Tuesday, September 27, 2022

Cabinet approves interest subvention of 1.5 per cent per annum on Short Term Agriculture Loan upto Rs 3 lakh

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Cabinet has approved interest subvention of 1.5 percent on Short Term Agriculture Loan upto three lakh rupees.

Information and Broadcasting Minister Anurag Thakur said the decision has been taken to ensure adequate credit flow in agriculture sector.

He said the interest subvention of 1.5 percent will be provided to lending institutions i.e. banks, by the government. This increase in Interest Subvention support requires additional budgetary provisions of 34 thousand 856 crore rupees for the period of 2022-23 to 2024-25 under the scheme.

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Kisan Credit Card (KCC)

The Kisan Credit Card (KCC) scheme is a credit scheme introduced in August 1998 by Indian public sector banks to issue kisan credit card to the farmers of India. This model scheme was prepared by the National Bank for Agriculture and Rural Development (NABARD) on the recommendations of the R. V. Gupta Committee to provide advances for agricultural needs.

Its objective was to meet the comprehensive credit requirements of the agriculture sector and by 2019 for fisheries and animal husbandry by giving financial support to farmers.

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Participating institutions include all commercial banks, Regional Rural Banks, and state co-operative banks. The scheme entails short-term credit for crops and term loans.

KCC credit holders are also covered under personal accident insurance up to ₹50,000 for death and permanent disability, and up to ₹25,000 for other risks.

The premium is borne by both the bank and the borrower in a 2:1 ratio.  The validity period is five years, with an option to extend it up to three more years.

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Kisaan Credit Card (KCC) credit to the farmers is of two types –

  1. Cash Credit (for working capital)
  2. Term Credit (for capital expenditure such as the purchase of cattle, pump sets, land development, plantation, drip irrigations, etc.

Apart from this, Government has also approved enhancement of limit of Emergency Credit Line Guarantee Scheme by 50 thousand crore rupees for Travel, Tourism and Hospitality sector. Hospitality and related sectors will get a boost from this decision. The increase has been done due to the severe disruptions caused by COVID pandemic on hospitality and related enterprises.

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