Crop loan interest subsidy extended to August 31st

MUMBAI: In light of the lockdown to combat the coronavirus pandemic, the government has decided to continue the facility of 2 percent interest subsidy and 3 percent immediate repayment incentive for farmers until August 31, 2020. In April, the Interest Rate Subsidy (IS) Facility and Prompt Repayment Incentive (PRI) were extended until the end of May.

In a statement, the Reserve Bank of India called on banks to extend IS and PRI benefits to short-term crop loans to farmers.

The Reserve Bank of India had on May 23, 2020 allowed all lending institutions to extend the moratorium on loan repayments for another three months (until August 31, 2020) to reflect the lockdown extension and the ongoing disruptions due to COVID-19 19 to consider pandemic.

“To ensure farmers do not pay higher interest rates during the extended moratorium period, the government has decided to continue the availability of 2 percent IS and 3 percent PRI to farmers for the extended repayment period until August 31, 2020 or repayment date, whichever earlier,” the central bank said in the statement.

The benefit, the RBI said, applies to all short-term Agriculture and Livestock, Dairy and Fisheries (AHDF) loans up to Rs 3 lakh per farmer (up to Rs 2 lakh for AHDF farmers).

In order to provide farmers with short-term crop loans of up to Rs 3,000 at an interest rate of 7 per cent per annum, the government is offering banks an interest subsidy of 2 per cent per annum.

Farmers who repay their loans on time receive an additional interest subsidy of 3 percent. For such farmers, the effective interest rate is 4 percent.

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