The Reserve Bank of India (RBI) has increased the limit for collateral-free loans available to farmers from Rs 1.6 lakh to Rs 2 lakh per borrower. This decision was announced by Governor Shaktikanta Das after the conclusion of the Monetary Policy Committee meeting.
Governor Shaktikanta Das said, “Taking into account the rise in agricultural input costs and overall inflation, it has been decided to increase the limit for collateral-free agriculture loans from Rs 1.6 lakh to Rs 2 lakh per hour; this will further enhance credit availability for small and marginal farmers.”
Collateral-free loans allow farmers to access financing without pledging assets as security. The last revision to the collateral-free loan limit occurred in 2019 when the RBI increased the amount from Rs 1 lakh to Rs 1.6 lakh.
In February 2019, the Department of Financial Services waived charges like processing, documentation, and inspection for crop loans up to Rs 3 lakh. This was done to address the financial challenges faced by farmers.
The Kisan Credit Card (KCC) Scheme offers credit access to farmers, including tenant farmers and sharecroppers. It includes features like ATM-enabled RuPay Debit Cards, one-time documentation, and an overdraft facility within the sanctioned limit.