Interest Subvention Scheme for Agricultural Loans

In August, 2024, the government approved the continuation of the interest subvention scheme for short-term agricultural loans up to Rs 3 lakh, available through Kisan Credit Cards (KCC) for the current financial year.

Key Points

Concessional Loan Rates: Farmers will benefit from a concessional interest rate of 7% on short-term crop loans and loans for allied activities.
An additional 3% subvention is granted to those who repay their loans on time, reducing the effective interest rate to 4% for the 2024-25 financial year.
Interest Subvention for Lenders: The Reserve Bank of India (RBI) has set the interest subvention rate for lending institutions at 1.5% for the financial year 2024-25.
The priority for interest subvention and repayment incentives will be given to crop loans, with any remaining benefits applied to allied activities such as animal husbandry, dairy, fisheries, and beekeeping.
Support for Storage and Distress Sales: To prevent distress sales and encourage the storage of produce, the scheme allows small and marginal farmers to benefit from interest subvention for up to six months post-harvest.
Assistance for Natural Calamities: Farmers affected by natural disasters will receive interest subvention on restructured loans for the first year. From the second year onwards, these loans will be subject to the normal interest rates.
Mandatory Aadhaar Linkage: To ensure seamless access to benefits under the Modified Interest Subvention Scheme (MISS), Aadhaar linkage remains mandatory for obtaining short-term loans in the 2024-25 financial year.