Cabinet approves Interest Subvention to banks on Short-Term crop loan to farmers

Cabinet approves Interest Subvention to banks on Short-Term crop loan to farmers
The government has approved the Interest Subvention Scheme (ISS) for farmers for the year 2017-18. This will help farmers getting short term crop loan up to Rs. 3 lakh payable within one year at only 4% per annum. The Government has earmarked a sum of Rs. 20,339 crore for this purpose.

What you need to know?

The Interest Subvention Scheme will continue for one year and it will be implemented by NABARD and RBI.

The objective of the scheme is to make available at ground level, agricultural credit for Short Term crop loans at an affordable rate to give a boost to agricultural productivity and production in the country.
The interest subvention will be given to Public Sector Banks (PSBs), Private Sector Banks, Cooperative Banks and Regional Rural Banks (RRBs) on use of own funds and to NABARD for refinance to RRBs and Cooperative Banks.

About Interest subvention scheme :

The scheme has been running since 2006-07. Under this, the farmers can avail concessional crop loans of upto Rs.3 lakh at 7% rate of interest. It also provides for an additional subvention of 3%. Prompt Repayment within a period of one year from the date of advance.
As a measure to check distress sale, post-harvest loans for storage in accredited warehouses against Negotiable Warehouse Receipts (NWRs) are available for upto 6 months for KCC holding small & marginal farmers. During the year 2016-17, the volume of short term crop loan lent stood at Rs.6,22,685 crore, surpassing the target of Rs. 6,15,000 crore.

Sources: pib.