PSBs to get interest subsidy of 2% on farm loan: RBI
The Reserve Bank Friday said all public sector banks will get an interest subsidy of 2 percent per annum against short term production loan up to Rs 3 lakh to farmers.
Mumbai: The Reserve Bank Friday said all public sector banks will get an interest subsidy of 2 percent per annum against short term production loan up to Rs 3 lakh to farmers.
"Government will provide interest subvention of 2 percent per annum to Public Sector Banks (PSBs) in respect of short-term production credit up to Rs 3 lakh during the year 2012-13," RBI said in a notification.
This subvention will be available to PSBs on the condition they make available short-term production credit up to Rs 3 lakh at ground level at 7 percent per annum, it added.
The amount of subvention will be calculated on crop loan amount from the date of its disbursement/drawal up to the date of actual repayment of crop loan by the farmer of up to the date of loan fixed by banks for the repayment of loan, whichever is earlier, subject to maximum period of one year.
Also the government will provide additional interest subvention of 3 percent per annum to banks in respect of the farmers paying their loan within one year. This will be applicable on farm loans up to Rs 3 lakh.
RBI said the subvention will be applicable only if banks provide such loans at 4 percent per annum and the benefit would not include those farmers who repay after one year of availing such loans.
The government in the Budget 2012-13 had said the interest subvention scheme for providing short-term loans to farmers at 7 percent would be continued in this year.