RBI declared interest subvention scheme

RBI declared interest subvention scheme for Union government banks.

RBI Reserve Bank of India notified the interest subvention scheme on 13th august 2015 and asked all union government banks to provide interest concession of 2 percent on short term crop loans up to 3 lakh rupees.

The central bank in its notification said that interest subvention of 2 percent per annum will be made available to public and private sector banks provided they lend short term credit at the ground level at 7 percent per annum to farmers.

The bank said that additional interest subvention of 3 percent will be available to farmers for repaying the loan promptly from the date of disbursement of the crop loan. This implies that farmers paying promptly would get short term crop loans at 4 percent during the year 2015-16.To provide relief to farmers affected by natural calamities, the Reserve Bank has said that interest subvention of 2 percent will continue to be available to banks for the first year on the restructured amount. However, such restructured loans may attract normal rate of interest from the second year onwards.