Maharashtra CM Uddhav Thackeray asks Centre to restore 2 pc interest subvention scheme for farmers

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Maharashtra Chief Minister Uddhav Thackeray on Monday urged the Centre to restore the 2 per cent interest subvention facility for farmers which was withdrawn last year, saying the measure was required to protect the interest of cultivators.

In a letter to Union Agriculture Minister Narendra Singh Tomar, Thackeray said a circular of the farm ministry and NABARD (National Bank for Agriculture and Rural Development) earlier this year stated that the 2 per cent interest subvention scheme for short-term crop loan has been modified and it has been conveyed that the benefit of the subsidy will not be available from the fiscal 2022-23.

“This (discontinuation of scheme) will have an adverse impact on the financial position of cooperative banks and in turn will have serious negative impact on the distribution of short-term crop loan to the farmers of the state,” he said in the letter.

Thackeray said under the scheme, the central government had made 2 per cent interest subvention or subsidy available to cooperative as well as nationalized banks which enabled these lending institutions to disburse short-term crop loan to farmers at confessional rate.

This interest subvention scheme was specially helpful to cooperative banks which have larger connect with farmers, the chief minister said.

At present, cooperative banks/district cooperative central banks in the state are offering interest rate on deposits ranging from 3 per cent to 7.75 per cent per annum. These banks are also required to maintain statutory reserves like CRR (cash reserve ratio), SLR (statutory liquidity ratio) and other financial parameters as per RBI guidelines, he said.

Considering these factors, district cooperative central banks in the state find it difficult to lend to farmers at 7 per cent interest without subvention from the central government, Thackeray said.

He said the issue was on Monday discussed at a meeting of the state-level bankers committee (SLBC) where it was unanimously resolved to request the Centre to restore the interest subvention facility for agriculturists.

Considering all factors, Thackeray said in the letter there was an immediate need to review the decision of withdrawal of the interest subvention as it will adversely impact more than 70 lakh farmers in the state.

In order to provide short-term crop loans up to Rs 3 lakh to farmers at an interest rate of 7 per cent per annum, the central government offers interest subvention of 2 per cent annually to banks. An additional 3 per cent interest subvention was being provided to farmers who pay their loans promptly. For such farmers, the effective interest rate was 4 per cent. PTI MR RSY