With the aim of increasing costs in the agricultural sector and providing financial assistance to farmers, the Reserve Bank of India (RBI) has increased the agricultural loan limit without collateral. Earlier the limit was ₹ 1.6 lakh per farmer, which has been increased to ₹ 2 lakh. This decision will be effective from January 1, 2025 and will provide loans to farmers without collateral for their agricultural and allied activities.
Key points related to agricultural loan limit
- Increase in loan limit: The limit of agricultural loan without collateral has been increased from ₹ 1.6 lakh to ₹ 2 lakh.
Benefits
- Farmers will get relief from the pressure of rising inflation and agricultural costs.
- Small and marginal farmers, who account for 86% of the agricultural sector, will get more financial assistance.
Instructions for banks
- Banks will have to implement the new policy from January 1, 2025.
- The conditions of collateral and margin will be abolished.
- Banks will have to do publicity to give full information about this decision to the farmers.
Other benefits
- Farmers will find it easier to get KCC (Kisan Credit Card) loan.
- Farmers will get the benefit of revised interest subsidy scheme of 4% interest rate on loans up to Rs 3 lakh.
- Agricultural investment will increase, which will improve their livelihood and agricultural production.
Kisan Credit Card (KCC) Loan and Interest Subsidy Scheme
Kisan Credit Card (KCC) Loan
- Simplicity in process: Under the new rules, it will be easier for farmers to get Kisan Credit Card (KCC) loan.
Importance
- KCC loans provide farmers the necessary funds for various activities related to agriculture.
- The increased loan limit will enable farmers to avail more loans without collateral, thereby helping them run their agricultural activities smoothly.
Interest Subsidy Scheme
Revised Interest Subsidy Scheme
- This initiative will work in tandem with the government’s Revised Interest Subsidy Scheme.
- Benefits: Agricultural loans up to ₹3 lakh will be available at a low interest rate of 4%.
Objectives
- To help farmers manage their financial obligations.
- To increase investment in the agricultural sector and encourage production.