Farm subvention scheme on crop loans to continue at 7%

Mumbai: The Reserve Bank on Thursday said farmers will continue to get short-term crop loan of up to Rs 3 lakh at subsidised interest rate of 7 per cent and the rate could go down to 4 per cent if they repay promptly in 2017-18.

It said the Ministry of Agriculture and Farmers' Welfare has initiated the process for continuation of the Interest Subvention Scheme.

"It has been decided by the government, as an interim measure, to implement the Interest Subvention Scheme for 2017 -18 till further instructions are received...," the RBI said.

Under the scheme, a subvention of 2 per cent per annum is provided for short-term crop loan up to Rs 3,00,000 per farmer provided the lending institutions make available short-term credit at the ground level at 7 per cent per annum to farmers.

An additional interest subvention of 3 per cent per annum is available to the "prompt payee farmers".