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RBI Raises Collateral-Free Agricultural Loan Limit to ₹2 Lakh

14 Dec 2024 2:08 pm
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MUMBAI, 14 Dec (Commoditiescontrol): The Reserve Bank of India (RBI) has taken a significant step to support farmers and address rising agricultural costs by increasing the limit for collateral-free agricultural loans. The current loan limit of ₹1.6 lakh per borrower will be raised to ₹2 lakh, effective January 1, 2025. This change aims to provide greater financial access to farmers, enabling them to meet their operational and developmental needs without the burden of offering collateral.

Acknowledging the impact of inflation and the increasing cost of inputs, the RBI’s decision is expected to benefit small and marginal farmers, who make up more than 86% of the agricultural sector. By removing collateral requirements, the initiative reduces borrowing costs, making credit more accessible to farmers.

Under the revised guidelines, banks across the country are required to:

Waive collateral security and margin requirements for loans up to ₹2 lakh per borrower.
Implement the changes promptly to ensure timely financial assistance.
Actively promote the new policy to raise awareness among farmers and stakeholders.

This move is expected to enhance the uptake of Kisan Credit Card (KCC) loans, allowing farmers to invest in better farming practices, increase productivity, and improve their livelihoods. Coupled with the Modified Interest Subvention Scheme, which offers loans up to ₹3 lakh at an effective interest rate of 4%, the policy underscores the government’s commitment to supporting the agricultural sector and fostering sustainable, credit-driven growth.

By streamlining loan processes and expanding credit accessibility, the initiative aligns with India’s vision of empowering farmers and strengthening the agricultural economy, ensuring long-term development and financial inclusion.

(By Commoditiescontrol Bureau; +91 98201 30172)


       
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