The Honourable Finance Minister has announced in budget for 2012-13 that Interest subvention for short term crop loans of 2% will be continued this year and additional 3% subvention will be made available to prompt repayers of loan. In pursuance of this announcement, Government of India will provide interest subvention of 2 % p.a. to Public Sector Banks in respect of short-term production credit up to Rs.3 lakh during the year 2012-13. This amount of subvention will be calculated on the crop loan amount from the date of its disbursement/drawal up to the datae of acutal repaymnet of the crop loan by farmer or up to the due date of the loan fixed by the bank for repayment of loan, whichever is earlier, subject to a maximum period of one year. This subvention will be available to Public Sector Banks on the condition that they make available short-term production credit up to Rs. 3 lakh at ground level at 7% p.a.
Besides, Government of India will also provide additional interest subvention of 3% p.a. to Public Sector Banks in respect of those prompt paying farmers who repay their short-term production credit within one year of disbursement/drawal of such loans. This subvention will be available to such farmers on a maximum amount of Rs.3 lakh availed of by them during the year, 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. This additional subvention will be available to Public Sector Banks on the condition that the effective rate of interest on short-term production credit up to Rs. 3 lakh for such farmers will now be 4 % p.a. This benefit would not accrue to those farmers who repay after one year of availing such loans.
In respect of 2 % interest subvention, banks are required to submit their claims on a half-yearly basis as at September 30, 2012 and March 31, 2013, of which, the latter needs to be accompanied by a Statutory Auditor’s certificate certifying the claims for subvention for the entire year ended March 31, 2013 as true and correct.
In respect of the 3% additional subvention, banks may submit their one-time consolidated claims pertaining to the disbursements made during the entire year 2012-13 latest by April 30, 2014, duly audited by Statutory Auditors certifying the correctness.
In case of RRBs and co-operatives, a separate circular will be issued by NABARD.
