1. Short Term Agricultural Credit: In order to provide short term credit (Crop Loans, PAGCC, Kisan
Vikas Cards, Rythu Mitra Groups, Joint Liability Groups, Agricultural Gold
Loans and Working Capital Loans financed to Fisheries) to the farmers at
reasonable interest rate, Government of India announced a scheme of Interest
Subvention in the year 2006. Under this, farmer receives short term credit at
7% p.a. from the date of disbursement to the end of the respective season with
an upper limit of `3 lakh on the amount. Now the benefit is extended to small and marginal
farmers availing loans against negotiable warehouse receipts (up to 6 months)
and restructured crop loans (CCATL) on account of natural calamities. However,
Agricultural Medium Term Loans are not covered under this scheme. Government
will provide Interest Subvention to the banks (PSBs, RRBs, and Farmers Service
Co-operative Societies) on the amounts financed to farmers (short term).
Banks lending to short term agricultural credit are eligible to claim 2%
Interest Subvention from Government of India. Further, farmers are eligible for another 3% interest subvention who
repays the loan promptly. This additional subvention is available to Public
Sector Banks on the condition that the effective rate of interest on short term
production credit up to `3 lakh for such farmers will be 4%
p.a. Branches are required to submit claim half-yearly
(September & March) for reimbursement of interest subvention amount from
RBI. For crop loans up to one lakh disbursed in AP
State attracts zero interest rate as
state government is reimbursing the entire interest to the banks for prompt payment.
Further,
RBI has advised the Banks to ensure that all crop loans against which they are
claiming interest subvention should satisfy that the borrower should be a
farmer; the rate of interest charged should not exceed the rate stipulated by
the GOI; the amount of loan is fixed according to the prescribed scale of
finance for agricultural loans and the loan is used for stated purpose and seasonality
is observed in regard to both disbursement and recovery. In order to extend interest subvention benefit to the genuine farmers, linking
of Aadhaar number in the Customer ID is made mandatory for all short term crop
loans such as stated above w.e.f 1st April 2017.
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