Interest Subvention Scheme-Benefits, Objectives & More.

Interest Subvention Scheme

The Government of India has launched the Interest Subvention Scheme (ISS) for farmers, which provides credit to farmers at a reduced interest rate. Under the interest subvention scheme, farmers can obtain short-term crop loans of up to Rs. 3 lakh at a 7% interest rate for one year. This article delves into the Interest Subvention Scheme (ISS).

The objective of the Scheme

The primary goal of the ISS scheme is to provide agricultural credit for short-term crop loans at an affordable rate, which was initiated to achieve high productivity and overall production in the agricultural sector and is renewed on an annual basis.

Features of the scheme

The following are some of the key features of the Government of India's Interest Subvention Scheme (ISS).

• Farmers can get crop loans worth up to Rs. 3 lakh with a 7% interest rate and a one-year repayment period.
• In the case of prompt payee farmers, short-term crop loans are available at a 4% annual interest rate. For short-term crop loans, the effective rate of interest will be around 4%.
• The amount is distributed to Public Sector Banks/Private Sector Banks (PSBs), Regional Rural Banks (RRBs), and Cooperative Banks for use of their funds, as well as to NABARD for refinancing to RRBs and Cooperative Banks.
• The NABARD-RBI-initiated scheme provides post-harvest loans for storage in accredited warehouses against Negotiable Warehouse Receipts for six months.
• If the farmer's payee does not repay the crop loan (short term) on the due date, they will be eligible for 2% interest instead of the 5% interest available above.
• The amount of the subsidy will be calculated based on the amount of the crop loan from the date of disbursement to the date of repayment.

Government Budgetary Support

During 2017-2018, the government allocated approximately Rs. 20,339 crores for interest subvention. Furthermore, beginning with the current fiscal year, this scheme will be implemented through the DBT model.

Interest subvention of Post-Crops Loans

Post-harvest loans for storage in authorized warehouses secured by Negotiable Warehouse Receipts (NWRs) are made as a safeguard against distress sales. Loans of up to 6 months are available for KCC-owned small and marginal farmers. This scheme will be implemented by NABARD and the RBI for one year.

The central government has allowed a 2% interest subsidy (i.e., an effective interest rate of 7%) for farmers who must borrow 9% for post-harvest warehouse storage of their products for up to 6 months.

Interest Subvention under Deendayal Antyodaya Yojana 

The interest subvention provision under DAY-NRLM is primarily intended to cover the difference between the lending bank's rate and 7%.

This is available in two ways:

• Banks in identified countries will lend 7 percent up to a total loan amount to women SHGs. On timely payment, SHGs will receive an additional 3% interest subvention, bringing the interest rate down to 4%.
• DAY-NRLM compliant women SHGs will be registered with SRLMs in the remaining districts. The SHGs are eligible for interest subsidies up to the difference between the lending amounts and 7% for loans up to Rs. 3 lakhs, subject to the norms set by the respective SRLMs. SRLMs will carry out this aspect of the scheme.

For more information on Deen Dayal Antyodaya Yojana follow the link: Everything You Need To Know About Deen Dayal Antyodaya Yojana.  

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