RBI Raises Collateral-Free Loan Limit for Farmers
The RBI has raised the collateral-free loan limit for farmers from ₹1.6 lakh to ₹2 lakh, effective January 1, 2025. This measure aims to support small and marginal farmers, who constitute over 86% of India’s farming population, by easing access to credit amid rising agricultural costs. Banks will offer these loans without requiring collateral, improving access to funds, particularly via the Kisan Credit Card (KCC). The initiative aligns with the government’s Modified Interest Subvention Scheme, offering loans up to ₹3 lakh at 4% interest. This move underscores the agricultural sector's resilience, which recorded a 3.5% GDP growth in Q2 2024.
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