NEW DELHI: The Union Cabinet chaired by the Prime Minister Narendra Modi on Tuesday gave its ex-post facto approval for interest waiver for November and December months of last year for farmers accessing short-term crop loans from Cooperative Banks. In effect, the government waived Rs 660.50 crore interest on short-term crop loans.
The Prime Minister had announced this decision on his December 31 televised address on the completion of 50 days of the decision on demonetisation.
The Cabinet decision also provides for interest subvention to National Bank for Agricultural and Rural Development (NABARD) on additional refinance by it to the Cooperative Banks. “Farmers across the country availing short-term crop loans, from Cooperative Banks will benefit from the decision.
It intends to ensure availability of resources with Cooperative Banks to help farmers in easily accessing crop loans from them to overcome the difficulties in view of the reduction in the availability of cash for carrying out Rabi crop sowing,” said a senior official in the Ministry of Agriculture.
According to the Cabinet decision, additional resources are to be provided to Cooperative Banks through NABARD for refinancing to them on account of interest waiver of two months.
“This will be extended by Cooperative Banks to the farmers in the current financial year 2016-17. An additional financial liability of Rs 1,060.50 crore will be required for this purpose. A sum of Rs 15,000 crore allocated during 2016-17 to implement the Interest Subvention Scheme (ISS) has already been utilised,” added the official.
Incidentally, the Centre since 2006-07 has been implementing the Interest Subvention Scheme under which short-term crop loans up to Rs 3 lakh are made available to the farmers at an interest rate of seven per cent per annum by the Public Sector Banks, Regional Rural Banks and Cooperative Banks.
“Farmers are provided with three per cent interest subvention for short-term crop loan up to Rs 3 lakhs on prompt repayment of the loan. Thus, farmers have to effectively pay only 4% as interest for the said crop loan,” stated the official.