In line with the government's policy, the Reserve Bank of India said on Wednesday farmers can avail of short-term crop loans of up to Rs 3 lakh at a subsidised interest rate of 7 percent, which could go down further to 4 percent timely repayment. However, linkage of Aadhaar was made compulsory for availing the interest subvention scheme.
“To ensure hassle-free benefits to farmers under the Interest Subvention Scheme, the banks are advised to make Aadhaar linkage mandatory for availing of short-term crop loans in 2017-18,” the RBI said in a notification to banks.
The scheme will provide short-term crop loans up to Rs 3 lakh to farmers at an interest rate of 7 percent during 2017-18, as opposed to the 9 percent they'd normally pay. This interest subvention of 2 percent will be calculated on the crop loan amount from the date of its disbursement up to the date of actual repayment by the farmer or up to the due date of the loan fixed by the banks, whichever is earlier, subject to a maximum of one year, the RBI notification said.
An additional interest subvention of 3 percent per annum will be available to “prompt payee farmers”. “This also implies that the farmers paying promptly as above would get short-term crop loans at 4 percent per annum during 2017-18,” it said.
In order to discourage distress sale and encourage farmers to store produce in warehouses, RBI said that the benefit of subvention will be available to small and marginal farmers with Kisan Credit Cards for a further period of up to 6 months post harvest at the same rate as available to crop loans against negotiable warehouse receipts.
The warehouses should be accredited with the Warehousing Development Regulatory Authority (WDRA), it said.
To provide relief to farmers affected by natural calamities, an interest subvention of 2 percent per annum will be made available to banks for the first year on the restructured loan, it said, adding that such loans will attract normal rate of interest from the second year onward.
To avoid multiple loaning and ensure only genuine farmers avail of concessional crop loans through the mechanism of gold loans, the lending institutions may conduct due diligence and ensure proper documentation, including recording of land details, even when the farmer takes gold loans for such purposes, it said.
Earlier in June, the Cabinet headed by Prime Minister Narendra Modi had approved the interest subvention scheme for 2017-18. The Cabinet has approved total expenditure of Rs 20,339 crore for this fiscal as interest subsidy on short-term crop loans.
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