New Delhi
The Reserve Bank of India (RBI) has increased the limit for collateral-free agricultural loans from Rs 1.6 lakh to Rs 2 lakh, effective from January 1, 2025. This move is aimed at easing the financial strain on farmers, especially amidst rising input costs and inflationary pressures on agricultural supplies, as per the Ministry of Agriculture and Farmers Welfare.
Under this new policy, farmers can access loans for agricultural and allied activities without needing to provide collateral or meet margin requirements. The RBI has instructed banks to implement the updated guidelines swiftly, ensuring that the financial assistance reaches farmers without delay. Banks are also required to publicize the changes widely so that farmers are aware of the updated loan provisions.
This decision is expected to benefit small and marginal farmers, who make up more than 86% of the agricultural sector. By removing the need for collateral, farmers can borrow more easily, reducing borrowing costs and facilitating investment in farming operations. The move also complements the Modified Interest Subvention Scheme, which offers loans up to Rs 3 lakh at an effective interest rate of 4%.
Together, these measures enhance financial inclusion, support sustainable farming practices, and align with the government’s goal to boost agricultural growth and economic resilience.