In an effort to step up credit to farmers, State Bank of India (SBI) has slashed interest rates on crop loans above Rs 3 lakh and up to Rs 25 lakh by over 175 basis points. At present, crop loans upto Rs 3 lakh are available to farmers at 7 per cent. They get additional 2 per cent concession for prompt repayment, SBI said in statement.
The country’s largest lender is extending similar support to farmers availing crop loans above Rs 3 lakh. The interest on crop loans has been reduced from 11.75 - 12.75 per cent to 10 per cent for one year. This concession is applicable to loans sanctioned and disbursed from April 1, 2010 to March 31, 2011. An additional 1 per cent will be given to regular borrowers for prompt repayment. Thus, the effective interest rate will be only 9 per cent (fixed) up to one year. For farmers undertaking minor irrigation projects, SBI said the interest on new loans was slashed from 10.50-13.25 per cent to 8.5 per cent for one year.
The interest rate for second and third year would be 9.5 per cent for loans up to Rs 25 lakh. These loans have to be sanctioned between April 2010 and March 2011. It has also cut margin money that farmers have to keep for irrigation project loan to 10 per cent from the existing 15-25 per cent of the project cost. The repayment period for new loans has been extended by one year.