Cabinet Extends Modified Interest Subvention Scheme to Empower Farmers

In a pivotal move aimed at bolstering the rural economy and enhancing the welfare of millions of Indian farmers, the Union Cabinet has approved the continuation of the Modified Interest Subvention Scheme (MISS) for the financial year 2025–26. This decision reaffirms the government's commitment to ensuring affordable institutional credit to the agricultural sector, especially for small and marginal farmers.

The continuation of this scheme will allow banks to receive a 1.5% interest subvention for short-term crop loans up to ₹3 lakh issued through the Kisan Credit Card (KCC) platform. Farmers repaying their loans promptly will continue to benefit from a net effective interest rate of just 4%, thanks to an additional 3% Prompt Repayment Incentive (PRI).

Key Benefits for Farmers

1. Affordable Working Capital

The scheme allows farmers to access short-term loans at just 4% interest, which remains among the lowest agricultural lending rates globally. This provides crucial working capital during critical phases of crop production—planting, fertilization, and harvesting.

2. Flexible and Revolving Credit Access

Under the Kisan Credit Card (KCC) system, farmers can avail revolving credit for up to five years, giving them the flexibility to withdraw funds as and when needed, without undergoing multiple application procedures.

3. Protection Against Disasters

In the event of natural calamities such as floods, droughts, or cyclones, interest relief is extended up to one year, and up to five years in extreme cases. This measure safeguards farmers from falling into debt traps due to unforeseen weather shocks.

4. Focus on Small and Marginal Farmers

Currently, 76% of agri-credit accounts are held by small and marginal farmers, who are often the most vulnerable. MISS ensures continued financial empowerment for this crucial demographic, which forms the backbone of Indian agriculture.

5. No Collateral for Small Loans

Loans up to ₹2 lakh are issued without the need for collateral, easing access for low-income and landless farmers and fostering financial inclusion in rural India.

6. Boosting Agricultural Productivity

Affordable and timely credit helps farmers invest in quality seeds, fertilizers, irrigation equipment, and farm machinery, leading to higher yields and better incomes.

Impact and Growth of Agricultural Credit

The decision comes at a time when agricultural credit performance has significantly improved over the past decade:

• KCC loan disbursement has more than doubled, from ₹4.26 lakh crore in 2014 to ₹9.81 lakh crore in 2024.

• Total agricultural credit flow rose from ₹7.3 lakh crore to ₹25.49 lakh crore, reflecting the effectiveness of credit-linked policies.

• The share of institutional credit now exceeds 75%, reducing farmers’ dependence on informal sources like moneylenders.

• Non-Performing Assets (NPAs) in the agriculture sector have improved, declining from 8.9% in 2019 to 7.2% in 2023.

• KCC-specific NPAs have also reduced from 12.66% (2021–22) to 11.5% (2023–24), showcasing better repayment discipline and targeted credit delivery.

Digital Innovations for Transparency: Kisan Rin Portal (KRP)

In tandem with the scheme’s extension, the government has launched the Kisan Rin Portal (KRP)—a digital platform designed to monitor and manage interest subvention claims:

• Ensures faster and transparent disbursement of subsidies to banks.

• Tracks real-time loan utilization, repayment patterns, and claim processing.

• Reduces administrative delays and promotes data-driven decision-making.

• Strengthens accountability across stakeholders—banks, borrowers, and regulators.

KRP represents a key milestone in the digitization of India’s agri-finance ecosystem and enhances trust between the government and farming communities.

Future Outlook: KCC Limit Likely to Rise

The Cabinet also reiterated the government's intent, as announced in the Union Budget 2025, to raise the KCC credit limit to ₹5 lakh. Though currently under active consideration, this prospective enhancement signals continued policy focus on empowering farmers with expanded access to credit.

A Strong Step Towards Doubling Farmers’ Incomes

The extension of the Modified Interest Subvention Scheme is not just a financial measure—it is a socio-economic intervention designed to support livelihoods, foster resilience, and modernize Indian agriculture. By ensuring low-cost, easy-to-access credit and leveraging digital tools like the KRP, the government is laying a strong foundation for inclusive rural growth and sustainable agricultural transformation.