Maharashtra Chief Minister Uddhav Thackeray writes to Centre on crop loan subsidy restoration

Discontinuing the 2% interest subvention scheme will have a negative impact on short term crop loans to farmers, he says

In what could be yet another showdown between State and Centre, Maharashtra Government has asked the Union Government to restore the 2% interest subvention scheme for short term crop loans in respect of District Central Cooperative banks (DCCB).

Maharashtra Chief Minister Uddhav Thackeray on Monday wrote a letter to Union Agriculture Minister Narendra Tomar saying that the discontinuing it would have an adverse impact on financial position of the cooperative banks and ‘in turn will have serious negative impact on the distribution of short term crop loan to the farmers in the State.’

“In fact, Govt. of India had made 2% interest subvention available to the Cooperative as well as Nationalised banks which enabled these lending institutions to disburse short term crop loan at concessional interest rate. The interest subvention was specially helpful to the Cooperative banks which have larger connect to the farmers,” the letter said.

Mr. Thackeray’s letter pointed out that without Center’s 2% subvention the DCCBs will find it difficult to lend farmers at 7% interest as they are mandated to maintain certain reserve amount as per the guidelines of the Reserve Bank of India (RBI).

On Monday, Mr. Thackeray chaired the meeting of the State Level Bankers Committee (SLBC) where an unanimous resolution was passed to request the Central government to restore the said interest subvention scheme.

The said scheme was available till financial year 2021-22 and in March 2022, the Ministry of Agriculture and Farmers Welfare conveyed that the benefits of the scheme will not be available for the fiscal 2022-23.