Modified Interest Subvention Scheme for Short Term Loans
Modified Interest Subvention Scheme for Short Term Loans for Agriculture and Allied Activities availed through Kisan Credit Card (KCC) during the financial years 2022-23 and 2023-24
Please refer to our circular FIDD.CO.FSD.BC.No.3/05.02.001/2022-23 dated April 28, 2022 conveying the decision of the Government of India for continuation of the Modified Interest Subvention Scheme for short term loans for agriculture and allied activities for the year 2021-22.
2. In this regard, it is advised that Government of India has approved the continuation of the Interest Subvention Scheme (ISS) with modification for the financial years 2022-23 and 2023-24 with the following stipulations:
(i) In order to provide short term crop loans and short term loans for allied activities including animal husbandry, dairy, fisheries, bee keeping etc. upto an overall limit of ₹3 lakh to farmers through KCC at concessional interest rate during the years 2022-23 and 2023-24, it has been decided to provide interest subvention to lending institutions viz. Public Sector Banks (PSBs) and Private Sector Banks (in respect of loans given by their rural and semi-urban branches only), Small Finance Banks (SFBs) and computerized Primary Agriculture Cooperative Societies (PACS) which have been ceded with Scheduled Commercial Banks (SCBs), on use of their own resources. This interest subvention will be calculated on the loan amount from the date of disbursement/drawal up to the date of actual repayment of the loan by the farmer or up to the due date of the loan fixed by the banks, whichever is earlier, subject to a maximum period of one year. The applicable lending rate to farmers and the rate of interest subvention for the financial years 2022-23 and 2023-24 will be as follows:
| Financial Year | Lending rate to farmers | Rate of Interest Subvention to Lending Institutions |
| 2022-23 | 7% | 1.50% |
| 2023-24 | 7% | 1.50% |
(ii) An additional interest subvention of 3% per annum will be provided to such of those farmers repaying in time, i.e., from the date of disbursement of the loan/s upto the actual date of repayment or upto the due date fixed by the banks for repayment of such loan/s, whichever is earlier, subject to a maximum period of one year from the date of disbursement. This also implies that the farmers repaying promptly as above would get short term crop loans and/or short term loans for allied activities including animal husbandry, dairy, fisheries, bee keeping etc. @ 4% per annum during the financial years 2022-23 and 2023-24. This benefit would not accrue to those farmers who repay their agri loans after one year of availing such loans.
(iii) Interest subvention and prompt repayment incentive benefits on short term crop loans and short term loans for allied activities will be available on an overall limit of ₹3 lakh per annum subject to a maximum sub-limit of ₹2 lakh per farmer in respect of those farmers involved only in activities related to animal husbandry, dairy, fisheries, bee keeping etc. The limit for crop loan component will take priority for interest subvention and prompt repayment incentive benefits and the residual amount will be considered towards allied activities including animal husbandry, dairy, fisheries, bee keeping etc. subject to the cap as mentioned above. (Illustrations)
(iv) In order to discourage distress sale by farmers and to encourage them to store their produce in warehouses, the benefit of interest subvention under KCC will be available to small and marginal farmers for a further period of upto six months post the harvest of the crop against negotiable warehouse receipts on the produce stored in warehouses accredited with Warehousing Development Regulatory Authority (WDRA), at the same rate as applicable to the crop loan.
(v) To provide relief to farmers affected by natural calamities, the applicable rate of interest subvention for that year will be made available to banks for the first year on the restructured loan amount. Such restructured loans will attract normal rate of interest from the second year onwards.
(vi) However, to provide relief to farmers affected due to severe natural calamities, the applicable rate of interest subvention for that year will be made available to banks for first three years/entire period (subject to a maximum of five years) on the restructured loan amount. Further, in all such cases, the benefit of prompt repayment incentive @3% per annum shall also be provided to the affected farmers. The grant of such benefit in cases of severe natural calamities shall, however, be decided by a High Level (HLC) based on the recommendations of the Inter-Ministerial Central Team (IMCT) and Sub Committee of National Executive Committee (SC-NEC).
(vii) To ensure hassle-free benefits to farmers under the ISS, Aadhar linkage would continue to be mandatory for availing the above mentioned short term loans in 2022-23 and 2023-24.
(viii) All the above mentioned short term loans processed in 2022-23 and 2023-24 are required to be brought on the ISS portal/DBT platform. Lending institutions are advised to capture and submit category-wise data of beneficiaries under the Scheme and report the same on the ISS portal, individual farmer-wise, to settle the audited claims arising from 2022-23 onwards.
3. All lending banks may submit their eligible pending audited claims of previous scheme years as well as for 2020-21, if any, to us latest by December 31, 2022.
4. Further, banks are advised to adhere to the following stipulations:
(i) In respect of interest subvention, banks are required to submit their claims on annual basis duly certified by their Statutory Auditors as true and correct, within a quarter from the close of the year. Any remaining claim pertaining to the disbursements made during the years 2022-23 and 2023-24 and not included in the claim as on March 31 of the corresponding financial year may be consolidated separately and marked as an ‘Additional Claim’ and submitted latest by June 30, 2024, and June 30, 2025 respectively, duly certified by the Statutory Auditors as true and correct.
(ii) In respect of prompt repayment incentive, banks may submit their one-time consolidated claims pertaining to the disbursements made during the years 2022-23 and 2023-24, accompanied by Statutory Auditors’ certificate certifying the claim as true and correct, within a quarter from the close of the financial year. Any remaining claim pertaining to the disbursements made during the years 2022-23 and 2023-24 and repaid promptly during 2023-24 and 2024-25 respectively, may be consolidated separately and marked as an ‘Additional Claim’ and submitted latest by June 30, 2024 and June 30, 2025, duly certified by the Statutory Auditors as true and correct.
(iii) Banks may submit their interest subvention claims relating to post-harvest credit against negotiable warehouse receipts and loans restructured on account of natural calamities/severe natural calamities, separately for each head pertaining to the disbursements made during the year, duly certified by the Statutory Auditors as true and correct.
(iv) The claims in respect of computerized PACS ceded with SCBs may be submitted separately by the respective banks with the certification that interest subvention/prompt repayment incentive is being claimed on loans for which no refinance has been availed of from NABARD, duly certified by the banks’ Statutory Auditors.
(v) The above claims may be submitted in Formats I, II, III and IV (enclosed herewith) to the Chief General Manager, Financial Inclusion and Development Department, Reserve Bank of India, Central Office, Shahid Bhagat Singh Marg, Fort, Mumbai – 400 001.
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