RBI Modifies Interest Subvention Scheme for Short-Term Loans for Agriculture and Allied Activities Via Kisan Credit Card

Circular No. RBI/2024-25/59 FIDD.CO.FSD.BC.No.8/05.02.001/2024-25, Dated: 06.08.2024

Earlier, the Govt. decided to continue the Modified Interest Subvention Scheme for short-term loans for agriculture and allied activities for the years 2022-23 and 2023-24. Now, RBI has decided to provide interest subvention to lending institutions, viz. Public and Private Sector Banks, SFBs, and computerized Primary Agriculture Cooperative Societies ceded with SCBs, on the use of their resources.

This interest subvention will be calculated on the loan amount from the date of disbursement/drawal up to the date of actual repayment of the loan by the farmer or up to the due date of the loan fixed by the banks, whichever is earlier, subject to a maximum period of one year.

For 2024-25, the applicable lending rate for farmers will be 7%, with an interest subvention rate of 1.5%. Further, an additional interest subvention of 3% per annum will be provided to such of those farmers repaying in time, i.e., from the date of disbursement of the loan/s up to the actual date of repayment or up to the due date fixed by the banks for repayment of such loan/s, whichever is earlier, subject to a maximum period of one year from the date of disbursement.

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