A new scheme for interest subvention for farmers is being worked out though it may take some time, the RBI said in a notification. Meanwhile, the earlier interest subvention scheme will continue till June 30 “as an interim measure” on the terms and conditions approved for the scheme for 2014-15, it added.
The apex bank further said, as regards the scheme for 2015-16, the government has advised that various alternative approaches for improving the efficacy of the scheme are being examined, the finalisation of which may take some time.
This comes a week after Prime Minister Narendra Modi announced higher compensation to farmers for damaged crops. On April 8, he announced the Centre’s decision to raise by 50 per cent the quantum of compensation to farmers affected by crop losses due to recent unseasonal rains.
Under 2014-15 scheme, interest subvention of 2 per cent per annum is available to all commercial banks on their own funds used for short-term crop loans up to ₹3 lakh per farmer provided the lending institutions made available short-term credit at 7 per cent to farmers.
The 2 per cent subvention 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.