The Reserve Bank of India (RBI) has recently issued Circular No. RBI/2024-25/59 (Click Here to refer the circular) regarding 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.” This circular continues the government’s initiative to support farmers by providing interest subvention on short-term loans. Here’s a detailed breakdown of the key points from the circular:
1. Continuation of the Scheme: The Modified Interest Subvention Scheme (MISS) will remain in effect for the financial year 2024-25. This scheme offers financial assistance to farmers through concessional interest rates on short-term loans used for agricultural and allied activities.
2. Interest Subvention Details:
- Eligible Loans: Short-term loans for crop production and allied activities like animal husbandry, dairy farming, fisheries, and beekeeping.
- Subvention Amount: The scheme provides an interest subvention to lending institutions including Public Sector Banks (PSBs), Private Sector Banks (in rural and semi-urban branches), Small Finance Banks (SFBs), and computerized Primary Agriculture Cooperative Societies (PACS). The interest subvention will be calculated from the date of loan disbursement to the date of repayment or the due date, whichever comes first, up to a maximum of one year.
- Interest Rates: For the financial year 2024-25, the lending rate to farmers will be 7%, with an interest subvention of 1.50% for the lending institutions.
3. Additional Incentives:
- Prompt Repayment Benefit: Farmers who repay their loans on time will receive an additional interest subvention of 3% per annum. This means that timely repayments will result in an effective interest rate of 4% per annum for these loans.
4. Loan Limits:
- Overall Limit: The scheme covers short-term loans up to ₹3 lakh per farmer.
- Allied Activities Limit: For loans related only to allied activities, the maximum limit is ₹2 lakh. Crop loans will have priority, and any remaining amount will be allocated to allied activities within the cap.
5. Benefits for Small and Marginal Farmers: To encourage better storage practices, small and marginal farmers can avail of the interest subvention for up to six months post-harvest against negotiable warehouse receipts for produce stored in accredited warehouses.
6. Relief for Natural Calamities:
- Restructured Loans: For farmers affected by natural calamities, the interest subvention will apply to restructured loans for the first year, with normal rates applying in subsequent years.
- Severe Calamities: For severe calamities, the subvention will apply for up to three years (or five years maximum) on restructured loans, along with the prompt repayment incentive.
7. Aadhar Linkage: Farmers must have their Aadhar details linked to their Kisan Credit Card to avail of the benefits under this scheme.
8. Reporting and Claims: Banks need to capture and report detailed data on farmer beneficiaries through the Kisan Rin Portal (KRP). Claims must be certified by statutory auditors and submitted by June 30, 2025.