Press Information Bureau

Government of India

Ministry of Finance

04-May-2012 16:51 IST

Cooperative Credit System

The Interest Subvention Scheme is being implemented by the Government of India since 2006-07 to make short term crop loans upto Rs. 3 lakh for a period of one year available to farmers at the interest rate of 7% per annum. Interest Subvention is provided to Public Sector Banks, Regional Rural Banks and Cooperative Banks to meet the difference between the cost of their own funds and the lending rates on such loans. The Government has released Rs.1356.64 crore to cooperative banks through NABARD towards Interest Subvention between 2006-07 and 2010-11.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Lok Sabha today.

*****

SS/GN

Interest Subvention Scheme ensures subsidised short-term crop credit by compensating banks for lower lending rates. The Interest Subvention Scheme enables one-year short-term crop loans to be offered to farmers at a concessional interest rate by reimbursing Public Sector Banks, Regional Rural Banks and Cooperative Banks for the difference between their cost of funds and the lower lending rate; funds for cooperative banks have been released through NABARD under this mechanism.