RBI said that the farmers do not have to pay penal interest and at the same time they will continue getting the benefits of the interest subvention scheme.
In an extension to the earlier relief related to term loans moratorium, RBI has today announced that the farmers will not be charged penal interest on their crop loans till the end of May. Earlier, the RBI had given moratorium for three months on payment of installments falling due between March 1 and May 31, 2020, however, interest was accrued on the non-payment of dues. Now, with the latest announcement, RBI said that the farmers do not have to pay penal interest and at the same time they will continue getting the benefits of the interest subvention scheme.
It said that the government has decided to continue the availability of 2 per cent interest subvention and 3 per cent prompt repayment incentive for an extended period of repayment up to 31 May, or date of repayment, whichever is earlier. The decision has been taken as many farmers are not able to travel to bank branches for payment of their short term crop loan dues due to nationwide lockdown and resultant restrictions imposed on the movement of people.
Accordingly, banks are also advised to extend the benefit of interest subvention of 2 per cent and prompt repayment incentive of 3 per cent for short term crop loans up to Rs 3 lakh to farmers whose accounts have become due or it will
become due between March 1 and May 31, 2020. Meanwhile, all the other terms and conditions will remain the same. RBI’s announcement has brought a big relief to the farmers who were concerned about the increasing interest on their loans, despite the three-month moratorium announced earlier for deferring installments of EMI.