Banks may get 2% interest subsidy on farm loans

New Delhi, May 18 | Updated: May 19 2006, 05:30am hrs
The finance ministry is considering a 2% interest subsidy to scheduled commercial banks to enable them to provide farm loans at 7%. Official sources said the government is yet to take a final decision on this but would ensure that banks do not bleed.

The finance minister while presenting the Union budget had announced that farm loans will be provided at 7% with an upper limit of Rs 3 lakh. According to estimates, this may cause damage of over Rs 2,000 crore to banks.We are studying the situation and accordingly the finance ministry would take a decision on the issue, a senior government official said.