Only Kisan Credit Card accounts will be eligible for prompt repayment incentives, a sop extended to agriculture jewel loans and short-term crop loans.
In a circular sent to all banks and agriculture credit cooperative societies it was stated that the Ministry of Agriculture and Farmer’s Welfare has decided not to encourage lending of agriculture jewel loans and short-term crop loans under the prompt repayment incentive scheme unless the loans were availed through Kisan Credit Card accounts.
The Ministry has also announced that agriculture jewel loans or short-term crop loan availed through KCC accounts would be entitled for interest subvention of 2 % in addition to the prompt repayment incentive of 3 %.
So far, agriculture jewel loans of up to ₹1 lakh having an interest rate of 7 % were eligible for prompt repayment incentive of 3 % resulting in the borrower paying just 4 % per annum as interest.
The Agriculture and Farmer’s Welfare Ministry has announced that the all agriculture jewel loans and short-term crop loans availed from October 1, 2019 would qualify for the prompt repayment incentive and interest subvention only if these loans were converted as KCC accounts on or before April 1, 2020.
“Though the interest rate for agriculture jewel loan has been increased to 9.5% per annum from the present 7% per annum, the interest subvention of 2% and another 3% as prompt repayment incentive effectively brings down the annual interest on these loans to 4.5 % per annum,” official sources said
The revised jewel loans and short-term loans with interest for agriculture are as follows: Agriculture jewel loans (AJL) of up to ₹3 lakh will attract an interest rate of 9.5% per annum and with AJLs of more than ₹3 lakh the interest rate will be 9.9%.
Similarly, short-term loans for agriculture of up to ₹3 lakh will attract an annual interest rate of 9.25% and for loans of more than ₹3 lakh the interest will be charged at 9.5% per annum.
The Ministry had also issued a note to lenders to not extend prompt repayment incentive of 3 % to agriculture jewel loans and short term crop loans taken after October 1, 2019, sources added.
