Mumbai: The Reserve Bank of India (RBI) has raised the collateral-free agricultural loan limit for farmers. The apex bank raised the collateral-free agricultural loan limit from Rs 1.6 lakh to Rs 2 lakh. The revised limit is effective from 1 January 2025.
The apex bank took this decision to ease financial pressures on farmers and address escalating agricultural input cost. This decision is expected to benefit millions of farmers nationwide. where Small and marginal farmers account for over 86% of the farming community.
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The new limit extends to loans for allied activities. Banks have been directed to waive collateral and margin requirements for loans within the updated threshold. The RBI has also urged banks to expedite implementation of the revised guidelines to ensure timely assistance for farmers.
The move is expected to facilitate easier access to Kisan Credit Card (KCC) loans and complement the government’s Modified Interest Subvention Scheme, which offers loans up to Rs 3 lakh at a 4 per cent effective interest rate.
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