Relief for farmers: Cabinet nod to 1.5% interest aid on agri loan
New Delhi: In a major relief to farmers, the Union Cabinet chaired by Prime Minister Narendra Modi has on Wednesday approved an interest subvention of 1.5 per cent per annum on short-term agriculture loans up to Rs 3 lakh.
According to Union Minister for Information and Broadcasting Anurag Thakur, the interest subvention of 1.5 per cent will be provided to lending institutions such as public sector banks, private sector banks, small finance banks, regional rural banks, cooperative banks and computerised PACS, which are directly ceded with commercial banks for the financial year 2022-23 to 2024-25.
"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. The decision has been taken to ensure adequate credit flow in the agriculture sector," Thakur said while addressing a media briefing after the Cabinet meeting.
An increase in interest subvention will ensure the sustainability of credit flow in the agriculture sector as well as ensure financial health and viability of the lending institutions especially regional rural banks and cooperative banks, ensuring adequate agriculture credit in the rural economy.
As per a senior government official, 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.
The move will also lead to the generation of employment as short-term agri-loans are provided for all activities, including animal husbandry, dairying, poultry, fisheries, etc.
Recently, under the Aatmanirbhar Bharat campaign, over 3.13 crore farmers have been issued a new Kisan Credit Card (KCC) against the target of 2.5 crore. Special initiatives such as the KCC saturation drive for farmers enrolled under the PM-KISAN scheme have also simplified the process and documentation involved for getting the KCC sanctioned.