3 per cent interest subvention for short-term crop loans in 2008-09 – RBI Instructions
RBI has been informed by Government of India, Ministry of Finance, Department of Financial Services that the Government has approved interest subvention of 3% (instead of 2%) for the year 2008-09, as under:
The subvention of 3% per annum is available to public sector banks (PSBs), co-operative banks and Rural Regional Banks (RRBs) on their own funds used for short term credit up to Rs 3,00,000 /- provided to farmers.
Accordingly, public sector banks would be eligible for interest subvention of 3% in respect of short-term production credit up to Rs.3 lakh provided to farmers for the year 2008-09. The amount of subvention is to be calculated on the amount of the crop loan disbursed from the date of disbursement/drawal up to the date of repayment or up to the date beyond which the outstanding loan becomes overdue, whichever is earlier. This subvention is available to the Banks on the condition that they make available short-term credit at the ground level at 7% p.a.