Mumbai: Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday increased collateral-free agriculture loans’ limit to Rs 1.6 lakh from Rs 1 lakh. Das said: “Agricultural loan without collateral was fixed in 2010. Keeping in view the overall inflation and rise in agriculture input costs, it has been decided to raise the limit for collateral-free agriculture loans from Rs 1 lakh to Rs 1.6 lakh, he added. Before arriving at this figure, there was an internal accounting done, he added. Das said, “We will be issuing the circular within a week or so,” when asked about the timeline for availing this loan.
Sunil Mehta, Chairman, Indian Banks’ Association (IBA) and MD and CEO, Punjab National Bank, said, “Increase in the limit of the collateral free agriculture loans will help farmers get more credit from the formal institutions and is in sync with pro-farmer policy of the government.” Apart from enhancing credit limit, RBI will also be setting up an internal working group to review agricultural credit to find out a “workable solutions and policy initiatives”.
RBI said that although agricultural credit growth has been significant over the years, issues like regional disparity and extent of coverage have remained. “There is also the issue of deepening long-term agricultural credit for capital formation. To examine these issues and arrive at workable solutions and policy initiatives, an internal working group to review agricultural credit has been constituted,” it said.
