Union Minister Anurag Thakur said that this decision was taken to ensure adequate flow of credit in the agriculture sector. He informed after the Cabinet meeting held today, while speaking, Anurag Thakur said that the Cabinet has approved to increase the limit of emergency credit line guarantee scheme for travel, tourism and hospitality sector by Rs 50,000 crore. Good news for farmers: cabinet green signal to give loan at 1.5% interest rate.
The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the restoration of interest subvention of 1.5 per cent on short term agriculture loans for all financial institutions for lending short term agri-loansuptoRs 3 lakh to the farmers. The interest subvention of 1.5 per cent will be provided to lending institutions including public sector banks, private sector banks, small finance banks, regional rural banks, cooperative banks, and computerised PACS for financial year 2022-23 to 2024-25.
The cabinet’s approval of interest subvention will require additional budgetary provisions of Rs 34,856 crore for the period. The government said that the increase in interest subvention will ensure the sustainability of credit flow in the agriculture sector as well as the financial health of the lending institutions. Banks will be able to absorb the increase in cost of funds and will be encouraged to grant loans to farmers for short terms.
This scheme will lead to the generation of employment since short-term agri-loans are provided for all kinds of activities, including animal husbandry, dairying, poultry and fisheries. While repaying the loan in time, farmers will continue to avail short-term agriculture credit at an interest rate of 4 per cent.