RBI provides relief to small farmers in latest MPC meet, collateral free agricultural loan limit increased to Rs 2 lakh

Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said that it has decided to increase the limit for collateral free agricultural loans from Rs 1.6 lakh per borrower to Rs 2 lakh per borrower.

At present, banks are required to extend collateral-free agriculture loans up to Rs 1.6 lakh per borrower. This limit was enhanced from Rs 1 lakh, set in the year 2010 to Rs 1.6 lakh in the year 2019.

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


This, he said will enhance coverage of small and marginal farmers in the formal credit system.

The central bank will soon be issuing a circular giving effect to the announcement.