Building on earlier relief from the moratorium on term loans, the RBI today announced that farmers will not be charged penal interest on their crop loans until the end of May. Previously, the RBI had granted a three-month moratorium on the payment of installments due between March 1 and May 31, 2020, however, interest was accrued on non-payment of contributions. Now, with the latest announcement, RBI said that farmers do not have to pay penal interest and at the same time will continue to benefit from the interest subsidy scheme.
He said the government has decided to maintain the availability of a 2 percent interest subsidy and a 3 percent early repayment incentive for an extended repayment period until May 31, or the repayment date, whichever comes first. The decision was made because many farmers are unable to visit bank branches for payment of their short-term loan contributions due to the nationwide lockdown and resulting restrictions on the movement of people.
Accordingly, banks are also advised to extend the benefit of the 2 percent interest subsidy and the 3 percent early repayment incentive for short-term crop loans up to Rs 3 lakh to farmers whose accounts have become due or it will be
are due between March 1 and May 31, 2020. In the meantime, all other terms and conditions will remain the same. RBI’s announcement brought great relief to farmers who were concerned about rising interest on their loans, despite the three-month moratorium announced earlier on the postponement of EMI payments.