Quick answerRBI modifies interest subvention scheme for short term agriculture loans through Kisan Credit Card for 2025-26, providing 1.5% interest subvention and additional 3% for prompt repayment.
What changed
The Modified Interest Subvention Scheme has been continued for the financial year 2025-26 with some stipulations. The scheme provides interest subvention to lending institutions on short term crop loans and allied activities up to ₹3 lakh. The applicable lending rate to farmers is 7% and the rate of interest subvention is 1.5%. An additional 3% interest subvention is provided for prompt repayment.
What it means for you
The modified scheme aims to provide relief to farmers by reducing the interest burden on short term loans. The additional interest subvention for prompt repayment encourages farmers to repay loans on time. The scheme also provides benefits for small and marginal farmers to store their produce in warehouses, discouraging distress sale.
The rule, in the simplest words
The RBI continues the Modified Interest Subvention Scheme for short term agriculture loans through Kisan Credit Card for 2025-26.
The scheme provides 1.5% interest subvention and an additional 3% for prompt repayment.
The applicable lending rate to farmers is 7% and the interest subvention is capped at ₹3 lakh.
How it plays out — a real example
{'description': "Rahul, a gold-loan officer in Indore, helps a farmer repay his loan on time and receives an additional 3% interest subvention, reducing the farmer's interest burden.", 'scenario': 'Rahul explains to the farmer that repaying the loan on time will result in an additional 3% interest subvention, which will be deducted from the total interest amount. The farmer agrees to repay the loan on time, and Rahul processes the payment, ensuring the farmer receives the benefits of the modified interest subvention scheme.'}
What you must do
Review the modified interest subvention scheme for 2025-26
Update lending rates and interest subvention calculations
Inform farmers about the benefits of prompt repayment
Ensure compliance with the scheme's stipulations
Who it affects
Public Sector Banks, Private Sector Banks, Small Finance Banks, Farmers with Kisan Credit Card
What is the applicable lending rate to farmers under the scheme?
7%
What is the rate of interest subvention for lending institutions?
1.5%
Is there an additional interest subvention for prompt repayment?
Yes, 3% per annum
📜 Read the original circular — full text as issued by RBI
RBI/2025-26/193
FIDD.CO.FSD.BC.No.10/05.02.001/2025-26
January 13, 2026
The Chairman/Managing Director/Chief Executive Officer
All Public Sector Banks, Private Sector Banks and
Small Finance Banks
Madam/Dear Sir,
Modified Interest Subvention Scheme for Short Term Loans for Agriculture and Allied Activities availed through Kisan Credit Card (KCC) during the financial year 2025-26
Please refer to our circular FIDD.CO.FSD.BC.No.8/05.02.001/2024-25 dated August 06, 2024 conveying the decision of the Government of India for continuation of the Modified Interest Subvention Scheme for short term loans for agriculture and allied activities for the year 2024-25.
2. In this regard, it is advised that Government of India has approved the continuation of the Modified Interest Subvention Scheme (MISS) for the financial year 2025-26 with the following stipulations:
(i) In order to provide short term crop loans and short term loans for allied activities including animal husbandry, dairy, fisheries, bee keeping etc. upto an overall limit of ₹3 lakh to farmers through KCC at concessional interest rate during the year 2025-26, it has been decided to provide interest subvention to lending institutions viz. Public Sector Banks (PSBs) and Private Sector Banks (in respect of loans given by their rural and semi-urban branches only), Small Finance Banks (SFBs) and computerized Primary Agriculture Cooperative Societies (PACS) ceded with Scheduled Commercial Banks (SCBs), on use of their own resources. This interest subvention will be calculated on the loan amount from the date of its disbursement/drawal/renewal up to the date of actual repayment of the loan by the farmer or up to the tenure/ due date/renewal of loans fixed by the banks/PACS, whichever is earlier, subject to a maximum period of one year. The applicable lending rate to farmers and the rate of interest subvention for the financial year 2025-26 will be as follows:
Financial Year
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2025-26/193 · issued 13 Jan 2026. The plain-English explanation above is BankPulse’s own independent summary.
Test yourself
Quick self-check built only from the facts already on this page — tap a question to reveal the answer.
Q1. In one line, what does this circular do?
RBI modifies interest subvention scheme for short term agriculture loans through Kisan Credit Card for 2025-26, providing 1.5% interest subvention and additional 3% for prompt repayment.
Q2. Who does this circular apply to?
Public Sector Banks, Private Sector Banks, Small Finance Banks, Farmers with Kisan Credit Card
Q3. What is the first thing you should do about it?
Review the modified interest subvention scheme for 2025-26
Related circulars · Financial Inclusion & Priority Sector
Review the modified interest subvention scheme for 2025-26
Update lending rates and interest subvention calculations
Inform farmers about the benefits of prompt repayment
Ensure compliance with the scheme's stipulations
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (Public Sector Banks, Private Sector Banks, Small Finance Banks, Farmers with Kisan Credit Card), your first concrete step on “Modified Interest Subvention Scheme” is: “Review the modified interest subvention scheme for 2025-26” (RBI issued this 13 Jan 2026).
Action required: Review the modified interest subvention scheme for 2025-26
Action required: Update lending rates and interest subvention calculations
Action required: Inform farmers about the benefits of prompt repayment
Action required: Ensure compliance with the scheme's stipulations
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
AI-drafted · 1-model AI consensus fact-check · under the editorial review of our expert review panel · decoded & published by BankPulse · 06 Jul 2026, 15:17 IST
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13270&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert review panel. Independent platform, not affiliated with the Reserve Bank of India; never reproduces RBI text verbatim.
Help us keep this accurate
Found an inaccuracy or have an improvement? Tell us. Every report is reviewed by our team before any change is made — nothing goes live unverified.
Public beta — plain-English informational summaries. Always verify against the official RBI source (circular number cited on every page) before making compliance, credit, treasury, audit, or operational decisions. · Join our WhatsApp channel ↗
BANKPULSE · FREE DAILY BRIEF
Get RBI updates for your role
Every important RBI update, decoded in plain English — for your career, exams & financial awareness.
We collect only your email, name and role, used solely to send your brief — never sold or shared. Withdraw anytime via the unsubscribe link in any email. Independent platform, not affiliated with the RBI. Information, not legal advice.
REPORT AN ERROR · BETA
Spotted an error? Earn 500 BankPulse Credits
Help us stay accurate. If your correction is verified true and approved by our founder, you earn 500 BankPulse Credits — redeemable when the platform monetises.
Reviewed by a human before any credit is awarded. We never change the site from crowd input without verification.
WANT A NEW FEATURE · BETA
What would make BankPulse more useful for you?
Tell us what to build next — a tool, a data view, a role page, anything. We read every suggestion.
Thank you — your ideas directly shape what we build.