The Reserve Bank of India (RBI) on Wednesday, November 23, said the government has approved the interest subvention scheme availed through Kisan Credit Card (KCC) with modification for the financial years 2022-23 and 2023-24.
The applicable lending rate to farmers will be 7 percent and the rate of interest subvention to lending institutions will be 1.5 percent, according to an RBI notification.
The interest subvention will be calculated on the loan amount from the date of disbursement up to the date of actual repayment of the loan by the farmer or up to the due date of the loan fixed by the banks, whichever is earlier, subject to a maximum period of one year.
Also, an additional interest subvention of 3 percent per annum will be provided to the farmers repaying in time, subject to a maximum period of one year from the date of disbursement.
Further, farmers repaying promptly as above would get short-term crop loans and/or short-term loans for allied activities, including animal husbandry, dairy, fisheries, bee keeping, etc, at 4 percent per annum during the financial years 2022-23 and 2023-24. However, this benefit would not accrue to those farmers who repay their agri loans after one year of availing of such loans.
What is interest subvention
Subvention means grant of money by the government. And interest subvention refers to the government subsidising the interest on a loan. The government offers interest subvention mostly on home, crop and education loans.
To ensure that the farmers have to pay a minimal interest rate to the bank, the government of India introduced interest subvention scheme (ISS) to provide short-term crop loans and short-term loans for allied activities, including animal husbandry, dairy, fisheries, bee-keeping, etc, up to an overall limit of Rs 3 lakh to farmers through KCC at a concessional interest rate for farmers.
The interest subvention will be provided to lending institutions, namely public sector banks and private sector banks, small finance banks, and computerised primary agriculture cooperative societies.
To ensure hassle-free benefits to farmers, Aadhar linkage would continue to be mandatory for availing the short-term loans in 2022-23 and 2023-24.
