RBI/2018-19/137
FIDD.CO.FSD.BC.No.15/05.02.001/2018-19

March 7, 2019

The Chairman / Managing Director & CEOs
All Public & Private Sector Scheduled Commercial Banks

Madam/Dear Sir,

Interest Subvention Scheme for Short Term Crop Loans during the years 2018-19 and 2019-20

Please refer to our circular FIDD CO.FSD.BC.No.21/05.04.001/2017-18 dated June 7, 2018 conveying continuation of Interest Subvention Scheme on the interim basis. In this regard, it is advised that Government of India has approved the implementation of the Interest Subvention Scheme with modifications for the years 2018-19 and 2019-20 for short term crop loans up to ₹ 3 lakh with the following stipulations:

1. In order to provide short-term crop loans upto ₹ 3 lakh to farmers at an interest rate of 7% p.a. during the years 2018-19 and 2019-20, it has been decided to offer interest subvention of 2% per annum to lending institutions viz. Public Sector Banks (PSBs) and Private Sector Commercial Banks (in respect of loans given by their rural and semi-urban branches only). This interest subvention of 2% will be calculated on the crop loan amount from the date of its disbursement/drawal up to the date of actual repayment of the crop loan by the farmer or up to the due date of the loan fixed by the banks whichever is earlier, subject to a maximum period of one year.
2. To provide an additional interest subvention of 3% per annum to such of those farmers repaying in time i.e. from the date of disbursement of the crop loan upto the actual date of repayment by farmers or upto the due date fixed by the banks for repayment of crop loan, whichever is earlier, subject to a maximum period of one year from the date of disbursement. This also implies that the farmers repaying promptly as above would get short term crop loans @ 4% per annum during the years 2018-19 and 2019-20. This benefit would not accrue to those farmers who repay their crop loans after one year of availing such loans.
3. In order to discourage distress sale by farmers and to encourage them to store their produce in warehouses, the benefit of interest subvention will be available to small and marginal farmers having Kisan Credit Card for a further period of upto six months post the harvest of the crop at the same rate as available to crop loan against negotiable warehouse receipts issued on the produce stored in warehouses accredited with Warehousing Development Regulatory Authority (WDRA).
4. To provide relief to farmers affected by natural calamities, an interest subvention of 2% per annum will be made available to banks for the first year on the restructured loan amount. Such restructured loans will attract normal rate of interest from the second year onwards.
5. However, to provide relief to the farmers affected due to severe natural calamities, an interest subvention of 2 percent per annum will be made available to banks for the first three years/entire period (subject to a maximum of five years) on the restructured loan amount. Further, in all such cases, the benefit of prompt repayment incentive @ 3% per annum shall also be provided to the affected farmers. The grant of such benefits in cases of severe natural calamities shall, however, be decided by a High Level Committee (HLC) based on the recommendation of Inter-Ministerial Central Team (IMCT) and Sub Committee of National Executive Committee (SC-NEC).
6. To avoid multiple loaning and to ensure that only genuine farmers avail concessional crop loan through the mechanism of gold loans, the lending institutions may conduct due diligence and ensure proper documentation including recording of land details even when the farmer avails gold loans for such purposes.
7. To ensure hassle-free benefits to farmers under Interest Subvention Scheme, banks are advised to make Aadhar linkage mandatory for availing short-term crop loans in 2018-19 and 2019-20.
8. Further, from 2018-19, the Interest Subvention Scheme is being put on DBT mode on ‘In Kind/services’ basis and all short term crop loans processed in 2018-19 are required to be brought on ISS portal / DBT platform. Banks are advised to capture and submit category wise data of beneficiaries under the scheme and report the same on ISS portal individual farmer wise once it is launched to settle the claims arising from 2018-19 onwards.

2. Banks may give adequate publicity to the above scheme so that the farmers can avail the benefits.

3. All lending banks are requested to send us the eligible pending audited claims of 2017-18 latest by August 30, 2019. Please note that under no circumstances further extension will be granted in this regard.

4. It is also advised as under:

i) Claims in respect of 2% interest subvention and 3% additional interest subvention may be sent in Formats I and II (enclosed herewith) respectively to the Chief General Manager, Financial Inclusion and Development Department, Reserve Bank of India, Central Office, Shahid Bhagat Singh Marg, Fort, Mumbai – 400 001 both in hard copy and soft copy (excel format) by email.

ii) In respect of 2% interest subvention, banks are required to submit their claims on a half-yearly basis as on September 30 and March 31 for the years 2019 and 2020, of which, the latter needs to be accompanied by a Statutory Auditor’s certificate certifying the claims for subvention for the financial year ended March 31 of the corresponding period. Any remaining claim pertaining to the disbursements made during the years 2018-19 and 2019-20 and not included in the claim for March 31, 2019 and March 31, 2020 respectively, may be consolidated separately and marked as an ‘Additional Claim’ duly certified by Statutory Auditors.

iii) In respect of the 3% additional subvention, banks may submit their one-time consolidated claims pertaining to the disbursements made during the year during 2018-19 and 2019-20 latest by April 30, 2020 and April 30, 2021 respectively, certifying the correctness of the claim by Statutory Auditors.

iv) In respect of 2% IS claims towards post–harvest credit against negotiable warehouse receipts, 2% claim on restructured loans on account of natural calamity and 2 % or 3% claim on account of severe natural calamity, banks may submit their one-time consolidated claims separately for each head pertaining to the disbursements made during the year, certifying the correctness of the claim by Statutory Auditors.

