Farm loan to touch Rs 5.20 lakh crore in FY2012

Total Farm loan amount is expected to touch Rs 5.20 lakh crore for the current financial year 2011-12 compared to the previous projected target of Rs 4.75 lakh crore, as per Nabard (National Bank for Agriculture and Rural Development). The increase in the farm loan disbursal was mainly because of good monsoon rain which is expected to increase the farm activity for the current financial year. The total refinance will be nearly Rs 50,000 crore for the current financial year 2o11-12 compared to previous projection of Rs 40,000 crore. Nabard provides refinance to the co-operative institutions to facilitate the farm loan credit to the farmers at lower interest.


Central government has been providing interest subsidy to all public sector banks, Regional Rural Banks and cooperative banks for short term farm loans upto Rs 3 lakh at much lower interest rate of 7% compared to the market rate. It has also reduced the interest rate to 5% from financial year 2011-12 for those who has re-paid the previous loan on time. This farm credit facility helps the farmers to arrange finance for farming at much lower interest rate which also boost the agricultural sector. Since last two years, Agricultural sector is posting handsome growth and helping to increase the overall GDP growth. Also most of India-s populations earn their livelihood through agriculture, scheme like this helps all the populations directly or indirectly related to the agricultural sector.