Good news is waiting for farmers. RBI has given a New Year gift to the farmers. Farmers will soon have the opportunity to secure larger loans without the need for collateral. The Reserve Bank of India has raised the limit for collateral-free loans for farmers from Rs 1.6 lakh to Rs 2 lakh, effective January 1, 2025. This initiative aims to support small and marginal farmers facing increasing cultivation costs. The new guidelines instruct banks nationwide to eliminate security and margin requirements for agricultural loans up to Rs 2 lakh for each borrower.
Millions of farmers stand to gain from this change
The Agriculture Ministry has stated that this decision addresses the rising input costs and aims to enhance credit accessibility for farmers. “This initiative will significantly benefit over 86 percent of small and marginal landholder farmers,” the statement noted. Banks are expected to promptly implement these guidelines and raise awareness regarding the new loan options.
This initiative is anticipated to simplify access to Kisan Credit Card (KCC) loans and will work in conjunction with the government’s updated interest subvention scheme. Under this scheme, the government offers loans of up to three lakh rupees at a reduced effective interest rate of four percent.
Collateral-free loan of Rs 2 lakh
With the RBI’s recent decision, farmers will be able to obtain loans of up to Rs 2 lakh without any collateral requirements starting January 1, 2025. This increased loan limit will help farmers manage their cultivation expenses more effectively. Additionally, under the PM Kisan Samman Nidhi Yojana, the central government provides annual financial support of Rs 6,000 to farmer families, distributed in three installments of Rs 2,000 each.
