Modified Interest Subvention Scheme

About Modified Interest Subvention Scheme: 

• It is a Central Sector Scheme, 100% funded by the Government of India.
• It was launched in the year 2006-07 with a view to provide short term Agri-loans availed by farmers through Kisan Credit Card (KCC) for their working capital requirements at concessional rate of interest.
• For this, at present, interest subvention is being given to concerned Financial Institutions (Scheduled Commercial Banks (SCBs)/ Small Finance Banks/ RRBs/ Cooperatives/ Computerized PACS ceded with SCBs) providing the loan.
• Working of the scheme
  • Farmers engaged in Agriculture and other allied activities can acquire Kisan Credit Card loans up to Rs 3 lakh at a benchmark rate of 9%.
  • However, the Centre provides 2% interest subvention on the benchmark rate, bringing down the effective rate of interest to 7 per cent.
  • An additional 3% concession for prompt and timely repayment further reduces it to 4% per year.
• The implementing agencies for settling the claims under Interest Subvention Scheme are Reserve Bank of India (RBI)/National Bank for Agriculture and Rural development (NABARD).

Q1: What is a Kisan Credit Card ?

It is a government-sponsored scheme in India that provides farmers with a credit card to meet their agricultural credit requirements. It aims to provide timely and adequate credit to farmers to meet their production and investment needs.

Source: Interest subvention scheme: Govt looks to raise limit of crop loans from Rs 3 lakh to Rs 5 lakh