The Union Cabinet today gave its approval to continue interest subsidy to Public Sector Banks (PSBs), Regional Rural Banks (RRBs), Cooperatives Banks and NABARD to enable them to provide short-term crop loans up to Rs 3 lakh to farmers at 7% p.a. during the year 2012-13. It also decided to provide additional interest subsidy of 3% p.a. to those farmers who repay loans within one year of disbursement in the current fiscal year.

The Cabinet allowed the release of 10,901 crore Rupees as interest subvention for 2012-13 . Interest subsidy has also been allowed for small and marginal farmers having Kisan Credit Cards for loan against negotiable warehouse receipts for post harvest at 7% p.a. The Cabinet approved the release of 442 crore rupees as interest subsidy to small and marginal farmers having Kisan Credit Cards against negotiable warehouse receipts, for post-harvest.

AIR correspondent reports, centre has been subsidizing short-term crop loans to farmers since 2006-07 to ensure the availability of crop loans to farmers upto Rs.3 lakh at 7% p.a. Banks have been consistently meeting the target set for agriculture credit flow in the past years. For the year 2012-13, the target for agricultural credit flow has been raised to 5,75,000 crore Rs from 4,75,000 crore Rs in the year 2011-12.