RBI Notifies 2% Interest Subsidy Scheme For Short-Term Crop Loans
A woman carries harvested mustard crop in a field in Palwal district, Haryana, India. (Photographer: Anindito Mukherjee/Bloomberg)

RBI Notifies 2% Interest Subsidy Scheme For Short-Term Crop Loans


The Reserve Bank of India notified the norms for banks with regards to two percent interest subvention or subsidy for short-term crop loans during 2018-19 and 2019-20.

The Centre has already approved the scheme.

To provide short-term crop loans up to Rs 3 lakh to farmers at an interest rate of 7 percent, the RBI said, it has been decided to offer interest subvention of 2 percent per annum to lending institutions.

This interest subvention of 2 percent will be calculated on the crop loan amount from the date of its disbursement/drawal up to the date of actual repayment of the crop loan by the farmer or up to the due date of the loan fixed by the banks, whichever is earlier, subject to a maximum period of one year
RBI Notification

Under the scheme, an additional 2 percent interest subvention is provided to farmers repaying loans promptly. For such farmers, the effective rate of short-term crop loans works out to be 4 percent per annum.

Also read: Farm Loan Waivers To Hit States’ Fiscal Deficit Targets, Says Report

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