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Modified Interest Subvention Scheme (MISS)


The Union Cabinet has decided to restore the interest subvention on short-term agriculture loans to 1.5% for all financial institutions, including cooperative banks.

  • Thus, Interest Subvention of 1.5% will be provided to lending institutions for the financial year 2022-23 to 2024-25 for lending short term agri-loans upto Rs 3 lakh to the farmers.


GS II: Government policies and Interventions

Dimensions of the Article:

  1. What is MISS?
  2. Features of MISS
  3. Benefits of MISS
What is MISS?
  • To enable farmers to buy agricultural goods and services on credit at any time, the Kisan Credit Card programme was developed.
  • The GoI introduced the Interest Subvention Scheme (ISS), now known as the Modified Interest Subvention Scheme, to make sure that farmers only had to pay a minimal interest rate to the bank (MISS).
  • It attempts to offer farmers short-term credit at discounted interest rates.
Features of MISS
  • Under this scheme, short term agriculture loan upto Rs. 3.00 lakh is available to farmers engaged in Agriculture and other allied activities including Animal Husbandry, Dairying, Poultry, fisheries etc. at the rate of 7% p.a.
  • An additional 3% subvention (Prompt Repayment Incentive – PRI) is also given to the farmers for prompt and timely repayment of loans.
  • Therefore, if a farmer repays his loan on time, he gets credit at the rate of 4% p.a.
  • For enabling this facility to the farmers, GoI provides Interest Subvention (IS) to the Financial Institutions offering this scheme.
  • This support is 100% funded by the Centre, it is also the second largest scheme of DA&FW as per budget outlay and coverage of beneficiaries.
  • The lending institutions include- Public Sector Banks, Private Sector Bank, Small Finance Banks, Regional Rural Banks, Cooperative Banks and Computerized PACS directly ceded with commercial banks.
 Benefits of MISS
  • The Government of India has made it a major goal to provide farmers with easier access to financing at lower rates.
  • An increase in interest subvention will guarantee the long-term survival of lending institutions as well as the continuity of credit flow to the agricultural sector.
  • Banks will be able to absorb increase in cost of funds and will be encouraged to grant loans to farmers for short term agriculture requirements and enable more farmers to get the benefit of agriculture credit.
  • This will also lead to generation of employment since short term agri-loans are provided for all activities including Animal Husbandry, Dairying, Poultry, fisheries.
  • Farmers will continue to avail short term agriculture credit at interest rate of 4% per annum while repaying the loan in time.

-Source: The Hindu

March 2024