Agricultural loans will receive 1.5% interest relief

New Delhi/Chennai: The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved an interest subsidy of 1.5% per annum on short-term agricultural loans for all financial institutions lending up to Rs 3 lakh to farmers. The government’s decision aims to ensure an adequate flow of credit to the agricultural sector. In addition to farmers, this interest relief facility has been extended to fisheries, livestock and related sectors.

The Cabinet has also given the go-ahead for the enhancement of the Rs 50,000 crore Emergency Credit Line Guarantee Scheme (ECLGS) corpus to increase the limit of eligible collateral. With this, it is expected that sectors affected by Covid such as hospitality, tourism, travel and related sectors will get some much needed relief. The subsidized line of credit will be immediately available to the sector.

Briefing the media after the Cabinet meeting, Union Information and Broadcasting Minister Anurag Thakur said, “The 1.5% interest subsidy will be given to lending institutions including public sector banks, private sector banks, small financial banks, regional rural banks, cooperative banks and computerized PACS for the financial year 2022-23 to 2024-25.

“This interest subsidy program will require additional budgetary provision of Rs 34,856 crore for the period. The increase in interest subsidy will ensure sustainability of credit flow in the agricultural sector as well as financial health of institutions Banks will be able to absorb the increased cost of funds and will be encouraged to provide short-term loans to farmers,” he added.

“While repaying the loan on time, farmers will continue to benefit from short-term agricultural credit at an interest rate of 4%,” the minister added.
The minister further said that the Cabinet has also approved the ECLGS scheme worth Rs 50,000 crore for the hospitality, travel and tourism sectors.

By allocating the additional amount, the limit of the ECLGS scheme has increased from Rs 4.5 lakh crore to Rs 5 lakh crore. The additional amount of Rs 50,000 crore would be applicable to businesses until March 31, 2023. The government had announced the allocation in the last budget.

As the ECLGS is an ongoing program, the allowance will be immediately available to the sectors after Cabinet approval. It is not necessary to notify it further.

In June last year, the Ministry of Finance announced a loan guarantee scheme of Rs 1.1 lakh crore, of which Rs 50,000 crore was allocated to the health sector and Rs 60,000 crore to others. sectors affected by covid, including hospitality and tourism. However, the government has not notified the program for the hotel sector and the sector has not yet received the benefits.

“Many hotel establishments cannot maintain operations without sufficient cash, but the expanded ECLGS could help businesses buy time to keep the wheels moving,” said Gurbaxish Singh Kohli, Vice President of the Federation of Hospitality Associations. hotels and restaurants in India.

Under the ECLGS, loans of Rs 3.67 lakh crore have been sanctioned till August 5, 2022 to different sectors.

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