The Union Government has approved a 1.5% interest subsidy to credit institutions (public sector banks, private sector banks, small financial banks, regional rural banks, cooperative banks directly transferred to commercial banks) for the financial year 2022-23 to 2024-25 for lending short term agricultural loans up to Rs 3 lakh to farmers at the rate of 7%.
It has earmarked nearly Rs 35,000 crore for interest subsidy scheme under which banks and other financial institutions will provide short term agricultural loans for agriculture and related businesses including dairy, poultry and the Peach.
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This increase in interest subsidy support necessitates additional budgetary provision of Rs 34,856 crore for the period of 2022-23 to 2024-25 under the scheme, said Union Minister Anurag Thakur.
To ensure that farmers pay a minimum rate of interest to the bank, the Center runs, from time to time, interest subsidy programs to provide short-term credit to farmers at rates of subsidized interest.
It will also lead to job creation as short-term agricultural loans are provided for all activities including animal husbandry, dairy farming, poultry and fisheries, according to an official statement.