Kisan Credit Card subsidy faces a 50 bps cut
The Indian government is considering cutting the interest subvention rate on Kisan Credit Card (KCC) loans by 50 basis points, in line with the Reserve Bank of India's (RBI) recent reduction in policy rates. The KCC scheme, which provides short-term loans to farmers, is currently subsidized by the government at a rate of 1.5% on loans up to ₹3 lakh.
With policy rates falling, the government aims to pass on this reduced interest subvention to banks, allowing them to offer KCC loans at a lower interest rate of 7%. The discussions with banks are still preliminary, but the government is confident that banks can absorb this change due to the declining marginal cost of funds-based lending rate (MCLR).
The scheme, which was extended until 2031-32, has a total subsidy outlay of ₹1.87 lakh crore till 2024-25, with ₹22,600 crore allocated in the 2026-27 budget.
Written by urgent.news from The Economic Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
