Mumbai: The government has approved continuation of the interest subvention scheme for short-term loans up to Rs 3 lakh for agriculture and allied activities availed through Kisan Credit Card (KCC) during the current fiscal year.

Under this scheme, farmers get loans at a concessional interest rate of 7 percent. Farmers who repay the loan on time are provided additional interest subsidy of 3 percent per annum.

Farmers will get benefit

RBI said this also means that farmers repaying loans on time as above will get short-term crop loans and/or short-term loans for allied activities including animal husbandry, dairy, fisheries, beekeeping, etc. at the rate of 4 per cent per annum during FY 2024-25. In a circular, the Reserve Bank said the rate of interest subvention to lending institutions will be 1.5 per cent for 2024-25.

It said the limit of crop loan component will take priority for interest subvention and prompt repayment incentive benefits and the balance amount will be considered for allied activities including animal husbandry, dairy, fisheries, bee-keeping, etc.

Benefit of interest rebate under KCC

In order to discourage distress selling by farmers and to encourage them to store their produce in warehouses, the benefit of interest subvention under KCC will be available to small and marginal farmers for a period up to six months after harvesting of the crop.

The RBI circular said that to provide relief to farmers affected by natural calamities, the interest rebate rate applicable for that year will be made available to banks for the first year on the restructured loan amount. Normal interest rate will be applicable on such restructured loans from the second year onwards. To ensure hassle-free benefits to farmers under the Modified Interest Subvention Scheme (MISS), Aadhaar linkage will continue to be mandatory for availing the above-mentioned short-term loans in 2024-25.