Following the recent demonetization of Specified Bank Notes (SBNs) the central government is seized of the constraints faced by the farming community in repayment of loan dues within the prescribed time limit.
Appreciating the requirement for some more time by the farmers to repay their loan dues, the Government has on the lines of Reserve Bank of India (RBI) circular dated 21st November, 2016 decided to provide an additional grace period of 60 days to such of the farmers, whose crop loan dues fall due between November 1, 2016 and December 31, 2016 and if such farmers repay the same within 60 days with effect from the date on which the repayment was due, they will be eligible for prompt repayment incentive for 2016-17.
With a view to provide stimulation to the rural sector and farming community, the Government provides crop loans at subvented rates of interest @ 7 per cent per annum at the ground level.
An added incentive of 3 per cent per annum is provided to the farmers for prompt repayment of loans within due date and up to a maximum period of one year.
The prompt payee farmers in effect avail short term crop loans @ 4 per cent per annum. This prompt repayment incentive however does not accrue to those farmers who repay after one year of availing such loans.