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Cabinet may clear interest subvention scheme for farmers

25 Jul 2013 Evaluate

The Cabinet is likely to take up the issue of interest subvention scheme implemented by public sector banks, private banks, cooperative banks, and Regional Rural Banks in its meeting scheduled for July 25. Under the interest subvention scheme, the government pays 2% interest subsidy to banks for granting short-term crop loan to farmers at concessional rate of 7%.

In the Budget speech this year, Finance Minister P Chidambaram had announced that the interest subvention scheme for providing short-term crop loans to farmers at 7% interest per annum will be continued in 2013-14. The Finance Minister has also increased the target of loan to be disbursed to Rs 700,000 crore.

Initially, the scheme has been applied to loans extended by public sector banks, Regional Rural Banks (RRBs) and cooperative banks. Chidambaram proposed to extend the scheme to crop loans borrowed from private sector scheduled commercial banks in respect of loans given within the service area of the branch concerned.

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