Cabinet clears interest waiver for farm loans

The Union Cabinet has given its ex-post facto approval for an interest waiver of farmers accessing short-term crop loans from cooperative banks for the two months of November and December, 2016
The decision also provides for interest subvention to National Bank for Agricultural and Rural Development (NABARD) on additional refinance provided by NABARD to Cooperative Banks.

Key Facts
  • This decision will ensure availability of resources with Cooperative Banks to help farmers to get easy access to crop loans from Cooperative Banks to overcome difficulties due demonisationduring Rabi operations.
  • Additional resources are to be provided to Cooperative Banks through NABARD for refinance to the Cooperative Banks on account of interest waiver of two months for November and December, 2016.
  • A sum of Rs. 15, 000 crore already has been allocated to NABARD during 2016-17 to implement the Interest Subvention Scheme (ISS) has already been utilised.
NABARD to make short-term borrowings

The Union Cabinet also approved NABARD to make short-term borrowings for approximate Rs.20,000 crore at prevailing market rate of interest for on-lending to Cooperative Banks at 4.5% rate of interest. Additional capital of Rs. 2,000 crore will be be provided to NABARD for this purpose through the Union Budget.



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