NEW DELHI, 26 December 2025: The Government of India has operationalised an escrow account mechanism under the revised Pradhan Mantri Fasal Bima Yojana (PMFBY) guidelines, with effect from the Kharif 2025 season, aimed at ensuring timely and disciplined release of premium subsidies by states and union territories.
Under the PMFBY Operational Guidelines, 2023, states and UTs are required to commit their premium subsidy liabilities in advance by maintaining a dedicated escrow account for their share of the subsidy. The mechanism mandates the upfront release of 50% of the advance premium subsidy for each season, calculated on the basis of the corresponding premium subsidy paid in the previous season to the respective insurance companies. Subsequent instalments are to be released in line with the seasonality framework specified in the guidelines.
The escrow account mechanism is integrated with the National Crop Insurance Portal (NCIP). Insurance companies are required to confirm the receipt of the advance premium subsidy deposited by the state or UT in the escrow account through the NCIP subsidy module. Enrolment under PMFBY for the season is enabled on the portal only after such confirmation, creating a compliance-linked workflow for subsidy release and farmer enrolment.
As of Kharif 2025, 20 of the 24 states implementing PMFBY have opened escrow accounts and are actively utilising them for the deposit and disbursement of their respective shares of premium subsidies. The escrow accounts are managed by the nodal state departments, typically the agriculture or horticulture departments, and are maintained with scheduled commercial banks or cooperative banks, based on the state’s preference.
To operationalise the arrangement, states enter into a multi-party agreement involving the concerned bank and the implementing insurance companies. This structure is intended to enhance transparency, improve cash-flow predictability for insurers and reduce delays in claim settlements linked to subsidy backlogs.
Four PMFBY-implementing regions — Andaman & Nicobar Islands, Manipur, Mizoram and Sikkim — are yet to open escrow accounts under the revised framework.
Given that the escrow mechanism has only recently been rolled out from the Kharif 2025 season, the government said that a formal impact assessment of the reform is premature at this stage.
The update was provided by Minister of State for Agriculture and Farmers Welfare Ramnath Thakur in a written reply to the Rajya Sabha.