Centre restores farm loan interest subsidy as rates rise
- Union Cabinet has restored the interest subsidy on short-term agriculture loans to 1.5% for all financial institutions, including cooperative banks.
Modified Interest Subvention Scheme
- To ensure that the farmers have to pay a minimal interest rate to the bank, the GoI introduced Modified Interest Subvention Scheme (MISS).
- It aims to provide short term credit to farmers at subsidised interest rates.
Features of MISS
- Short term agriculture loan upto Rs. 3.00 lakh is available to farmers engaged in Agriculture and other allied activities including Animal Husbandry, Dairying, Poultry, fisheries etc. at the rate of 7% p.a.
- An additional 3% subvention (Prompt Repayment Incentive – PRI) is also given to the farmers for prompt and timely repayment of loans.
- Therefore, if a farmer repays his loan on time, he gets credit at the rate of 4% p.a.
Who gets the subvention?
- The lending institutions include- Public Sector Banks, Private Sector Bank, Small Finance Banks, Regional Rural Banks, Cooperative Banks and Computerised PACS directly ceded with commercial banks.
Prelims Take Away
- Kisan Credit Card
- Interest Subvention Scheme
- NBFC
- MISS