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Interest subvention scheme for farmers

This topic provides information about the interest subvention scheme for farmers.

The interest subvention scheme for farmers aims at providing short term credit to farmers at subsidised interest rate.  The policy came into force with effect from Kharif 2006-07. The scheme is being implemented for the year 2017-18. The Government has earmarked approximately Rs 20,339 crores for interest subvention during 2017-18.

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.

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

Interest subvention for short term crop loans

  • The Central Government provide farmers under the interest subvention scheme to all farmers for short term crop loan upto one year for loan upto Rs. 3 lakhs borrowed by them during the year 2017-18
  • Farmers will thus have to effectively pay only 4% as interest. In case farmers do not repay the short term crop loan in time they would be eligible for interest subvention of 2% as against 5% available above.
  • The amount of subvention is to be calculated on the amount of crop loan from the date of disbursement up to the date of repayment.

Interest subvention for post harvest loans

In order to give relief to small and marginal farmers who would have to borrow at 9% for the post harvest storage of their produce, the Central Government has approved an interest subvention of 2% i.e an effective interest rate of 7% for loans upto 6 months.

Interest subvention for relief to farmers affected by natural calamities

To provide relief to the farmers affected by Natural Calamities, the interest subvention of 2% will be provided to Banks for the first year on the restructured amount.

Source : PIB

Interest subvention under Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-NRLM)

DAY-NRLM has a provision for interest subvention, to cover the difference between the Lending Rate of the banks and 7%, on all credit from the banks/ financial institutions availed by women SHGs, for a maximum of Rs 3,00,000 per SHG. This will be available across the country in two ways:

  • In 150 identified districts, banks will lend to the women SHGs @7% up to an aggregated loan amount of Rs 3,00,000/-. The SHGs will also get additional interest subvention of 3% on prompt payment, reducing the effective rate of interest to 4%.
  • In the remaining districts also, DAY-NRLM compliant women SHGs will be registered with SRLMs. These SHGs are eligible for interest subvention to the extent of difference between the lending rates and 7% for the loan up to Rs 3 lakhs, subjected to the norms prescribed by the respective SRLMs. This part of the scheme will be operationalized by SRLMs.

Source : RBI

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Charan Raj G Oct 13, 2017 07:54 AM

Can Government employees avail interest subvention??

bhaskar Sep 09, 2017 11:23 AM

hi..,
i want to know the exact calculation of short term crop loans. What is the procedure for interest subvention scheme

Dr Shankar Chatterjee Jul 14, 2016 06:51 PM

Interest subvention is used in Government of India, Ministry of Rural Development's sponsored programme viz., National Rural Livelihoods Mission (NRLM)/Aajeevika. But here it has not been mentioned so if your site requires information I can write in details in this regard.

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