Interest Subvention Subsidy Scheme for MSME 2021

Interest Subvention Subsidy Scheme for MSME 2020

The central government has realized that the condition of the Indian farmers was very poor. In a bid to change the situation, the central government implemented the Interest Subvention Subsidy Scheme. As the name suggests, the project offered subsidy on the interest that the farmers had to pay for the loan. The scheme was passed by the RBI as well. It released an official statement that highlighted the banks, which came under this scheme. In this article, you will gather important details of this scheme and its benefits.


Launch details of the scheme

Name of the scheme

Interest Subvention Subsidy Scheme

Launched in


Date of announcement

2006 – 2007

Date of implementation


Target beneficiaries

Needy farmers of the country

Supervised by

Ministry of Agriculture

Key features of the scheme

  1. Boosting agriculture – Agricultural welfare schemes are implemented with the view of improving the financial status of the agricultural workers. Farming implements are becoming expensive by the day. With low interest rates, the farmers can opt for short term loan from the selected banks.
  2. Encouraging agricultural credit – The slashing the interest rate will encourage the farmers to opt for short term agricultural credits. Easy access to money will help the farmers to meet their requirements. The money can be utilized to purchase HYV seeds, fertilizers and other necessary components.
  3. Limit of the credit – The central government had announced that the benefits will be offered to those farmers who have opted for a short term and low sum agricultural credit. It has been mentioned that only those agricultural workers who have acquired Rs. 3 lakhs or less credit, will get the interest subvention.
  4. Subsidy on the interest rate – Earlier, the banks used to charge an annual interest on the credit amount at the rate of 7%. After the launch and implementation of the scheme, it was announced by the RBI that this rate has been slashed by 2%. Thus, the farmers will have to pay yearly interest at 5%.
  5. Payment tenure – The scheme also highlights that the subsidy is only applicable for short term credits. Thus, it is mandatory that the creditor pays back the agricultural loan before the completion of one year, from the date of loan sanction.
  6. Selected banks – It has also been highlighted in the scheme details that the farmers need to apply for the agricultural credit from the private sector banks, cooperative banks, rural banks, and other registered financial institutes.

Eligibility for the applicants

  1. Residents of India – The central government has highlighted that the scheme perks are only available to the residents of the country.
  2. Full-time farmers – The scheme has been designed and developed for the benefit of the farmers. It is only for those agricultural workers, who are associated with this profession permanently.
  3. Financially weak backgrounds – The ministers also stated that the financially weak farmers will get the opportunity to save a significant amount by signing up for this project.
  4. BPL community members – All the farmers, which belong the BPL category, will automatically acquire the subsidy.

Documents necessary for application

  1. Residential documents – Only the farmers, who possess documents, which support their claims of being permanent members of the country, will be allowed to get the interests subsidy.
  2. Identification documents – All the interested applicants will have to furnish copies of their Aadhar Card and voter card.
  3. Certificate from farmers’ associations – It is mentioned in the scheme draft that only registered farmers, which will be able to produce the authorization certificates, issued by the farmers; associations, will be able to acquire the perks of this scheme.
  4. Credit application documents – In case the applicant has already acquired the low sum short terms credit, he must submit a photocopy of the credit application and issuance documents.
  5. BPL certificate – It has been highlighted in the scheme draft that every agricultural worker, interested in getting the perks of this scheme must submit a copy of his BPL certificate at the financial institution.

How to get the application form and register?

  1. Application process – Most needy farmers, which opt for short-term and low sun credits, may not possess the knowledge of completing the digitized application process. For this, the central government has kept the provision for offline application.
  2. Loan application from the banks – To acquire the perks of this scheme, the interested applicants will have to go to the registered financial institutes. They will have to fill in loan application form for the agricultural credit.
  3. Attachment of the documents – The agricultural workers need to furnish the necessary document with the loan application form.
  4. Assessment of the application – As RBI has announced that eligible farmers will acquire the interest subsidy; the bank officers will check the documents.
  5. Transfer of credit amount – Once the credit application of the farmer has been accepted, the annual interest calculation will be done as per the new RBI subsidy rules.

The central government implements various policies, which will help in boosting the financial status of the farmers. Reducing the credit interest is one such step. It will offer respite to the poor farmers from the financial burdens. The subsidy project and other similar projects allow the government to pave the path for the holistic development of the agricultural sector. The prosperity of the farmers means better crop cultivation, which supplies the national markets, and keeps the commodities under check.

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