Circular no. RBI/2025-26/193 FIDD.CO.FSD.BC.No.10/05.02.001/2025-26; Dated: 13.01.2026
1. Introduction
Reserve Bank of India (RBI) has modified the Interest Subvention Scheme applicable to short-term loans granted for agriculture and allied activities through the Kisan Credit Card (KCC) system for the financial year 2025-26.
2. Background Of The Scheme
The Interest Subvention Scheme aims to ensure affordable credit access to farmers by reducing the effective interest burden on short-term crop loans. The scheme covers loans availed through KCC for agricultural and allied activities, supporting timely credit flow to the farming sector.
3. Key Modifications Announced
For FY 2025-26, RBI has prescribed a lending rate of 7% per annum for eligible farmers. Banks will receive an interest subvention of 1.5% per annum on such loans, enabling them to offer credit at the concessional rate.
4. Incentive For Timely Repayment
In addition to the base subvention, farmers who repay their loans on or before the due date will be eligible for an extra interest subvention of 3% per annum. This benefit applies from the date of loan disbursement until actual repayment or the due date fixed by banks, whichever is earlier.
5. Conclusion
The revised Interest Subvention Scheme reinforces RBI’s focus on supporting farmers through affordable credit and incentivising timely repayment. By continuing concessional lending under the KCC framework, the scheme strengthens credit discipline while easing financial stress in the agricultural sector.
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