To encourage prompt repayment of bank loans, the Government will continue with the additional three per cent interest subvention scheme for farmers, said the Finance Minister, Mr Pranab Mukherjee.
Under the existing interest subvention scheme, farmers get short-term crop loans at seven per cent interest. If the loan to the bank is promptly paid then the effective rate of interest to the farmer works out to four per cent a year due to the additional interest subvention.
“The Government is giving interest subvention to improve the loan repayment culture in the farm segment. The agriculture debt waiver and debt relief of 2009 had marred the repayment culture,” said a senior public sector bank official.
Subvention against warehouse receipts
The Government said it will give a three per cent subvention on post-harvest loans up to six months against negotiable warehouse receipt. This will encourage the farmers to keep their produce in warehouses.
Bank Credit
In the Budget, the Finance Minister said that banks will have to lend Rs 1 lakh crore to the agriculture in FY2013. “Farmers need timely access to affordable credit. I propose to raise the target for agricultural credit in 2012-13 to Rs 5,75,000 crore (from Rs 4,75,000 crore in 2011-12),” he said.
KCC
Kisan Credit Card (KCC) scheme will be modified to make it a smart card which could be used at ATMs. The card is an effective instrument for making agricultural credit available to the farmers.