Question : Interest Rates on Agricultural Loans

(a) whether the Government has reduced the interest rates on agricultural loans provided to farmers by the Public Sector Banks (PSBs)/Cooperative Banks/ NABARD during the last three years and if so, the details thereof;
(b) whether the Government has laid down guidelines/norms for providing interest/interest free agricultural loans to the farmers and if so, the details thereof;
(c) whether instances of violation of these guidelines have been reported by various banks during the last three years, if so, the details thereof, bank-wise along with the corrective steps taken by the Government in this regard;
(d) the details and percentages of agricultural loan disbursed, target set and achieved and interest rate charged by the Bank for sanctioning of loans along with the total amount of outstanding loan against them during the last three years and the current year, State/UT-wise including Maharashtra; and
(e) the steps taken/being taken by the Government to provide affordable rate of interest on crop loans so far?

The Minister of State in the Ministry of Finance


(a) to (e): Reserve Bank of India (RBI) has deregulated the interest rate on advances sanctioned by Scheduled Commercial Banks and these interest rates are determined by banks with the approval of their respective Board of Directors subject to applicable regulatory guidelines.
However, with a view to ensure availability of agriculture credit at a reduced interest rate of 7% p.a. to the farmers, the Government of India in the Department of Agriculture Cooperation and Farmers’ Welfare (DAC&FW) implements an interest subvention scheme for short term crop loans up to Rs. 3.00 lakh. The scheme provides interest subvention of 2% per annum to Banks on use of their own resources. Besides, additional 3% incentive is given to the farmers for prompt repayment of the loan, thereby reducing the effective rate of interest to 4%.
National Bank for Agriculture and Rural Development (NABARD) has reported that they have no information on instances of violation of these guidelines. RBI has reported that complaints received by them are taken up promptly with concerned banks for remedial action. Further, as reported by RBI, there are no specific complaints regarding irregularities in interest rate on Kisan Credit Card (KCC) pending with RBI.
The State/ UT-wise agriculture credit target and loans disbursed and outstanding loans during the last three years, as reported by NABARD is at Annexure I & II.