NEW DELHI: The Union Cabinet on Wednesday approved Rs 15,642 crore for providing interest subsidy to farmers on working capital loans for the current financial year.
Under the Modified Interest Subvention Scheme (MISS) farmers taking short-term loans of up to Rs 3 lakh through Kisan Credit Cards (KCC) will have to pay just 7% interest including 1.5% interest subvention.
Additionally, farmers repaying loans promptly are eligible for an incentive of up to 3% as Prompt Repayment Incentive (PRI) effectively reducing their interest rate on KCC loans to 4%. For loans taken exclusively for animal husbandry or fisheries, the interest benefit is applicable up to Rs.2 lakh, according to a statement issued after the meeting of the cabinet.
There are more than 77.5 million KCC accounts in the country. “The continuation of this support is critical to sustaining the flow of institutional credit to agriculture, which is vital for enhancing productivity and ensuring financial inclusion for small and marginal farmers,” the statement added.
Institutional credit disbursement through KCC increased from Rs 4.26 lakh crore in 2014 to Rs 10.05 lakh crore by December 2024. Overall agricultural credit flow also rose from Rs.7.3 lakh crore in FY 2013-14 to Rs.25.49 lakh crore in FY 2023-24.
Digital reforms such as the launch of the Kisan Rin Portal (KRP) in August 2023 have enhanced transparency and efficiency in claim processing. Around 449 banks and financial institutions on single portal for farmers.
Total credit to the agriculture sector by commercial banks and regional rural banks is likely to cross Rs 31.5 lakh crore, a new record, in FY26. An increasing formalisation of the rural credit structure is helping the expansion of credit.
In FY25, Nabard had disbursed over Rs 28.98 lakh crore through commercial banks, cooperatives and regional rural banks out of which around 60% was towards short term crop loans and rest was towards investment loans in agriculture and allied sector.
The Nabard is trying to address the regional imbalance in the credit flow through preparing potential linked credit plans.
To ensure fast and timely disbursal of agri-credits to the KCC holders, NABARD in collaboration with Chennai-based 24X7 Moneyworks, have developed ekisancredit (eKCC) portal for rural banking institutions. Through using a portal specifically designed for the Rural Cooperative Banks (RCBs) and Regional Rural Banks, farmers submit their loan applications, for getting access to agri-credit without visiting the banks.
Source: The Financial Express
