The interest subvention scheme for farmers aims at providing short term credit to farmers at subsidised interest rate. The policy came into force with effect from Kharif 2006-07. The scheme is being implemented for the year 2022-23 to 2024-25. The interest subvention will be given to Public Sector Banks (PSBs), Private Sector Banks, Small Finance Banks, Cooperative Banks and Regional Rural Banks (RRBs) on use of own funds and to NABARD for refinance to RRBs and Cooperative Banks. The Interest Subvention Scheme is being implemented by NABARD and RBI. Eligiblity Farmers, individuals/ Joint borrowers who are owner cultivator; Tenant farmers, oral lessees & share croppers; Self Help Groups (SHGs) or Joint Liability Group (JLG)s of farmers including share croppers etc. KCC has been made mandatory for availing the benefit of Interest Subvention on short term loans disbursed from 01.04.2020. Interest subvention for short term crop loans The Central Government provides to all farmers for short term crop loan upto one year for loan upto Rs. 3 lakhs borrowed by them. Under this scheme, the farmers can avail concessional crop loans of upto Rs.3 lakh at 7 per cent rate of interest. It also provides for an additional subvention of 3 per cent for prompt repayment within a period of one year from the date of advance. The scheme will help farmers to avail short term crop loans up to Rs. 3 lakh payable within one year at only 4 per cent per annum. In case farmers do not repay the short term crop loan in time they would be eligible for interest subvention of 2% as against 5% available above. The amount of interest subvention will be calculated on the crop loan amount from the date of its disbursement/drawal up to the date of actual repayment of the crop loan by the farmer or up to the due date of repayment of crop loan fixed by the bank whichever is earlier subject to a maximum period of one year. Interest Subvention would be available only on credit requirement for cultivation of crops and post-harvest loan components under ST limit of KCC. Limit towards household / consumption requirement / maintenance expenses of farm assets, term loan etc. will be outside the purview of the Interest Subvention Scheme. Interest subvention for post harvest loans As a measure to check distress sale, post-harvest loans for storage in accredited warehouses warehouses accredited with Warehousing Development Regulatory Authority (WDRA) against Negotiable Warehouse Receipts (NWRs) are available for upto 6 months for KCC holding small & marginal farmers. The Interest Subvention Scheme will continue for one year and it will be implemented by NABARD and RBI. In order to give relief to small and marginal farmers who would have to borrow at 9% for the post harvest storage of their produce, the Central Government has approved an interest subvention of 1.5 % i.e an effective interest rate of 7% for loans upto 6 months. Subvention (incentive) for prompt repayment will not be available to the farmers for loans extended against NWRs. Interest subvention for relief to farmers affected by natural calamities To provide relief to the farmers affected by Natural Calamities, the interest subvention of 1.5 % will be provided to Banks for the first year on the restructured amount. Such restructured loans will attract normal rate of interest from the second year onwards as per the policy laid down by the RBI. However, to provide relief to farmers affected by severe natural calamities, Interest Subvention of 2% will be available to Banks for the 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 benefits in cases of severe natural calamities shall, however, be decided by a High-Level Committee (HLC) based on the recommendation of Inter-Ministerial Central Team (IMCT) and Sub Committee of National Executive Committee (SC-NEC). Source : NABARD Interest subvention under Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-NRLM) The Ministry of Rural Development, Government of India launched the programme known as National Rural Livelihoods Mission (NRLM) by restructuring and replacing the Swarnjayanti Gram Swarozgar Yojana (SGSY) scheme with effect from April 01, 2013. NRLM was renamed as Deendayal Antyodaya Yojana – National Livelihoods Mission (DAY-NRLM) with effect from March 29, 2016. DAY-NRLM is the flagship program of Govt. of India for promoting poverty reduction through building strong institutions of the poor, particularly women, and enabling these institutions to access a range of financial services and livelihood services. The Interest subvention scheme is limited to Women Self Help Groups under DAY-NRLM in rural areas only. For loans up to Rs 3 lakh under the scheme, banks will extend credit at a concessional interest rate of 7% per annum. For outstanding credit balance up to ₹3 lakh, banks will be subvented at a uniform rate of 4.5% per annum during FY 2025-26. For loans above Rs 3 lakh and upto Rs 5 lakh under the scheme, banks will extend credit at interest rate equivalent to their 1 year-MCLR or any other external benchmark-based lending rate or 10% per annum, whichever is lower. For outstanding credit balance above ₹3 lakh and up to ₹5 lakh, banks will be subvented at a uniform rate of 5% per annum during FY 2025-26. Source : RBI