Cabinet approves interest subvention of 1.5% on short-term farm loans

India

oi-Deepika S

New
Delhi,
Aug
17:
The
Union
Cabinet
on
Wednesday
approved
interest
subvention
of
1.5
per
cent
on
short-term
agriculture
loans
of
up
to
Rs
3
lakh
for
all
financial
institutions,
a
move
aimed
at
ensuring
adequate
credit
flow
in
the
farm
sector.

Thus,
Interest
Subvention
of
1.5%
will
be
provided
to
lending
institutions
(Public
Sector
Banks,
Private
Sector
Bank,
Small
Finance
Banks,
Regional
Rural
Banks,
Cooperative
Banks
and
Computerised
PACS
directly
ceded
with
commercial
banks)
for
the
financial
year
2022-23
to
2024-25
for
lending
short
term
agri-loans
upto
Rs
3
lakh
to
the
farmers.

This
increase
in
Interest
Subvention
support
requires
additional
budgetary
provisions
of
Rs
34,856
crore
for
the
period
of
2022-23
to
2024-25
under
the
scheme.

Cong
promises
farm
loan
waiver,
free
electricity
to
farmers
if
voted
to
power
in
Gujarat

Benefits:

• An
  increase
  in
  Interest
  Subvention
  will
  ensure
  the
  sustainability
  of
  credit
  flow
  in
  the
  agriculture
  sector
  as
  well
  as
  ensure
  the
  financial
  health
  and
  viability
  of
  the
  lending
  institutions
  especially
  Regional
  Rural
  Banks
  &
  Cooperative
  Banks,
  ensuring
  adequate
  agriculture
  credit
  in
  rural
  economy.

• Banks
  will
  be
  able
  to
  absorb
  the
  increase
  in
  the
  cost
  of
  funds
  and
  will
  be
  encouraged
  to
  grant
  loans
  to
  farmers
  for
  short-term
  agriculture
  requirements
  and
  enable
  more
  farmers
  to
  get
  the
  benefit
  of
  agriculture
  credit.

• This
  will
  also
  lead
  to
  the
  generation
  of
  employment
  since
  short-term
  agri-loans
  are
  provided
  for
  all
  activities
  including
  Animal
  Husbandry,
  Dairying,
  Poultry,
  and
  fisheries.

• Farmers
  will
  continue
  to
  avail
  short-term
  agriculture
  credit
  at
  an
  interest
  rate
  of
  4%
  per
  annum
  while
  repaying
  the
  loan
  in
  time.