In line with the government's policy decision, RBI today said farmers can avail short-term crop loan of up to Rs 3 lakh at subsidised interest rate of 7 per cent and the rate could go down to 4 per cent if they repay promptly.
"A subvention of 2 per cent per annum will be made available to... For short-term crop loan up to Rs 3,00,000 per farmer, provided the lending institutions make available short-term credit at the ground level at 7 per cent per annum to farmers," RBI said in a notification.
An additional interest subvention of 3 per cent per annum will be available to the "prompt payee farmers".
"This also implies that the farmers paying promptly would get short-term crop loans @4 per cent per annum during 2016-17. This benefit would not accrue to those farmers who repay after one year of availing such loans," RBI said.
In order to discourage distress sale by farmers and encourage them to store their produce in warehouses, the subvention will be given to small and marginal farmers with a Kisan Credit Card for a further period of up to six months post-harvest on the same rate as available to crop loan against negotiable warehouse receipt.
To provide relief to farmers affected by natural calamities, the interest subvention of 2 per cent will continue to be available to banks for the first year on the restructured amount.
Such restructured loans may attract a normal rate of interest from the second year onwards as per the policy laid down by RBI.
The government had announced the interest subvention scheme for the fiscal in the Budget. It was earlier implemented by the Finance Ministry, but transferred to the Agriculture Ministry this year.
