What is Interest Subvention Scheme for farmers?
The Interest Subvention Scheme was launched by the government in the year 2006-07 to achieve high productivity and overall production in agricultural sector by providing credit to farmers at concessional rate of interest. The scheme is extended on yearly basis.
Objective of the scheme
The objective of the scheme is to make available at ground level, agricultural credit for Short Term crop loans at an affordable rate to give a boost to agricultural productivity and production in the country.
Features of Interest Subvention Scheme
- The farmers can avail concessional crop loans of upto Rs.3 lakh at 7% rate of interest
- An additional subvention of 3% is extended to farmer if he makes Prompt Repayment within a period of one year from the date of advance.
- The effective rate of interest comes out to be 4% for short term crop loans.
- The subvention is given to Public Sector Banks (PSBs), Private Sector Banks, Cooperative Banks and Regional Rural Banks (RRBs) on use of own funds and to NABARD for refinance to RRBs and Cooperative Banks
- The scheme is implemented by NABARD and RBI.
- The scheme also offers post-harvest loans for storage in accredited warehouses against Negotiable Warehouse Receipts (NWRs) for a period of 6 months
Government Budgetary Support
The Government has earmarked approximately Rs 20,339 crores for interest subvention during 2017-18. The government has earmarked Rs 15,000 crore for 2018-19. Further the scheme will be implemented through the DBT mode from the current financial year
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