Yours faithfully,

(G.P. Borah)
Chief General Manager-in-Charge

Unified Agricultural Marketing E-Platform to be Dedicated to the Nation on 14th April this Year

The Union Finance Minister, Shri Arun Jaitley while presenting the General Budget today said that his Government intends to go beyond Food Security and give back a sense of income security to our farmers. In this regard, his Government intends to double the farmers’ income by 2022.  He allotted Rs. 35,984 crore for agriculture and farmers’ welfare. He said that his government intends to address issues of optimal utilization of water resources, create new infrastructure for irrigation, conserve soil fertility with balanced use of fertilizer and provide connectivity from farm to market.

Shri Arun Jaitley said that out of 141 million hectares of net cultivated area only about 65 million hectares are irrigated. In this regard, he announced ‘Pradhan Mantri Sinchai Yojana’, to be implemented in a mission mode to bring another 28.5 lakh hectares under irrigation.   He said that 89 projects under AIBP will be fast tracked which will help to irrigate another 80.6 lakh hectare. He promised to complete 23 of these projects before 31^st March, 2017.  These projects require Rs.17,000 crores  next year and Rs. 86,500 crore in the next five years.

The Union Finance Minister, Shri Jaitley announced to create a dedicated Long Term Irrigation Fund in NABARD with an initial corpus of Rs. 20,000 crore.  A similar progrmme for sustainable management of ground water resources, with an estimated cost of Rs.6,000 crores has been proposed for multilateral funding.  He also said that allocations under MGNREGA will be used for creating atleast 5 lakh farm pond and dug wells in rain fed areas and 10 lakh compost pits for organic manure production.

Shri Jaitley has set the target for Soil Health Card Scheme coverage to 14 crore farm holdings by March, 2017. This will help farmers to make judicious use of fertilizer. He said that 2000 model retail outlets of Fertilizer companies will be provided with soil and seed testing facilities in the next 3 years.   He announced a policy to convert city waste to compose under Swachh  Bharat Abhiyan.  Fertilizer Companies will co-market these compost .

The Union Finance Minister Shri Jaitley announced ‘Parmparagat Krishi Vikas Yojana’ for  bringing 5 lakh acres of rain fed areas under organic farming.  He launched a scheme ‘Organic value chain development in North East Region’ to make their organic produce find domestic and export markets.  Number of pulses districts under National Food Security Mission has been increased to 622.

Shri Jaitley announced that a Unified Agricultural Marketing E Platform will be dedicated to the Nation, on the birthday of Dr. Baba Saheb Ambedkar on 14^th April, this year. He also said that, the completion target of ‘Pradhan Mantri Gram Sadak Yojana’ will be advanced from 2021 to 2019, to connect the remaining 65,000 eligible habitations.

The Union Finance Minister, Shri Jaitley announced 3 specific initiatives to ensure MSP reaches to all the farmers.  First, the remaining State will be encouraged to take-up decentralized procurement.  Second, an online Procurement System will be undertaken through the Food Corporation of India.   Third, effective arrangements will be made for pulses procurement.

The Union Finance Minister, Shri Jaitley announced that four new initiatives to make dairying more remunerative to the farmers.  First, ‘Pashudhan Sanjivani’, an animal wellness programme and provision of Animal Heaalth Cards (‘Nakul Swasthya Patra’). Second, an advanced breeding technology. Third, Creation of E-Pashudhan Haat, an e market portal for connecting breeders and farmers. Fourth, a National Genomic Centre for indigenous breeds.  He said that these projects will be implemented at a cost of Rs. 850 crore over the next few years.

The Union Finance Minister, Shri Jaitley announced an allocation of Rs. 2.87 lakh crore as Grants in Aid to Gram Panchayats and Municipalities (228% increase compared to previous five years) as per the recommendations of 14^th Finance Commission.  He said that every block in the areas of drought and rural distress will be taken up under ‘Deen Dayal Antyodaya Mission’.  These districts would also be taken up for priority under ‘Pradhan Mantri Krishi Sinchai Yojana’.

Shri Jaitley announced that 300 Rurban Clusters will be developed under the ‘Shyama Prasad Mukherjee Rurban Mission’ to incubate growth centre in rural areas by providing infrastructure amenities and market access for the farmers.  He committed to achieve 100 percent village electrification by 1^st May, 2018.  He proposed to make priority allocation from centrally sponsored scheme, to reward villages that have become free from open defecation.

In order to spread digital literacy in Rural India, the Union Finance Minister, Shri Jaitley has approved 2 new Schemes viz. ‘National Digital Literacy Mission’ and ‘Digital Saksharta Abhiyan’ (DISHA).  He proposed to launch a new Digital  Literacy Mission Scheme  to cover around 6 crore additional  households has been revamped under Digital India initiative and will be implemented as a Central Sector Scheme with effect from 1^st April, 2016.  This will be critical for dispute free titles. He proposed a new structure scheme, ‘Rashtriya Gram Swaraj Abhiyan’ to help Panchayat Raj Institutions deliver Sustainable Development Goals.

Source Ministry of Finance 29-February, 2016