The Finance Minister Shri P. Chidambaram has set a target of Rs. 8 lakh crore of Agriculture credit for the year 2014-15. Presenting the Interim Budget in the Lok Sabha today, The Union Finance Minister P. Chidambaram said that the banks will exceed the target of Rs. 7 lakh crore of Agriculture credit fixed for the current year i.e 2013-14.

The Finance Minister also announced that the interest subvention scheme shall continue in 2014-15. Under this scheme, a subvention of 2 percent and an incentive for 3 per cent for prompt payment is provided. This reduces the effective rate of interest on farm loans to 4 per cent. An amount of Rs. 23,924 crore has been released under this scheme so far.

Agriculture credit target increased; interest subvention continues reducing farm loan rates with prompt payment incentive. The Union Government set an increased Agriculture credit target for 2014-15, directing banks to expand lending to meet the national objective and signalling that the current year's target will be exceeded. The existing interest subvention scheme will continue, providing a 2 percent subvention plus a 3 percent prompt repayment incentive that reduces the effective interest rate on eligible farm loans to 4 percent; a substantial amount has already been released under the scheme.