Mumbai (Maharashtra) [India], November 24 (ANI): The Reserve Bank of India (RBI) has approved the continuation of the Interest Subvention Scheme (ISS) with modification for the financial years 2022-23 and 2023-24.

The interest rate for short-term loans up to Rs 300,000 through Kisan Credit cards (KCC) for farmers will be seven per cent and interest subvention will be 1.5 per cent for the current financial year 2022-23 and the next 2023-24, RBI said in a statement on Wednesday.

In order to provide short-term crop loans and short-term loans for farming and allied activities up to an overall limit of Rs 3 lakh, it has been decided to provide interest subvention to lending institutions viz. Public Sector Banks (PSBs) and Private Sector Banks, Small Finance Banks (SFBs) and computerized Primary Agriculture Cooperative Societies (PACS) have been ceded with Scheduled Commercial Banks (SCBs).

"This interest subvention will be calculated on the loan amount from the date of disbursement/drawal up to the date of actual repayment of the 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," RBI said.

Notably, an additional interest subvention of 3 per cent per annum will be provided to those farmers repaying in time.

The interest subvention typically ensures the sustainability of credit flow in the agriculture sector as well as ensures the financial health and viability of the lending institutions and ensures adequate agriculture credit in the rural economy. (ANI)