The Reserve Bank of India (RBI) has raised the limit of collateral-free agricultural loans to Rs. 1.6 lakh from the current Rs. 1 lakh with a view to help small and marginal farmers. The central bank also decided to set up an internal working group (IWG) to review agricultural credit and arrive at a workable policy solution. Currently, the banks are mandated to extend collateral-free agricultural loans up to Rs. 1 lakh.
This limit was fixed in the year 2010. This will enhance coverage of small and marginal farmers in the formal credit system.
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