RBI seeks details from Scheduled Banks on Subvention scheme

Mumbai, July 14 (UNI) The Reserve Bank of India has sought details from Public sector banks on short term crop loans extended by them to farmers at seven per cent, under the two per cent interest subvention Scheme announced by the Union government.

In a circular to all Public sector banks, the RBI said that the Government would provide interest sub vention of two per cent to them in respect of short term production credit upto Rs three lakh, provided to farmers. Finance Minister P Chidambaram had in his budget for the current fiscal indicated that the scheme would be continued this year also with a provision of Rs 1,600 crore for interest subvention.

RBI said the amount of subvention will be calculated on the amount of crop loan disbursed from the date of disbursement/drawal up to the date of payment or up to the date, beyond which the outstanding loan becomes overdue that is on March 31, 2009 for Kharif and June 30, 2009 for Rabi, respectively, whichever is earlier. This subvention would be available to Public Sector Banks on the condition that they make available short-term credit at ground level at seven per cent per annum.

Banks have been advised to immediately submit their estimates of short-term production credit to farmers of up to Rs three lakh for Kharif and Rabi 2008-09 (separately) to enable RBI to provide Government with an estimate of the likely amount of subvention. The estimates should be realistic in nature, it said.

UNI VK SR AG1955