State Government orders one per cent crop loan for farmers

An order to this effect was issued by the State government on Wednesday, as promised in the budget proposal 2011-12. Farmers can raise short-term crop loans up to Rs three lakh.  Hitherto, crop loans through co-operative institutions attracted an interest rate of three per cent.

Sources in the co-operation department said the low interest rate is only restricted to short-term crop loans. These are availed for a period ranging between nine months and one year, depending on the cropping pattern. If the farmer defaults in repayment, then he will be charged full bank rate for the entire loan period, the sources added.

Medium and long term crop loans will continue to attract three per cent interest with a cap of Rs 10 lakh, the sources added. Short-term loans raised since January this year (with three per cent interest) will be converted to the lower interest rate (one per cent) from April 1, the sources added.

A final decision to this effect was taken at a meeting chaired by Chief Minister Yeddyurappa which was attended by officials of the finance and co-operation departments.

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