The government will release Rs 10,901 crore to state-run banks to enable interest subvention for short-term crop loans up to Rs 3 lakh to farmers for the current financial year. On Thursday’s cabinet meeting, chaired by the Prime Minister, decided this.
Public sector banks (PSBs) provide such a subvention to enable short-term crop loans at seven per cent interest. Also, a three per cent subvention is given to those who start repaying their loans within the first year of disbursal.
Of the total, Rs 7,634 crore is to go to PSBs, regional rural banks & cooperative banks for a subvention on their own funds. The remaining Rs 3,267 crore is to go to the National Bank for Agriculture and Rural Development (Nabard), for refinance to cooperative banks and RRBs.
The Cabinet also approved Rs 442 crore as interest subvention for small and marginal farmers having Kisan Credit Cards against negotiable warehouse receipts, for post-harvest. This subvention also helps farmers get loans at seven per cent. The government has been subsidising short-term crop loans to farmers since 2006-07.
In 2009-10, an additional subvention of one per cent was provided to farmers who repaid on time. This was increased from two per cent in 2010-11 to three per cent in 2011-12.
The cabinet also cleared a proposal to revive Nepa Mills, the government-run newsprint maker, through infusion of Rs 234 crore and restructuring of its equity and loans.
