In a notification, the Reserve Bank of India asked the banks to extend the benefit of IS and PRI for short-term crop loans to farmers.
The Reserve Bank of India on May 23, 2020 had permitted all lending institutions to extend moratorium on repayment of loans by another three months (up to August 31, 2020) in wake of the extension of lockdown and continuing disruption on account of COVID-19 pandemic.
“In order to ensure that farmers do not pay higher interest during the extended moratorium period, the government has decided to continue the availability of 2 per cent IS and 3 per cent PRI to farmers for the extended period of repayment up to August 31, 2020 or date of repayment, whichever is earlier,” the central bank said in the notification.
The benefit, the RBI said, will be applicable to all short-term loans for Agriculture and Animal Husbandry, Dairy and Fisheries (AHDF) up to Rs 3 lakh per farmer (up to Rs 2 lakh for AHDF farmers).
In order to provide short-term crop loans up to Rs 3 lakh to farmers at an interest rate of 7 per cent per annum, the government offers interest subvention of 2 per cent per annum to banks.
An additional 3 per cent interest subvention is provided to farmers who pay their loans promptly. For such farmers, the effective interest rate is 4 per cent.