In a major move to sustain agricultural growth and empower farmers, the Union Cabinet has approved the continuation of the Modified Interest Subvention Scheme (MISS) for FY2025–26. This extension ensures that farmers will continue receiving 1.5 percent interest subvention on short-term crop loans up to Rs. 3 lakh, disbursed via the Kisan Credit Card (KCC) platform.
Key Benefits of Modified Interest Subvention Scheme for Farmers:
- Low-Interest Loans: Farmers repaying on time will benefit from a reduced effective interest rate of just 4 percent, inclusive of a 3 percent Prompt Repayment Incentive (PRI): one of the lowest globally.
- Easy & Flexible Credit: The KCC system offers revolving credit access for up to 5 years, allowing farmers to withdraw funds as per their crop cycle and working capital needs.
- Natural Calamity Relief: In case of adverse events like floods or droughts, interest relief will continue for 1 year, and for up to 5 years in cases of severe disasters.
- Support for Small and Marginal Farmers: With 76 percent of agri-credit accounts held by small and marginal farmers, this scheme continues to be a lifeline for those who form the core of India’s agricultural sector.
- Collateral-Free Loans: Farmers can avail loans up to Rs. 2 lakh without providing any collateral, promoting financial inclusion.
- Boost to Agricultural Productivity: Easy access to credit means better adoption of quality seeds, fertilizers & equipment, leading to higher yields and better incomes.
Positive Outcomes So Far:
- Significant Credit Growth: Credit through KCC more than doubled from Rs. 4.26 lakh crore in 2014 to Rs. 9.81 lakh crore in 2024. In addition, total agricultural credit flow has increased from Rs.7.3 lakh crore to Rs.25.49 lakh crore in the same period.
- Increased Formal Credit Use: Over 75 percent of agricultural credit now comes through institutional sources, reducing farmers’ reliance on informal moneylenders.
- Improved Loan Performance: NPA in agriculture has dropped from 8.9 percent (2019) to 7.2% (2023). Also, KCC-specific NPAs improved from 12.66 percent (2021–22) to 11.5% (2023–24), indicating better repayment discipline.
Future Plans
Looking to the future, the Center is actively considering an increase in the KCC loan limit to Rs. 5 lakh, as announced in the Union Budget 2025. While that proposal is under review, the current Cabinet decision ensures uninterrupted credit support to millions of farmers under the existing provisions.