RBI's BIG Announcement For Small, Marginal Farmers; Limit For Collateral-Free Agriculture Loan Raised

New Delhi: The Reserve Bank of India on Friday announced to enhance the limit of  Collateral-free Agriculture Loan for farmers. RBI has announced that collateral-free agriculture loans will be raised from Rs 1.6 lakh to Rs 2 lakh per borrower.

"The limit for collateral-free agriculture loans was last revised in 2019. Taking into account the rise in agricultural input costs and overall inflation, it has been decided to increase the limit for collateral-free agriculture loans from Rs 1.6 lakh to Rs 2 lakh per borrower," RBI Governor Shaktikanta Das, announcing the outcome of the three-day Monetary Policy Committee (MPC) meeting said.

This will further enhance credit availability for small and marginal farmers, said Das. 

RBI kept the key interest rates unchanged at 6.5 percent for the 11th consecutive time on Friday. 

Reserve Bank has slashed Cash Reserve Ratio to 4 percent from existing 4.5 percent, which would lead to release of Rs 1.16 lakh crore to banks and improve their lending capacity. The CRR is the percentage of a bank's total deposits that it is required to maintain in liquid cash with the RBI. The CRR percentage is determined by the RBI from time to time. Banks do not get any interest on this amount.