<p>New Delhi: The union cabinet on Wednesday approved continuation of Modified Interest Subvention Scheme for 2025-26, under which farmers get upto Rs 3 lakh loan at a subsidised interest through Kisan Credit Card. </p>.<p>Briefing media after the cabinet meeting, Union Minister Ashwini Vaishnaw said the continuation of the scheme in the current financial year would cost the exchequer Rs 15,640 crore.</p>.<p>Under this central sector scheme, farmers received short-term loans of up to Rs 3 lakh through KCC at a subsidised interest rate of 7%, with 1.5% interest subvention provided to eligible lending institutions.</p>.<p>Additionally, farmers repaying loans promptly are eligible for an incentive of up to 3% as Prompt Repayment Incentive effectively reducing their interest rate on KCC loans to 4%. For loans taken exclusively for animal husbandry or fisheries, the interest benefit is applicable up to Rs 2 lakh.</p>.<p>“The continuation of this support is critical to sustaining the flow of institutional credit to agriculture, which is vital for enhancing productivity and ensuring financial inclusion for small and marginal farmers,” the Ministry of Agriculture & Farmers Welfare said in a statement.</p>.<p>There are more than 7.75 crore KCC accounts in the country. Institutional credit disbursement through KCC increased from Rs 4.26 lakh crore in 2014 to Rs 10.05 lakh crore by December 2024.</p>.<p>Overall agricultural credit flow also rose from Rs 7.3 lakh crore in FY 2013-14 to Rs 25.49 lakh crore in FY 2023-24.</p>.<p>Given the current lending cost trends, median MCLR and repo rate movements, retaining the interest subvention rate at 1.5% remains essential to support rural and cooperative banks and ensure continued access to low-cost credit for farmers.</p>.<p>MCLR or Marginal Cost of the Fund-Based Lending Rate is the minimum interest rate a financial institution needs to charge for a specific loan.</p>
<p>New Delhi: The union cabinet on Wednesday approved continuation of Modified Interest Subvention Scheme for 2025-26, under which farmers get upto Rs 3 lakh loan at a subsidised interest through Kisan Credit Card. </p>.<p>Briefing media after the cabinet meeting, Union Minister Ashwini Vaishnaw said the continuation of the scheme in the current financial year would cost the exchequer Rs 15,640 crore.</p>.<p>Under this central sector scheme, farmers received short-term loans of up to Rs 3 lakh through KCC at a subsidised interest rate of 7%, with 1.5% interest subvention provided to eligible lending institutions.</p>.<p>Additionally, farmers repaying loans promptly are eligible for an incentive of up to 3% as Prompt Repayment Incentive effectively reducing their interest rate on KCC loans to 4%. For loans taken exclusively for animal husbandry or fisheries, the interest benefit is applicable up to Rs 2 lakh.</p>.<p>“The continuation of this support is critical to sustaining the flow of institutional credit to agriculture, which is vital for enhancing productivity and ensuring financial inclusion for small and marginal farmers,” the Ministry of Agriculture & Farmers Welfare said in a statement.</p>.<p>There are more than 7.75 crore KCC accounts in the country. Institutional credit disbursement through KCC increased from Rs 4.26 lakh crore in 2014 to Rs 10.05 lakh crore by December 2024.</p>.<p>Overall agricultural credit flow also rose from Rs 7.3 lakh crore in FY 2013-14 to Rs 25.49 lakh crore in FY 2023-24.</p>.<p>Given the current lending cost trends, median MCLR and repo rate movements, retaining the interest subvention rate at 1.5% remains essential to support rural and cooperative banks and ensure continued access to low-cost credit for farmers.</p>.<p>MCLR or Marginal Cost of the Fund-Based Lending Rate is the minimum interest rate a financial institution needs to charge for a specific loan.</p>