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Kisan Credit Card: Only 4% interest on short-term KCC loans upto Rs 3 lakh if repaid in 1 year!

Kisan Credit Card Loan Interest rate 2022-2023, 2023-24: Farmers availing short-term loans through Kisan Credit Card (KCC) will have to pay only 4% interest if they repay the amount within one year

Kisan Credit Card: Only 4% interest on short-term KCC loans upto Rs 3 lakh if repaid in 1 year!
RBI has announced interest rate and subsidy for Kisan Credit Card (KCC)

Kisan Credit Card Loan Interest rate 2022-2023, 2023-24: Farmers availing short-term loans through Kisan Credit Card (KCC) will have to pay only 4% interest if they repay the amount within one year from the date of disbursement, according to an RBI notification. The Reserve Bank of India (RBI) on Wednesday (November 23) announced the interest rate for short-term loans up to Rs 3 lakh through Kisan Credit Cards (KCC).

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The short-term loan through KCC is provided for agriculture and allied activities including animal husbandry, dairy, fisheries, beekeeping etc. In a notification, the central bank said the Government has approved the continuation of the Interest Subvention Scheme (ISS) with modification for FY 2022-23 and 2023-24.

Here are all the key details from the notification:

Interest rate

The interest rate on short-term loans up to Rs 3 lakh through KCC will be 7% for farmers. The rate of interest subvention for lending institutions would be 1.5%. These rates will apply for both FY 2022-23 and FY 2023-24.

3% discount!

An additional interest subsidy of 3% would be provided to farmers for repaying the loan in time. The effective rate of interest for such farmers, therefore, would be just 4%.

“An additional interest subvention of 3% per annum will be provided to such of those farmers repaying in time, i.e., from the date of disbursement of the loan/s up to the actual date of repayment or up to the due date fixed by the banks for repayment of such loan/s, whichever is earlier, subject to a maximum period of one year from the date of disbursement,” the RBI said.

“This also implies that the farmers repaying promptly as above would get short-term crop loans and/or short-term loans for allied activities including animal husbandry, dairy, fisheries, beekeeping etc. @ 4% per annum during the financial years 2022-23 and 2023-24,” it added.

However, the above benefit would not accrue to those farmers who repay their Agri loans after one year of availing of such loans.

Interest subvention calculation

The RBI said that interest subvention will be calculated on the loan amount from the date of disbursement/withdrawal 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.

Loan for allied activities

The RBI said that interest subvention and prompt repayment incentive benefits on short-term crop loans and short-term loans for allied activities will be available on an overall limit of Rs 3 lakh per annum subject to a maximum sub-limit of Rs 2 lakh per farmer in respect of those farmers involved only in activities related to animal husbandry, dairy, fisheries, bee keeping etc.

Avoiding distress sale

To discourage distress sale of produce by farmers, the RBI said that the interest subvention interest under KCC will be available to small and marginal farmers for a further period of up to six months post the harvest of the crop against negotiable warehouse receipts on the produce stored in warehouses accredited with Warehousing Development Regulatory Authority (WDRA).

Relief from Natural calamity

To provide relief to farmers from severe natural calamities, the applicable rate of interest subvention for that year will be made available to banks for the first three years/entire period (subject to a maximum of five years) on the restructured loan amount, the RBI said.

“Further, in all such cases, the benefit of prompt repayment incentive @3% per annum shall also be provided to the affected farmers. The grant of such benefit in cases of severe natural calamities shall, however, be decided by a High Level (HLC) based on the recommendations of the Inter-Ministerial Central Team (IMCT) and Sub Committee of National Executive Committee (SC-NEC),” it added.

Aadhaar Linkage

The RBI said that the Aadhaar linkage would continue to be mandatory for availing the above-mentioned short-term loans in 2022-23 and 2023-24.

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