Union Cabinet’s approval to interest subsidy for farmer loans

The Union Cabinet has given its approval to continue interest subsidy to Public Sector Banks (PSBs), Regional Rural Banks (RRBs), Cooperatives Banks and NABARD allowing them to grant short-term crop loans of up to Rs 3 lakhs to farmers at 7% p.a. during the year 2012-13.
A surplus interest subsidy of 3% p.a. will also be provided to those farmers who repay loans within one year of disbursement in the current fiscal year.
As per the decision, Rs 10901 crore will be released as interest subvention for 2012-13. Small and marginal farmers having Kisan Credit Cards will be provide with interest subsidy for loans. Release of 442 crore rupees as interest subsidy to small and marginal farmers having Kisan Credit Cards against negotiable warehouse receipts, for post-harvest has also been approved.
The Govt has subsidized short-term crop loans to farmers since 2006-07 to ascertain the availability of crop loans to farmers of upto Rs.3 lakh at 7% p.a. Banks have been consistent in accomplishing the goal set for agriculture credit flow in the past years. For the year 2012-13, the target for agricultural credit flow has been elevated to Rs 575000 crore from Rs 475000 crore in the year 2011-12.


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