New Delhi, Dec 14: The Reserve Bank of India (RBI) has raised the collateral-free loan limit for farmers from Rs 1.6 lakh to Rs 2 lakh, effective from January 1, 2025. This decision is designed to assist small and marginal farmers facing increasing input costs.
In accordance with the new regulation, banks across the country are required to eliminate collateral and margin conditions for loans related to agricultural and allied activities up to Rs 2 lakh for each borrower.
The agriculture ministry has stated that this action responds to the escalating costs of inputs and aims to enhance credit availability for farmers. “Over 86 percent of farmers, primarily small and marginal landholders, will considerably benefit from this initiative,” the statement noted.
Banks are mandated to promptly implement these guidelines and to promote awareness regarding the new loan policies.
This change is anticipated to simplify access to Kisan Credit Card (KCC) loans and will complement the government’s Modified Interest Subvention Scheme, which provides loans of up to Rs 3 lakh at a 4 percent effective interest rate.
This initiative is viewed as a proactive measure to bolster financial inclusion within the agricultural sector, granting farmers essential financial flexibility for agricultural investments and enhancing their livelihoods.
Agricultural experts regard this initiative as a vital step toward improving credit inclusivity and aiding agricultural economic growth, particularly in light of the inflationary pressures impacting farming input costs. (Agencies)
