Modified Interest Subvention Scheme for short term crop loans during 2018-19 and 2019-20
Modified Interest Subvention Scheme for short term crop loans during 2018-19 and 2019-20
Please refer to our circular No. 100 {Ref.No.NB.DoR-Policy/526/IS-1/2018-19} dated 14 May 2018 on ‘continuation of ISS for Short Term Crop Loan on interim basis during the year 2018-19’. In continuation of the same, Ministry of Agriculture and Farmers Welfare, Government of India vide letter No. 1-7/2018-Credit-I dated 11.02.2019 have conveyed continuation of interest subvention scheme during the year 2018-19 and 2019-20 in modified form. The salient features of which are as under:
1)   Interest Subvention scheme for short term crop loans during the year 2018-19 and 2019-20
a)   Government of India will provide interest subvention @ 2% p.a. to Regional Rural Banks on their own funds involved (excluding NABARD ST(SAO) refinance) in respect of short-term crop loans provided by them to farmers up to ` 3.00 lakh per farmer. The amount of interest subvention will be calculated on the crop loan amount from the date of its disbursement/drawal up to the date of actual repayment of the crop loan by the farmer or up to the due date of repayment of crop loan fixed by the bank whichever is earlier subject to a maximum period of one year. This subvention will be available to Regional Rural Banks on the condition that they make available short-term crop loan up to ` 3.00 lakh at ground level at 7% p.a.
b)    The banks may submit their claims on half yearly basis (as on 30 September 2018/2019 and 31 March 2019/2020) or on annual basis (Annexure-I). In case of half yearly   claims, first half year claim can be   submitted without Audit Certificate and the second half year ending 31st March 2019/2020 needs to be accompanied by a Statutory Auditor's certificate certifying the claims for subvention for the entire year ended 31 March 2019/2020, as true and correct. Any remaining claim pertaining to the disbursements made during the year 2018-19/2019-20 and not included in the claim for 31 March 2019/2020, may be consolidated separately and marked   as an "Additional Claim - 2018-19/2019-20” (Annexure -I) and submitted latest by 30 April 2020/2021 duly audited by Statutory Auditors certifying the correctness.
2)   Prompt paying farmers - 3% interest subvention as an incentive to farmers by GoI
a)   Government of India will also provide interest subvention @ 3% p.a. to those farmers who promptly repay their short-term crop loan within one year of disbursement / drawal of such loans. This subvention will be available to such farmers on the short-term production credit up to a maximum amount of ` 3.00 lakh availed by them during the year.  In such cases of timely loan repayment, 3% interest subvention will be calculated from the date of disbursement / drawal of the crop loan up to the actual date of repayment by farmers or up to the due date fixed by the bank for repayment of crop loan, whichever is earlier, subject to a maximum period of one year from the date of disbursement.  In order to enable the Government of India to provide 3% interest subvention to farmers for prompt repayment, the banks should first credit the eligible amount of 3% interest subvention to the farmer's crop loan account and thereafter seek reimbursement. The banks may submit their  claims on a  half  yearly  basis  (as on  30th September 2018/2019 and 31st March 2019/2020)  or  on annual  basis (Annexure-II).
b)   Any remaining claim pertaining to 3% interest subvention provided for prompt repayment in respect of disbursement made during the year 2018-19/2019-20 and due during 2019-20/2020-21 may be submitted as "Additional Claim 2018-19/2019-20 - Incentive" latest by 30 April 2020/2021 duly audited by Statutory Auditors certifying the correctness. The format (Annexure-II) for the purpose is enclosed.
c)    The guidelines issued to ensure end use of crop loans vide our circular No.175/DoR- 47 / 2015-16 dated 20 August 2015 may be kept in view while preparing interest subvention claims (copy enclosed for ready reference).
d)   Interest Subvention would be available only on credit requirement for cultivation of crops and post-harvest loan components under ST limit of KCC. Limit towards household / consumption requirement / maintenance expenses of farm assets, term loan etc. will be outside the purview of the Interest Subvention Scheme.
