Modified Interest Subvention Scheme

22.07.2024

Modified Interest Subvention Scheme

Why in the news?                                                                                                                                                                                                                                      The Centre plans to increase the upper limit of the short-term crop loans under the Modified Interest Subvention Scheme (MISS) from Rs 3 lakh to Rs 5 lakh.

About Modified Interest Subvention Scheme:

• It is a Central Sector Scheme, 100% funded by the Government of India.
• It was launched in the year 2006-07 with a view to provide short term Agri-loans availed by farmers through Kisan Credit Card (KCC) for their working capital requirements at concessional rate of interest.
• For this, 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.
• The implementing agencies for settling the claims under Interest Subvention Scheme are Reserve Bank of India (RBI)/National Bank for Agriculture and Rural development (NABARD).

Working of the scheme

• Farmers engaged in Agriculture and other allied activities can acquire Kisan Credit Card loans up to Rs 3 lakh at a benchmark rate of 9%.
• However, the Centre provides a 2% interest subsidy on the benchmark rate, bringing down the effective rate of interest to 7 per cent.
• An additional 3% concession for prompt and timely repayment further reduces it to 4% per year.

                                                                  Source: Indian Express

Ques :- Consider the following statements regarding the Modified Interest Subvention Scheme:

Statement-I

 It is a Central Sector Scheme.

Statement-II

 It provides short term Agri-loans to farmers which can be availed through Kisan Credit Card (KCC).

Which one of the following is correct in respect of the above statements?

A.Both Statement-I and Statement-II are correct, and Statement-II is the correct explanation for Statement-I.

B.Both Statement-I and Statement-II are correct, and Statement-II is not the correct explanation for Statement-I.

C.Statement-I is correct, but Statement-II is incorrect.

D.Statement-I is incorrect, but Statement-II is correct.

Answer A