In view of the extension of lockdown to tackle the current pandemic, the government keeping in cognizance of the welfare of the common public had issued various notifications in the past few months. In light of the same, the government has decided to continue the facility of interest subvention of 2 per cent and prompt repayment incentive of 3 per cent to farmers till August 31, 2020 .
On April 21, 2020, vide Circular No. FIDD.CO.FSD.BC.No.24/05.02.001/2019-20, the facility of interest subvention (IS) and prompt repayment incentive (PRI) was extended till May-end. The Reserve Bank of India asked the banks to extend the benefit of interest subvention and prompt repayment incentive for short-term crop loans to farmers.
The Reserve Bank of India on May 23, 2020, had permitted-all lending institutions to extend the moratorium on repayment of loans by another three months (up to August 31, 2020) in wake of the extension of lockdown and continuous trouble & disturbances over the world due to the COVID-19 Pandemic.
In order to ensure that the farmers do not pay higher interest during the extended moratorium period. The government has decided to continue the facility of interest subvention (IS) of 2 per cent and prompt repayment incentive (PRI) of 3 per cent. To that affect, the RBI vide Circular No. FIDD.CO.FSD.BC.No.25/05.02.001/2019-20 dated June 4 and extended the period of repayment up to August 31, 2020 or date of repayment, whichever is earlier.
The above benefit is not only applicable to the farmers but also be applicable to all short term loans for Agriculture and Animal Husbandry and Fisheries (AHDF) up to Rs. 3 Lakh per farmer (up to Rs. 2 Lakh for AHDF farmers). In order to provide short-term loans up to 3 Lakh to farmers at an interest rate of 7 per cent annum, the government offers interest subvention of 2 per cent annum to banks.
Taking into consideration the above notification, the important sector i.e., food production class will get some benefits, which would help to deal with the present situation.