What changed
The 2% interest subvention scheme for short-term crop loans, announced in the Union Budget 2007-08, is extended for the fiscal year 2007-08. Public sector banks must now submit half-yearly claims for subvention on loans up to Rs.3 lakh, with a statutory auditor's certificate for the full year.
What it means for you
Banks will receive a 2% p.a. subvention from the government on short-term production credit up to Rs.3 lakh to farmers, provided they lend at 7% p.a. This reduces the effective cost of funds for banks on these loans. Claims must be realistic and submitted on time to avoid delays in reimbursement.
What you must do
- Submit realistic estimates of short-term production credit for Kharif and Rabi 2007-08 separately to RBI immediately.
- Disburse short-term crop loans up to Rs.3 lakh at 7% p.a. to farmers to qualify for subvention.
- File half-yearly subvention claims by October 31, 2007 (for half ending Sep 2007) and April 30, 2008 (for half ending Mar 2008).
- Ensure the claim for the half-year ending March 2008 includes a statutory auditor's certificate verifying the full year's claims.
- Send all claims to the Chief General Manager-in-Charge, Rural Planning and Credit Department, RBI, Central Office, Mumbai.
Who it affects
All Public Sector Banks, Farmers availing short-term crop loans up to Rs.3 lakh, RBI's Rural Planning and Credit Department
What is the interest rate farmers must be charged to qualify for subvention?
Banks must provide short-term credit at 7% per annum to farmers to be eligible for the 2% interest subvention from the government.
What is the deadline for submitting half-yearly claims?
Claims for the half-year ending September 30, 2007 must be submitted by October 31, 2007, and for the half-year ending March 31, 2008 by April 30, 2008.
What documentation is required for the final claim?
The claim for the half-year ending March 31, 2008 must be accompanied by a statutory auditor's certificate certifying the total subvention claimed for the entire year as true and correct.