3)   Interest subvention to small and marginal farmers against Negotiable Warehouse Receipts
a)   In  order  to  discourage  distress  sale  by farmers,  to  encourage  them  to  store  their produce  in  warehouses, the  benefit of 2% p.a. interest  subvention  will  be  available  to banks on  their  own  funds  involved  for  extending credit  support  up  to ` 3.00 lakh  at  7% interest per annum to small and marginal farmers having  Kisan Credit  Card  for  a  period  of  up to six months  post-harvest against negotiable warehouse receipts for keeping their produce in warehouses accredited by Warehousing Development Regulatory Authority (WDRA). Subvention (incentive) for prompt repayment will not be available to the farmers for loans extended against NWRs.
b)    Banks have to submit claims season-wise, duly certified by Statutory Auditors certifying the correctness. One claim for each season i.e Kharif and Rabi may be submitted as per Annexure III.
4)  Interest Subvention on Crop Loans converted due to Natural Calamities/ Severe Natural Calamities:
To provide relief to farmers affected by natural calamities, Interest Subvention of 2% will be available to Banks for the first year on the restructured amount. Such restructured loans will attract normal rate of interest from the second year onwards as per the policy laid down by the RBI.
However, to provide relief to farmers affected by severe natural calamities, Interest Subvention of 2% will be available to Banks for the first three years/entire period (subject to a maximum of five years) on the restructured loan amount. Further, in all such cases, the benefit of prompt repayment incentive @3% per annum shall also be provided to the affected farmers. The grant of such benefits in cases of severe natural calamities shall, however, be decided by a High-Level Committee (HLC) based on the recommendation of Inter-Ministerial Central Team (IMCT) and Sub Committee of National Executive Committee (SC-NEC). 
5)   The interest subvention claims, duly audited by the Statutory Auditors about their correctness, may be submitted by the bank to the Chief General Manager / OIC of our respective Regional Offices within a quarter from the close of the half year / year.
6)   In order to curtail time lags for submission of claims, if delayed due to non- availability of Statutory Auditor, the banks may forward the claims with certification from Chartered Accountant, explicitly giving reasons for non- submission of Statutory Auditor’s Certificate.
7)   To avoid multiple loaning and to ensure that only genuine farmers avail concessional crop loan through the mechanism of gold loans, lending institutions are advised to conduct due diligence and ensure proper documentation including recording of land details even when the farmer avails gold loan for such purposes. 
8)   To ensure hassle-free benefit to farmers under Interest Subvention scheme, the lending institutions may make Aadhar linkage mandatory for availing short term crop loans during 2018-19 and 2019-20. 
9)   Further, as advised by GoI, from 2018-19 the ISS is being put on DBT mode on ‘In kind/services’ basis and all loans processed in 2018-19 onwards are required to be brought on ISS portal/DBT platform, once it is launched.
10)  Banks are advised to capture the category-wise data of beneficiaries under the Scheme and report the same on ISS portal individual farmer wise to settle the claims arising from 2018-19 onwards. Till such time the DBT portal becomes functional banks are requested to submit their claims, category-wise in manual form, as hitherto. 
11)  The Reserve Bank of India,  in consultation with Govt. is working on the detailed modalities regarding categorisation of loans. Till such time the modalities are finalised, banks may obtain the category-wise data on self-declaration basis. There should, however, be no cap on the loans given under each category. Bank may also submit the duly filled category-wise data in Annexure-IV(A) and IV(B) along with the claim.
12)   The banks are advised that wide publicity to the scheme must be given by the lending branches so that the farmers can avail the benefits of prompt repayment and loans against Negotiable Warehouse Receipts. Banks may also keep NABARD RO informed of the steps initiated by them to publicise the scheme.
Banks are hereby advised to strictly follow the timelines prescribed for submission of claims.