Modified Interest Subvention Scheme (MISS): A Boon for Farmers

The Modified Interest Subvention Scheme (MISS) offers concessional short-term agricultural loans to farmers engaged in crop husbandry and allied activities such as animal husbandry and fisheries. As of January 5, 2024, a total of 465.42 lakh new Kisan Credit Card (KCC) applications have been sanctioned, with a credit limit of Rs. 5,69,974 crores.

About the Modified Interest Subvention Scheme (MISS)

• It is a Central Sector Scheme, 100% funded by the Government of India.

• It was launched in the year 2006-07 with the aim of providing short term Agri-loans to the farmers through Kisan Credit Card (KCC) for their working capital requirements at the concessional rate of interest.

• At present, interest subvention is being given to concerned Financial Institutions (Scheduled Commercial Banks (SCBs)/ Small Finance Banks/ RRBs/Cooperatives/ Computerized PACS ceded with SCBs) providing the loan.

How the Scheme Works?

• Loan Terms: Farmers engaged in agriculture and allied activities can avail KCC loans up to Rs.3 lakh at a benchmark interest rate of 9%.

• Interest Reduction: The Central Government provides a 2% interest subvention, reducing the effective interest rate to 7%. An additional 3% concession for prompt and timely repayment further lowers the interest rate to 4% per annum.

Implementing Agencies

The Reserve Bank of India (RBI) and the National Bank for Agriculture and Rural Development (NABARD) are responsible for settling claims under MISS. Funds are released to these institutions for further disbursement to the relevant financial institutions. There is no state-wise allocation or release under this scheme.

Benefits of the MISS:

1. Incentive for Prompt Repayment: Since 2009-10, an additional subvention has been provided to farmers who repay their loans promptly. Initially 1%, this incentive was increased to 2% in 2010-11 and to 3% from 2011-12 onwards.

2. Relief for Farmers Affected by Natural Calamities: An interest subvention of 2% is available to banks for the first year on restructured crop loans due to natural calamities. Normal interest rates apply from the second year as per RBI policy.

3. Subvention for Loans Against Negotiable Warehouse Receipts: To discourage distress sales, the scheme extends concessional loans to small and marginal farmers against warehouse receipts. A 2% interest subvention is available on loans up to Rs. 3 lakh at 7% interest per annum.

4. Working Capital for Animal Husbandry and Fisheries: From 2018-19, the scheme was extended to KCCs issued to farmers engaged in animal husbandry and fisheries. A 2% interest subvention and 3% prompt repayment incentive apply to loans up to Rs. 2 lakh.

Budget Allocation and Future Provisions

• 2023-24: The Centre set an agriculture credit target of Rs. 20 lakh crore with a focus on animal husbandry, dairy, and fisheries. The initial allocation of Rs. 23,000 crore for interest subvention was revised to Rs. 18,500 crore.

• 2024-25: The Finance Minister allocated Rs. 22,600 crore under MISS in the interim budget. The RBI has confirmed the continuation of the scheme for short-term loans up to Rs. 3 lakh through KCC during this financial year.

Modified Interest Subvention Scheme: Eligibility

Eligible applicants include:

• Farmers, individuals, or joint borrowers who are owner cultivators.

• Tenant farmers, oral lessees, and sharecroppers.

• Self-Help Groups (SHGs) or Joint Liability Groups (JLGs) of farmers, including sharecroppers.

Application Process

To apply for MISS, link your KCC account with your Aadhaar number. Bank branches or headquarters administrators can create a new user on the KCC-ISS portal by following these steps:

• Log in to the PMFBY portal.

• Navigate to the User Console page and select the option to create new users.

• Provide the new user’s details, including name, designation, email, and phone number.

• Submit the request to create the user.

For more details, refer to RBI Notification.