Long-term refinance for investment credit for agriculture - Long Term Rural Credit Fund 2021-22 (LTRCF) – State Cooperative Banks (StCBs)

As you are aware RBI has allocated funds under LTRCF for 2021-22 to meet the long term investment credit needs of agriculture activities supported by Cooperative Banks and Regional Rural Banks (RRBs).

2. The interest rate on refinance from NABARD will be 2.90% p.a. (with quarterly rests), subject to revision by NABARD from time to time. Banks may pass on the benefit to the ultimate borrower.

3. The Circular is also available on NABARD website under the tab Information Centre.

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Long Term Rural Credit Fund 2021-22 (LTRCF)


In order to double the farmer income by 2022, we need to prioritize farmer welfare and create an environment where affordable credit is available and accessible by all farmers, in order to increase the income from agriculture and allied activities. This will create a self-sustainable and vibrant rural economy.

Capital formation in agriculture is critical to boost agriculture production and productivity. This also protects farmers from uncertainty due to weather, climate change and provide them with a sustainable income flow. Apart from that, capital formation in allied activities enables farmer to have a perennial flow of income, increasing their resilience.

To give boost to long term investment credit, Government of India set up a “Long Term Rural Credit Fund” with NABARD for providing long term refinance support for investment credit in agriculture activities exclusively for Cooperative Banks and Regional Rural Banks (RRBs).

The salient features of the scheme and important terms and conditions of providing refinance are as under:

2.Eligible institutions

All State Cooperative Banks which are eligible to avail refinance facilities from NABARD will be eligible for refinance under this line of credit, subject to their satisfying the eligibility criteria for refinance as may be stipulated by NABARD from time to time.

3.Eligibility criteria

The eligibility criteria will be applicable as specified in our policy guidelines on refinance enumerated in our Circular No. 60/DoR -11/2021 dated 12 April 2021.

However, following the RBI instruction to improve the flow of credit to the credit starved districts by banks, NABARD has allocated 25% of the corpus funds under LTRCF towards identified districts where credit flow is comparatively low (list of districts is enclosed). The utilisation in these identified districts will be monitored closely by NABARD.

4.Activities covered

All eligible investment activities under agriculture sector (excluding Self Help Groups as they are covered under NRLM / Interest Subvention Scheme) will be covered under this scheme.

5.Extent of refinance

The extent of refinance for the States in North Eastern Region (Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Sikkim), Hilly Region (Jammu & Kashmir, Himachal Pradesh, and Uttarakhand), Eastern Region (West Bengal, Odisha, Bihar, Jharkhand and Andaman & Nicobar Islands), Lakshadweep and Chhattisgarh will be 95% of eligible bank loans for all purposes. For other regions the extent of refinance will be:

(a) 95% for all thrust areas (as indicated in our refinance policy)

(b) 90% for all other diversified purposes.

6. Automatic Refinance Facility

Automatic Refinance Facility will be extended without any upper ceiling of refinance quantum, bank loan or Total Financial Outlay for all projects under agriculture sector. In case, any bank intends to avail refinance under pre-sanction procedure, they may submit projects to NABARD.

7. Interest rate

7.1 Loans to borrowers

The rate of interest on loans to ultimate borrowers will be as per RBI guidelines. Banks may however extend loans to farmers at a concessional rate of interest as compared to their normal lending for agricultural activities.

7.2 Refinance from NABARD

The interest rate on refinance from NABARD will be 2.90 % p.a. (with quarterly rests), subject to revision from NABARD from time to time. Banks may pass on the benefit to the ultimate borrower.

7.3 Penal interest

In the event of default in repayment of principal and /or payment of interest, the StCB will be liable to pay to NABARD interest on amount of default at 2% over and above the interest rate on LT refinance (Normal) for 5 years and above as prevailing on the date of default for the period for which the default persists. The penal interest rates are subject to revision from time to time.

8. Repayment period

The repayment period for refinance will be 5 years to be repaid on half yearly basis on 31 January and 31 July. Interest payment will be on quarterly basis on 01 February, 01 May, 01 August and 01 November every year.

9. Maintenance of records

Refinance extended under the LTRC Fund has to be accounted for separately and necessary records should be maintained for the purpose. The banks have to provide all information like average amount of loan, interest rate charged, processing fee charged etc. as and when called for by NABARD.

10. All the other existing terms and conditions, laid down in our operational guidelines, for availing of refinance will be applicable under the scheme.

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