Mumbai: A week after the Prime Minister announced higher compensation for damaged crops, the Reserve Bank of India (RBI) on Thursday said a new scheme for interest subvention for farmers is being worked out though it may take "some time".
Meanwhile, the earlier interest subvention scheme will continue till June 30, the RBI said.
"As regards the scheme for the year 2015-16, the Government of India has advised that presently various alternative approaches for improving the efficacy of the scheme are being examined, the finalisation of which may take some time," it said through a notification.
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The RBI further said it has been decided by government, "as an interim measure", to implement the interest subvention scheme for 2015-16, till June 30, on the terms and conditions approved for the scheme for 2014-15.
"All banks are, therefore, advised to take note and implement the interest subvention scheme for 2015-16 accordingly," it said.
In 2014-15, interest subvention of 2 per cent was made available to banks on funds used for short-term crop loans up to Rs 3 lakh per farmer provided they make available short term credit at the ground level at 7 per cent.
Also, additional interest subvention at the rate 3 per cent was made available to farmers repaying loans promptly.
On April 8, Prime Minister Narendra Modi had announced the government's decision to raise by 50 per cent the quantum of compensation to farmers affected by crop losses due to recent unseasonal rains.
Besides, the criterion of 50 per cent crop damage for providing compensation to farmers has been reduced to 33 per cent, which will help more people get better compensation for the crop loss.
He also said insurance companies have been instructed to expeditiously settle the claims of the distressed farmers.
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