Providing 2% Interest Subvention to Banks and 3% Prompt Repayment Incentive to farmers on crop loans for the extended period upto 31.05.2020
Please refer to our instructions on Interest Subvention Scheme for short term crop loans.
In the wake of the lockdown due to Covid-19 pandemic, there have been restrictions imposed on movement of people. Many farmers are not able to travel to bank branches for payment of their short term crop loan dues. Moreover due to restrictions on movement of people and difficulty in timely sale and receipt of payment of their produce, farmers may be facing difficulties in repayment of their short term crop loans falling due during this time.
Further, GoI had, through RBI notification dated 27.03.2020 {copy enclosed}, already granted a moratorium of three months on repayment of all installments falling due between 01.03.2020 and 31.05.2020 in respect of all term loans (including agriculture term loans, retail and crop loans) and working capital loans taken from all Commercial Banks (including RRBs, SFBs and Local Area Banks) and Cooperative Banks.
In order to ensure that farmers do not have to face the situation of paying penal interest and they continue to get the benefit of short term crop loan at concessional interest rate of 4% p.a. which is applicable on timely repayment, it has been decided by Ministry of Agriculture and Farmers’ Welfare, Government of India (vide their office memorandum dated 30.03.2020-copy enclosed), to continue with 2% Interest Subvention to Banks and 3% Prompt Repayment Incentive to farmers for the extended period of repayment of short term crop loans upto 31.05.2020 or upto date of actual repayment whichever is earlier, for the short term crop loan of upto Rs 3 lakh per farmer given by Banks @7% p.a. which have fallen due or shall fall due between 01.03.2020 and 31.05.2020.
Banks are advised to take appropriate action in this regard.