Cabinet approves continuation of interest subvention scheme for farmers
New Delhi, May 28: The Union Cabinet on Wednesday approved the continuation of the Modified Interest Subvention Scheme (MISS) for the financial year 2025-26, aimed at providing affordable short-term credit to farmers through the Kisan Credit Card (KCC) platform.
Information and Broadcasting Minister Ashwini Vaishnaw announced the decision, stating that the scheme would continue with the existing 1.5 per cent interest subvention. The move will involve an estimated financial outlay of ₹15,640 crore.
MISS, a Central Sector Scheme, facilitates the availability of short-term loans up to ₹3 lakh at a subsidized interest rate of 7 per cent, with eligible lending institutions receiving a 1.5 per cent interest subvention. Additionally, farmers who repay their loans promptly are eligible for a Prompt Repayment Incentive (PRI) of up to 3 per cent, effectively reducing their interest rate to 4 per cent.
For loans taken exclusively for animal husbandry and fisheries, the interest subvention benefit is applicable for amounts up to ₹2 lakh.
According to an official release, the structure and components of the scheme remain unchanged. There are currently more than 7.75 crore KCC accounts across the country.
The continuation of the scheme is seen as crucial for maintaining the steady flow of institutional credit to the agriculture sector, thereby supporting productivity, financial inclusion, and especially benefiting small and marginal farmers.
Data shows that institutional credit disbursed through KCC increased from ₹4.26 lakh crore in 2014 to ₹10.05 lakh crore by December 2024. Overall agricultural credit flow also witnessed significant growth, rising from ₹7.3 lakh crore in 2013-14 to ₹25.49 lakh crore in 2023-24.
The release noted that in view of current lending trends, including movements in the median Marginal Cost of Funds-based Lending Rate (MCLR) and repo rate, retaining the 1.5 per cent interest subvention is vital for supporting rural and cooperative banks and ensuring continued access to affordable credit for farmers.
The Cabinet’s decision, it added, reaffirms the government’s commitment to doubling farmers’ income, strengthening the rural credit ecosystem, and promoting agricultural growth through timely and low-cost financial support.
