Union Cabinet approves Rs 10,901 crore funds for crop loan subsidy

In a move to help the suffering farmers amid drought due to stringent monsoon rains, Union Cabinet  presided by the Prime Minister has released funds of Rs 10,901 crore to banks as interest subvention for crop loans up to Rs 300,000 to farmers in FY 2012-13.

The Cabinet will allocate Rs 3,267 crore from the fund for subvention to NABARD for refinance to cooperatives banks and RRBs. The remaining Rs 7,634 crore will be given to public sector banks, RRBs and cooperative banks for subvention on their own funds. The centre has also decided to provide additional interest subvention of 3% to those farmers who repay short-term crop loans on time that is within 1 year of disbursement.

The government has been providing financial support to farmers on short-term crop loans in order to make sure the availability of crop loans to farmers for loans up to Rs 300,000 at 7% per annum. The cabinet has also approved the proposal to grant interest subvention to small and marginal farmers having Kisan Credit Card for loan against negotiable warehouse receipts for post harvest at 7% interest for a period of 6 months.