Farmers will get short-term crop loans of up to Rs 3 lakh at a lower interest rate of 7 per cent this fiscal with the government approving a 2 per cent interest subvention scheme. Also, farmers who would repay the loan on time will get the credit at more cheaper rate of 4 per cent.
Under the interest subvention scheme approved by the Cabinet today, farmers will get loans of up to Rs 3 lakh for a period of one year at an interest rate of 7 per cent.
The Cabinet also approved an additional subvention of 3 per cent for those farmers who pay loans on time.
The interest subvention scheme is applicable for all farmers availing short-term crop loans up to Rs 3 lakh for one year, Telecom Minister Ravi Shankar Prasad said after the Cabinet meeting.
Government has set an agricultural credit target for banks at Rs 9 lakh crore for the current fiscal, up from Rs 8.5 lakh crore 2015-16.
To reduce the burden of loan repayment on farmers, government has made a provision of Rs 15,000 crore in the budgetary estimate of 2016-17 towards interest subvention.
The interest subvention scheme was earlier implemented by the Finance Ministry. It was transferred to the Agriculture Ministry this year.