What changed
The Government of India continues the interest subvention scheme for 2012-13, providing 2% subvention to Public Sector Banks for short-term crop loans up to Rs.3 lakh at 7% p.a. An additional 3% subvention is available for prompt-paying farmers who repay within one year, bringing their effective rate to 4% p.a. The scheme also extends post-harvest loan subvention for up to six months against negotiable warehouse receipts for small and marginal farmers with Kisan Credit Cards.
What it means for you
Public Sector Banks must ensure short-term production credit up to Rs.3 lakh is offered at 7% p.a. to farmers to claim the 2% subvention. For prompt payers, banks can offer an effective rate of 4% p.a. and claim the additional 3% subvention. Banks need to submit half-yearly claims for the 2% subvention and a one-time consolidated claim for the 3% additional subvention by April 30, 2014, with statutory auditor certification.
What you must do
- Disburse short-term crop loans up to Rs.3 lakh at 7% p.a. to farmers to qualify for 2% subvention.
- Identify prompt-paying farmers who repay within one year and apply effective rate of 4% p.a. to claim additional 3% subvention.
- Submit half-yearly claims for 2% subvention as at September 30, 2012 and March 31, 2013, with statutory auditor certificate for the year-end claim.
- Submit one-time consolidated claim for 3% additional subvention for 2012-13 by April 30, 2014, duly audited.
- Give adequate publicity to the scheme so farmers can avail benefits.
Who it affects
All Public Sector Banks, Farmers availing short-term crop loans up to Rs.3 lakh, Small and marginal farmers with Kisan Credit Cards
What is the effective interest rate for prompt-paying farmers under this scheme?
Prompt-paying farmers who repay their short-term crop loan within one year get an additional 3% subvention, reducing the effective rate to 4% p.a. from the base 7% p.a.
What is the deadline for submitting claims for the additional 3% subvention?
Banks must submit a one-time consolidated claim for the additional 3% subvention for the entire year 2012-13 by April 30, 2014, with statutory auditor certification.
Does the subvention apply to post-harvest loans?
Yes, small and marginal farmers with Kisan Credit Cards can avail the same interest subvention on post-harvest loans up to six months against negotiable warehouse receipts for storing produce.