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The Central Government extended the interest subvention scheme to banks to ensure availability of crop loans of up to Rs 3 lakh to farmers at 7 percent per annum.
According to sources, the Union Cabinet has given its approval to continuation of interest subvention to public sector banks (PSBs), private sector commercial banks, regional rural banks (RRBs), cooperative banks and NABARD to enable them to provide short-term crop loans of up to Rs 3 lakh to farmers at 7 percent per annum during 2015-16.
The Cabinet has approved an additional interest subvention of 3 percent per annum for those farmers who repay on time, the sources said to the agencies.
They added that it decided to provide interest subvention to small and marginal farmers with Kisan Credit Cards for loans against negotiable warehouse receipts post-harvest at 7 percent per annum interest for six months.
The Union Cabinet, chaired by Prime Minister Narendra Modi, also decided to provide relief to farmers affected by natural calamities, where the interest subvention of 2 percent will continue to be available to banks for the first year on the restructured amount. For 2015-16, the target of agriculture credit has been raised to Rs 8,50,000 crore, from Rs 8,00,000 in 2014-15.