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Modified Interest Subvention Scheme for Agricultural Loans

Reserve Bank of India (RBI) has published the modified interest subvention scheme for short term loans for agriculture and allied activities availed through Kisan Credit Card (KCC) during the financial year 2024-25.

Which loans are covered under modified interest subvention scheme (MISS)?

The short-term crop loans and short-term loans for allied activities including animal husbandry, dairy, fisheries, bee keeping etc. up to an overall limit of ₹3 lakh to farmers through KCC during the year 2024-25 will be covered for interest subvention.

Which lending institutions are covered under MISS?

The MISS is applicable to the lending institutions viz. Public Sector Banks (PSBs) and Private Sector Banks (in respect of loans given by their rural and semi-urban branches only), Small Finance Banks (SFBs) and computerized Primary Agriculture Cooperative Societies (PACS) ceded with Scheduled Commercial Banks (SCBs), on use of their own resources. 

How much is the interest subvention?

The applicable lending rate to farmers and the rate of interest subvention for the financial year 2024-25 will be as follows –

Financial Year Lending rate to farmers Rate of Interest Subvention to Lending Institutions
2024-25 7% 1.50%

When is additional interest subvention applicable?

  • An additional interest subvention of 3% per annum will be provided to farmers repaying in time.
  • This implies that the farmers repaying promptly would get short-term crop loans and / or short-term loans for allied activities including animal husbandry, dairy, fisheries, bee keeping etc. @ 4% per annum during the financial year 2024-25.
  • This benefit would not accrue to those farmers who repay their agri loans after 1 year of availing such loans.

What are sub-limits for interest subvention?

  • Interest subvention and prompt repayment incentive benefits on short-term crop loans and short-term loans for allied activities will be available on an overall limit of ₹3 lakh per annum subject to a maximum sub-limit of ₹2 lakh per farmer in respect of those farmers involved only in activities related to animal husbandry, dairy, fisheries, bee keeping etc. 
  • The limit for crop loan component will take priority for interest subvention and prompt repayment incentive benefits and the residual amount will be considered towards allied activities including animal husbandry, dairy, fisheries, bee keeping etc.

What are relaxations under MISS for small and marginal farmers?

To discourage distress sale by farmers and to encourage them to store their produce in warehouses, the benefit of interest subvention under KCC will be available to small and marginal farmers for a further period of up to 6 months post the harvest of the crop against negotiable warehouse receipts on the produce stored in warehouses accredited with Warehousing Development Regulatory Authority (WDRA), at the same rate as applicable to the crop loan.

What is the applicability of MISS in cases of natural calamities?

  • To provide relief to farmers affected by natural calamities, the applicable rate of interest subvention for that year will be made available to banks for the first year on the restructured loan amount. Such restructured loans will attract normal rate of interest from the second year onwards.
  • To provide relief to farmers affected due to severe natural calamities -
    • The applicable rate of interest subvention for that year will be made available to banks for first 3 years / entire period (subject to a maximum of 5 years) on the restructured loan amount. 
    • The benefit of prompt repayment incentive @3% per annum shall also be provided to the affected farmers. 
    • The grant of such benefit in cases of severe natural calamities shall, however, be decided by a High Level Committee (HLC) based on the recommendations of the Inter-Ministerial Central Team (IMCT) and Sub Committee of National Executive Committee (SC-NEC).

How will interest subvention be calculated?

The interest subvention will be calculated from the date of disbursement of the loans up to the actual date of repayment or up to the due date fixed by the banks for repayment of such loans, whichever is earlier, subject to a maximum period of 1 year from the date of disbursement. 

What are the reporting requirements?

Banks shall report the category wise granular data of individual farmer beneficiaries under MISS on Kisan Rin Portal (KRP) to settle the audited MISS claims for the year 2024-25.


References

Reserve Bank of India. (2024, August 06). 'Modified Interest Subvention Scheme for Short Term Loans for Agriculture and Allied Activities availed through Kisan Credit Card (KCC) during the financial year 2024-25'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12717&Mode=0


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