Lok Sabha Question No. 4464 (UNSTARRED), answered on 2019-01-08
Subject: Interest Subvention for Farmers
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: DEVUSINH JESINGBHAI CHAUHAN

## GOVERNMENT OF INDIA MINISTRY OF AGRICULTURE AND FARMERS WELFARE DEPARTMENT OF AGRICULTURE, COOPERATION AND FARMERS WELFARE

## LOK  SABHA UNSTARRED QUESTION NO.4464

TO BE ANSWERED ON THE 8 TH   JANUARY, 2019

## INTEREST SUBVENTION  FOR  FARMERS

## 4464.  SHRI DEVUSINH CHAUHAN:

Will the Minister of AGRICULTURE AND FARMERS WELFARE कृ ष एवं कसान कयाण मंी be pleased to state:

- (a) whether the Government operates a scheme to disburse short term crop loan upto Rs. 3 lakh @ 7% interest and institutes are entitled to 2% interest subvention for their own funds for short term crop finance;
- (b) whether  the  Government  also provides  3%  interest  subvention  to  the farmers, who repay crop loan in time and as per  the guidelines  under the  scheme, Banks  have  to  charge only  4%  interest if farmers repay loan in time and thus funds remain invested in Agricultural Credit by way of principal or interest;
- (c) if  so,  the  manner  in  which  the Government is going to help the District Central Cooperative  Banks  and  Primary  Agriculture  Co-operative  Societies  so  that  their  finances  are strengthened;
- (d) whether the Government is aware that the claims are not paid in time thereby depriving the institutes to utilize their funds for further use and if so, the details thereof; and
- (e) whether    the    Government    is  contemplating    to    sanction    the    claim    of  interest subvention  at  the  earliest  or  provide  90%    of    the    claim  amount    in    advance    in  order    to reduce  the  financial  burden  of interest and if so, the details thereof?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF AGRICULTURE AND FARMERS WELFARE

कृ ष एवं कसान कयाण मंालय म राय मंी (SHRI  PARSHOTTAM  RUPALA)

- (a) to (c): Yes, Madam.  With a view to ensuring availability of agriculture credit {including loans taken against Kisan Credit Card (KCC)} at a reasonable cost/at a reduced rate of 7% per annum to farmers, the Government of India, is implementing an interest subvention scheme of 2% for short term crop loans up to Rs.3.00 lakh. The scheme is implemented through public sector banks and private sector banks {reimbursement through Reserve Bank of India (RBI)}, Regional Rural Banks and Cooperatives {reimbursement through National Bank for Agriculture and Rural Development (NABARD)}. Currently, besides 2% interest subvention, the farmers, on prompt  repayment  of  crop  loans  on  or  before  the  due  date,  are  also  provided  3%  additional interest  subvention.    Thus,  in  case  of  prompt  payee  farmers  the  short  term  crop  loans  are provided  at  an  effective  interest  rate  of  4%  per  annum.  The  benefit  of  interest  subvention  is extended for a period of up to six months (post-harvest) to small and marginal farmers having KCC on loan  against  negotiable  warehouse  receipts  with  the  purpose  of  preventing  distress sale of produce.

As  per  the  extant  policy  crop  loans  upto  Rs.3.00  lakh  per  farmer  provided  by  District Central Co-operative Banks and Primary Agricultural Co-operative Societies at 7% per annum are eligible for refinance (through State Cooperative Banks/District Central Co-operative Banks) from  National  Bank  for  Agriculture  and  Rural  Development  (NABARD)  out  of  Short  Term Cooperative Rural Credit (STCRC) fund allocated by Government of India every year.

(d): In terms of the extant Interest Subvention Scheme on short-term crop loans, loans are made available to the farmer at 7% per annum and on prompt repayment an incentive of 3% is credited to the farmer's account. While the benefit of interest subvention is passed on upfront to the  borrower  farmer  by  banks,  the  reimbursement  of  audited  claims  received  from  banks through  Reserve  Bank  of  India  in  respect  of  Commercial  Banks  and  NABARD  in  respect  of Cooperative Banks and Regional Rural Banks is made by Government of India on the basis of available budgetary resources.

(e): No, Madam.  Presently, Union Government is not considering any proposal to provide funds equal to 90% of the interest subvention to the financial institutions as advance.

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