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India : Credit to Farmers Under Interest Subvention Scheme

July 19, 2014

In order to provide credit to farmers at affordable interest rates, the Government of India has been implementing the Interest Subvention Scheme since 2006-07 under which short-term crop loans upto Rs.3 lakh are made available to the farmers at an interest rate of 7 percent per annum by the Banks.

The Government of India in 2009-10 introduced an additional interest subvention of 1% for farmers who repay their loans within the period of interest subvention i.e. within one year of disbursement of such loans.

The additional subvention was increased to 2% in 2010-11 and 3% from 2011-12 onwards.

The Interest Subvention Scheme has also been extended to the private sector commercial banks (in respect of short term crop loans disbursed by their rural and semi-urban branches) from the year 2013-14.

Thus effective rate of interest payment by the farmers who repay their loan in time is presently 4%.

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Source: TendersInfo (India)

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