RBI asks banks to continue with incentives on crop loans, govt to foot bill

Many farmers couldn't visit banks to pay dues on short-term crop loans in the wake of the Covid-19 lockdown and restrictions on movement of people

The Reserve Bank of India (RBI) has asked banks to continue extending the interest subvention and prompt repayment incentive (PRI) on short-term crop loans to farmers where instalment is due between March 1 and May 31, 2020.
 

Many farmers could not visit bank branches in the wake of the nationwide lockdown imposed to control the spread of the coronavirus disease (Covid -19) and the restrictions on movement of people.
 

As a part of the Covid-19 regulatory package, the RBI had granted a three-month moratorium on payment of instalments falling due between March 1 and May 31 on all term loans including short-term crop loans.

The government will continue the facility of 2 per cent interest subvention and 3 per cent PRI to farmers for the extended period of repayment up to May 31, 2020, or the date of repayment, whichever is earlier, for short-term crop loans up to Rs 3 lakh per farmer.

This will ensure that farmers do not have to pay penal interest and at the same time continue getting the benefits of the interest subvention scheme, the RBI added.
 

The government has exempted agriculture activities from restrictions imposed during the lockdown and allowed activity to ensure harvesting of rabi crop and pre-sowing goes on without hindrance.