(News) Loans to Farmers at Lower Interest

Loans to Farmers at Lower Interest

Government has already taken steps to provide loans to farmers at lower rate of interest. From Kharif 2006-07, farmers are receiving crop loans upto a principal amount of Rs.3 lakh at the rate of interest of 7 per cent per annum. Government is providing certain level of interest subvention to the banks on their own involvement of funds and on refinance support from National Bank for Agriculture and Rural Development (NABARD) to ensure that farmers receive short term crop loan at the rate of interest of 7 per cent. During 2009-10, Government provided additional 1 % interest subvention as incentive to those farmers who repay short term crop loans as per schedule. Government has proposed to raise this subvention for timely repayment of crops loans from 1% to 2% from the year 2010-11. Thus, the effective rate of interest for such farmers will be 5% p.a. from the year 2010-11.

The Government has not received any such report indicating that public sector banks are not advancing loans to the farmers easily due to the apprehension that such loans cannot be recovered.

Government is fixing annual agricultural credit flow targets for the Banks. Agricultural credit targets vis-a-vis achievements in respect of Commercial banks for last three years and target for the year 2010-11 is as under:

*Achievement upto 31st January, 2010.

This reply was given by the Minister of State for Agriculture, Consumer Affairs, Food and Public Distribution, Shri K.V. Thomas in written reply to a question in the Rajya Sabha today.

Courtesy: Press Information Bureau