Cabinet Okays Interest Subsidy On Farmers' Loans For 2025-26

((MENAFN- IANS) New Delhi, May 28 (IANS) The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved the continuation of the interest subvention component under the modified interest subvention scheme (MISS) for loans to farmers during the financial year 2025-26, and approved the required fund arrangements, according to an official statement issued after the meeting.

MISS is a Central sector scheme aimed at ensuring the availability of short-term credit to farmers at an affordable interest rate through Kisan credit cards (KCC).

Under the scheme, farmers receive short-term loans of up to Rs 3 lakh through kisan credit cards at a subsidised interest rate of 7 per cent with 1.5 per cent interest subvention provided to eligible lending institutions.

Additionally, farmers repaying loans promptly are eligible for an incentive of up to 3 per cent as a prompt repayment incentive, effectively reducing their interest rate on KCC loans to 4 per cent.

For loans taken exclusively for animal husbandry or fisheries, the interest benefit is applicable up to Rs 2 lakh.

No changes have been proposed in the structure or other components of the scheme, according to an official statement.

There are more than 7.75 crore KCC accounts in the country. The continuation of this support is critical to sustaining the flow of institutional credit to agriculture, which is vital for enhancing productivity and ensuring financial inclusion for small and marginal farmers.

Institutional credit disbursement through KCC has increased from Rs 4.26 lakh crore in 2014 to Rs 10.05 lakh crore by December 2024. Overall agricultural credit flow also rose from Rs 7.3 lakh crore in FY 2013-14 to Rs 25.49 lakh crore in FY 2023-24, the statement said.

Digital reforms such as the launch of the Kisan Rin Portal in August 2023 have enhanced transparency and efficiency in claim processing.

Given the current lending cost trends, median MCLR and repo rate movements, retaining the interest subvention rate at 1.5 per cent remains essential to support rural and cooperative banks and ensure continued access to low-cost credit for farmers, the official statement said.

"The Cabinet's decision reinforces the Government's unwavering commitment to doubling farmers' income, strengthening the rural credit ecosystem, and boosting agricultural growth through timely and affordable credit access," the statement added.

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