The Reserve Bank of India raised the limit for collateral-free agriculture loans to ₹1.6 lakh from ₹1 lakh. The circular to this effect will be issued shortly.
“Keeping in view the overall inflation and rise in agriculture input costs since then, it has been decided to raise the limit for collateral-free agriculture loans from ₹1 lakh to ₹1.6 lakh,” said the central bank in its Statement on Developmental and Regulatory Policies.
The central bank said the increased limit will enhance coverage of small and marginal farmers in the formal credit system.
Indian Banks’ Association Chairman Sunil Mehta said the increase in the limit of collateral-free agriculture loans from ₹1 lakh to ₹1.6 lakh will aid farmers to get more credit from formal institutions and is in sync with the pro-farmer policy of the government.