Govt extends interest subsidy on small crop loans till May 31

Amid the lockdown to curb COVID-19, farmers will continue to get short-term loan of up to Rs 3 lakh at a subsidised interest rate of seven per cent, and prompt repayers will get it at four per cent as the government extended the subsidy to banks till May 31.

In a statement, the agriculture ministry said the interest subsidy has been extended to all crop loans of up to Rs 3 lakh given by banks which are due or will be due between March 1, 2020 and May 31, 2020.

The decision comes as many farmers are not being able to go to banks for payment of their loan dues on account of restrictions imposed due to the lockdown,it said.

Moreover, due to difficulties in timely sale and receipt of payment of their produce, farmers may face issues in repayment of loans which are due during this period, it added.

Under the Interest Subvention Scheme, a subvention of two per cent per annum is provided for short-term crop loan of up to Rs 3,00,000 per farmer, provided the lending institutions make available short-term credit at the ground level at seven per cent per annum to farmers.

An additional interest subvention of three per cent per annum is available to the "prompt payee farmers", thus providing loans at 4 per cent per annum interest rate on timely repayment.