Centre approves 1.5% interest subvention on agriculture loans of up to Rs 3 lakh

New Delhi, Aug 18 (KNN) The cabinet on Wednesday approved the proposal to restore Interest Subvention of 1.5 per cent per annum short-term agriculture loan for all financial institutions lending up to Rs 3 lakh to the farmers.

During the meeting, it was decided that the relief facility will not only be extended to the agriculture sector, but also to the fishery, animal husbandry and allied sectors. This decision by the government aims at ensuring adequate credit flow to agriculture sector.

The cabinet meeting, chaired by Prime Minister Narendra Modi also passed a decision regarding the enhancement of corpus of Emergency Credit Line Guarantee Scheme (ECLGS) by Rs 50,000 crore for increasing the limit of admissible guarantees was also taken. This will help the Covid-hit sectors such as hospitality, tourism, travel and related sectors get a much-needed relief.

“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,” Union information and broadcasting minister Anurag Thakur said.

Thakur further highlighted 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.

"While repaying the loan in time, farmers will continue to avail short-term agriculture credit at an interest rate of 4 per cent," the minister added.

The cabinet also approved the ECLGS scheme worth Rs 50,000 crore for hospitality, travel and tourism sectors.  (KNN Bureau)