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Mahesh

19/08/22 06:10 AM IST

Cabinet approves Interest subvention of 1.5% per annum on Short Term Agriculture Loan upto Rupees Three lakh

In News 
  • The Union Cabinet, chaired by the Prime Minister, Shri Narendra Modi has approved to restore Interest Subvention on short term agriculture loans to 1.5% for all financial institutions.
MISS 
  • Under this, bank provides short term loans upto 3 lakh for all agriculture and allied activities at 7% per annum.
  • For prompt repayment of loans: Farmers repaying loans before due data are given extra 3% subventions (i.e., they will have to pay just 4% interest rate)
  • Funding: 100% by centre
  • Nodal agency: NABARD and RBI
  • Other schemes for interest subvention: Kisan Credit Card, Agri Market Infrastructure Fund (provide subsidized loans to state and UT) and PM Fasal Bima Yojana.
Interest Subvention 
  • It is a form of waiver of some percentage of interest from the total interest that one has to pay on a loan taken from financial institutions.
  • If banks provide loans on 8.5% interest rate to farmers. And if the government provides interest subvention of 1.5%. Then farmers have to pay only 7% interest rate to bank. The difference will be paid by government as subsidy.
Source- PIB 

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