The Cabinet chaired by Prime Minister Manmohan Singh decided "to continue interest subvention to Public Sector Banks, Regional Rural Banks (RRBs), Cooperatives Banks and Nabard to enable them to provide short- term crop loans up to Rs 3 lakh to farmers at 7 per cent per annum 2012-13."
While permitting the release of Rs 10,901 crore, the Cabinet decided that Rs 3,267 crore subvention to given to Nabard for refinance to cooperatives banks and RRBs.
The remaining Rs 7,634 crore will be given to public sector banks, RRBs and cooperative banks for subvention on their own funds, the official statement said.
The government also decided to provide additional interest subvention of 3 per cent to those farmers who repay short-term crop loans on time, that is within 1 year of disbursement.
The government has been subsidising short-term crop loans to farmers in order to ensure the availability of crop loans to farmers for loans up to Rs 3 lakh at 7 per cent per annum.
In the year 2009-10, an additional subvention of one per cent was provided to farmers who repay their loans on time.
This has been increased from 2 per cent in 2010-11 to 3 per cent in 2011-12 and 2012-13. Thus, effective rate of interest for such scheme for 2012-13 is Rs 10,901 crore.
The government also approved proposal to provide interest subvention to small and marginal farmers having Kisan Credit Card for loan against negotiable warehouse receipts for post harvest at 7 per cent interest for a period of 6 months.
The statement further said it has decided to permit release of Rs 442 crore as interest subvention to small and marginal farmers having Kisan Credit Card against negotiable warehouse receipts, for post-harvest.
"Banks have been consistently meeting the target set for agriculture credit flow in the past years," it added.
Agricultural credit target for 2012-13 is Rs 5,75,000 crore, up from Rs,4,75,000 crore a year ago.
