Interest subvention likely on FY19, FY20 crop loans

New Delhi: The Finance Ministry has asked all banks to take branchlevel measures to extend the interest subvention scheme and prompt repayment initiative (PRI) for all short-term crop loans taken by farmers in 2018-19 and 2019-20.

In a letter sent to the heads of all public sector banks (PSBs) and chairman of the National Bank for Agriculture and Rural Development, the ministry said the Reserve Bank of India (RBI) directive sent out on the previous day was applicable to all PSBs, scheduled commercial banks (SCBs), regional rural banks and cooperative banks.

The ministry has asked that the benefits of interest subvention of 2% and the PRI of 3% be extended to short-term crop loans up to Rs 3 lakh to farmers whose accounts have become due or are due between March 1and May 31. “It is, therefore, requested that all the banks’ branches may be suitably advised to take appropriate action in compliance with the instructions issued by RBI in the matter,” said the letter, dated April 22.


The government had taken the step to ensure that farmers do not have to pay penal interest and at the same time continue getting the benefits of interest subvention scheme, the RBI said while instructing all public and private SCBs about the extension. In order to provide short-term crop loans up to Rs 3 lakh to farmers at 7% rate, the government offers interest subvention of 2% to banks.