On 13 August 2015 Reserve Bank of India notified the Union Budget 2015-16 Interest Subvention Scheme and asked all banks to provide interest concession of 2% on short term crop loans of up to Three lakh rupees.
Central bank in its notification said that interest sub-vention of 2% per-annum will be made available to public and private sector banks provided they lend short-term credit at the ground level at 7% per annum to farmers.
The bank said that additional interest subvention of 3% will be available to the farmers for re-paying the loan promptly from the date of disbursement of crop loan. This implies that farmers paying promptly would get short term crop loans at 4% during the year 2015-16.
To provide relief to farmers affected by the natural calamities.The RBI has said that interest sub-vention of 2% will continue to be available to banks for the 1st year on the restructured amount. However, such restructured loans may attract normal rate of interest from the 2nd year onwards.
Background:
The government in the Budget for 2015-16 proposed to implement interest sub-vention scheme in the 2015-16 fiscal for short-term crop. loans up to 3 lakh rupees.
After that, the Union Govt. on 21 July 2015 extended (ISS) to Public Sector Banks,private sector commercial banks, rural regional banks (RRBs), cooperative banks and NABARD.
Reserve Bank of India notified Interest Subvention Scheme
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