Government announces farm, home loan interest subvention schemes for 2009-10

The government today operationalised the interest subvention to short-term crop loan at seven per cent per annum (six per cent for prompt payers) for loans up to an upper limit of Rs3,00,000 for the financial year 2009-10. The government, however, decided to reduce the interest subsidy on such loans to banks to two per cent from three per cent provided earlier.

This scheme is expected to cost the government Rs4,000 for the whole of the current fiscal.

The union cabinet also approved the allocation of a sum of Rs1,000 crore for the scheme of one per cent interest subvention on housing loans of up to Rs10 lakh.

The farm loan interest subvention scheme, announced in Budget 2009-10, is being operationalised through public sector banks (PSBs), cooperative banks (short-term credit) and regional rural banks (RRBs) NABARD (providing refinance to RRBs and cooperative banks).

The interest subvention scheme for housing loans will be implemented through scheduled commercial banks (SCBs) and housing finance companies (HFCs) registered with the National Housing Bank (NHB).

For the current year, the government has decided to reduce the interest subvention to two per cent to the banks on their own funds, besides giving concessional refinance through NABARD to RRBs and cooperative credit institutions.