IANS | 17 Aug, 2022
The Union Cabinet on Wednesday cleared a proposal to provide interest
subvention of 1.5 per cent per annum to banks for providing short term
agriculture loan of upto Rs 3 lakh.
The interest
subvention will be provided for a period of two financial years, i.e.
2022-23 to 2024-25. This increase in interest subvention will require an
additional budgetary provision of Rs 34,856 crore.
After the
cabinet meeting, Union Minister for Information and Broadcasting Anurag
Thakur told the media that the move is aimed at providing financial
assistance to banks who give short term loans to farmers under the
modified interest subvention scheme, keeping in mind the fact that repo
rates have been hiked in recent months.
The decision will also
ensure that short term credit facility to farmers continues and they do
not have to pay higher interest rate on loans.
Official sources
said that the increase in interest subvention will ensure 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.
Under the interest subvention scheme, loans
are provided to farmers at 7 per cent interest rate. On timely payment
of loans, farmers have to pay only 4 per cent interest on loans as they
get 3 per cent interest subvention.
