RBI changes the rules for banks participating in KCC's short-term agricultural loan plan

RBI changes the rules for banks participating in KCC’s short-term agricultural loan plan

The Reserve Bank of India changed the rules for banks to claim the amount of interest subsidies paid to farmers under short-term crop credit plan via the KCC

The Reserve Bank of India (RBI) changed the rules for banks to claim the amount of interest subsidies paid to farmers under the short-term crop credit plan via the Kisan Credit Card (KCC) during the previous fiscal year.

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The Reserve Bank of India (RBI) announced in a circular that pending claims for the fiscal year 2021-22 can be submitted by June 30, 2023, and that they must be duly certified by statutory auditors “as true and correct.”
The government grants banks a 2% annual interest subsidy in order to assist farmers with short-term crop loans of up to Rs 3 lakh at a 7% annual interest rate.
Farmers that repay their loans on time will receive an additional 3% interest subsidy. The effective interest rate for these farmers is 4%.
Banks must submit their claims on an annual basis, duly certified by their statutory auditors as true and correct, within a quarter of the year’s end, according to the circular on ‘Modified Interest Subvention Scheme for Short Term Loans for Agriculture and Allied Activities availed through Kisan Credit Card (KCC)‘ during 2021-22.