May 28: In a significant move to support the agricultural sector, the Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved the continuation of the Interest Subvention (IS) component under the Modified Interest Subvention Scheme (MISS) for the financial year 2025-26. The government also sanctioned the necessary fund allocation to ensure the scheme’s uninterrupted implementation.
MISS is a Central Sector Scheme designed to provide affordable short-term credit to farmers via the Kisan Credit Card (KCC) framework. Under this scheme, farmers can avail loans of up to ₹3 lakh at a subsidized interest rate of 7%. To further ease the burden on farmers, eligible lending institutions will continue to receive an interest subvention of 1.5%.
One of the key features of the scheme is the Prompt Repayment Incentive (PRI) of 3%. This means that farmers who repay their loans on time can effectively reduce their interest rate to just 4%. The benefit also extends to those engaged in animal husbandry and fisheries, though for such allied activities, the subvention applies to loans up to ₹2 lakh.
No changes have been proposed in the existing structure of MISS for FY 2025-26. This ensures stability and continuity for millions of farmers relying on institutional credit.
Currently, over 7.75 crore Kisan Credit Card accounts exist across the country, highlighting the scheme’s vast reach. The availability of low-interest loans is particularly crucial for small and marginal farmers, aiding them in meeting seasonal agricultural requirements and ensuring financial inclusion.
The impact of institutional credit has grown significantly. Disbursements under the KCC shot up from ₹4.26 lakh crore in 2014 to ₹10.05 lakh crore by December 2024. Similarly, overall agriculture credit flow surged from ₹7.3 lakh crore in FY 2013-14 to ₹25.49 lakh crore in FY 2023-24.
Further bolstering transparency and processing efficiency, the government launched the Kisan Rin Portal (KRP) in August 2023. This digital platform streamlines claim submission and verification, ensuring timely disbursement of subvention benefits.
In the backdrop of current market lending trends, including fluctuations in MCLR and repo rates, maintaining the 1.5% interest subvention is vital to sustain credit flow through rural and cooperative banks.
The Cabinet’s decision reiterates the government’s steadfast commitment to doubling farmers’ income, expanding rural credit outreach, and boosting agricultural productivity.