The Union Cabinet, led by Prime Minister Narendra Modi, approved the continuation of the interest subvention component under the modified interest subvention scheme (MISS) for loans to farmers for a financial year 2025-26, and approved the necessary fund arrangements according to an official statement released after the meeting.
MISS is a Central sector scheme to ensure availability of short-term credit to farmers at an affordable interest rate through Kisan credit cards (KCC). Under the scheme, farmers are given 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 given to eligible lending institutions.
Also, farmers repaying their loans on time are given the incentive of up to 3 per cent as prompt repayment incentive, effectively reducing the interest to 4 per cent for KCC loans. Interest benefot is applicable up to Rs 2 lakh for loans availed only for animal husbandry or for fisheries. No changes in whole structure of the scheme or other aspects has been proposed, said an official statement.
India has more than 7.75 crore KCC accounts. This ongoing support is very important for sustaining an adequate channel of institutional credit to agriculture that is essential for improvement in productivity and financial inclusion of all small and marginal farmers.
Institutional credit through KCC has gone from Rs 4.26 lakh crore in 2014 to Rs 10.05 lakh crore by December 2024 – overall flow of agricultural credit has gone from Rs 7.3 lakh crore in FY 2013-14 to Rs 25.49 lakh crore in FY 2023-24.
Digital reforms, including the introduction of Kisan Rin Portal in August 2023, have increased transparency and efficiency in the claim-disbursement process.
With trajectories of MCLR and repo rates trending, it is critical to maintain the interest subvention rate at 1.5 per cent to support rural and cooperative banks and facilitate farmers’ continued access to cheap loans, the statement said.
Also Read: UP: Varanasi Dean Booked After Teacher Alleges Sexual Harassment
