The Union Cabinet on Wednesday approved an interest subvention of 1.5 percent on short-term agriculture loans of up to Rs 3 lakh for all financial institutions, a move aimed at ensuring adequate credit flow in the farm sector.
The Cabinet, chaired by Prime Minister Narendra Modi, has approved restoring interest subvention on short-term agriculture loans of 1.5 percent for all financial institutions, Information, and Broadcasting Minister Anurag Thakur said.
The 1.5 percent interest subvention will be provided to lending institutions (public and private sector banks, small finance banks, regional rural banks, cooperative banks, and computerized Primary Agriculture Credit Societies) for the financial year 2022-23 to 2024-25 for providing short-term Agri loans of up to Rs 3 lakh to farmers.
”This increase in Interest Subvention support requires additional budgetary provisions of Rs 34,856 crore for the period of 2022-23 to 2024-25 under the scheme,” an official statement said.
The increase in interest subvention will ensure the sustainability of credit flow in the agriculture sector as well as the financial health and viability of the lending institutions.