The bank norms have been notified by the Reserve Bank of India (RBI) with regards to interest subvention or subsidy of two per cent for short-term crop loans during 2018-19 and 2019-20. The scheme is already been approved by the union government.
Reserve Bank in its notification said that in order to provide short-term crop loans up to Rs 3 lakh to farmers at an interest rate of 7 per cent, it has been decided to offer interest subvention of 2 per cent per annum to lending institutions.
RBI added, “This interest subvention of 2 percent will be calculated on the crop loan amount from the date of its disbursement/drawal up to the date of actual repayment of the crop loan by the farmer or up to the due date of the loan fixed by the banks, whichever is earlier, subject to a maximum period of one year.”
The notification also informed that an additional 2 per cent interest subsidy will be is provided to farmers repaying loans promptly. As such, the effective rate of short-term crop loans under this scheme for the farmers would be around 4 per cent per annum.
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