MANU/RMIC/0342/2015

Ministry : Reserve Bank of India

Department/Board : Financial Inclusion and Development Department

Circular No. : FIDD.No.FSD.BC.59/05.04.02/2015-2016
                   RBI/2015-2016/152

Date : 13.08.2015

The Chairman / Managing Director
All Public & Private Sector Scheduled Commercial Banks

Dear Sir/Madam

Union Budget - 2015-16 Interest Subvention Scheme.

Please refer to our letter FIDD CO.FSD.No.10740/05.04.02/2014-15 dated June 17, 2015 conveying extension of Interest Subvention Scheme upto July 31, 2015. In this regard, it is advised that Government of India has approved the implementation of the Interest Subvention Scheme for the year 2015-16 for short term crop loans upto Rs 3.00 lakhs with the following stipulations:

i) Interest subvention @ 2% per annum will be made available to the Public Sector Banks (PSBs) and the Private Sector Scheduled Commercial Banks (in respect of loans given by their rural and semi-urban branches) on their own funds used for short-term crop loans up to Rs.3,00,000/- (Rs. three lakhs) per farmer provided the lending institutions make available short term credit at the ground level at 7% per annum to the farmers. This 2% interest subvention will be calculated on the crop loan amount from the date of its disbursement/drawal up to the date of actual repayment of the crop loan by the farmer or up to the due date of the loan fixed by the banks whichever is earlier, subject to a maximum period of one year.

ii) Additional interest subvention @3% per annum will be available to the farmers repaying the loan promptly from the date of disbursement of the crop loan up to the actual date of repayment or up to the due date fixed by the bank for repayment of crop loan, whichever is earlier, subject to a maximum period of one year from the date of disbursement. This also implies that the farmers paying promptly would get short term crop loans @4% per annum during the year 2015-16. This benefit would not accrue to those farmers who repay after one year of availing of such loans.

iii) In order to discourage distress sale by farmers and to encourage them to store their produce in warehouses against warehouse receipts, the benefit of interest subvention will be available to small and marginal farmers having Kisan Credit Card for a further period of up to six months post-harvest on the same rate as available to crop loan against negotiable warehouse receipt for keeping their produce in warehouses.