Kisan Credit Card: Cabinet Extends Interest Subvention Scheme For FY26; Over 7.75 Crore Farmers To Benefit

Last Updated:May 28, 2025, 16:12 IST

The Union Cabinet, led by PM Modi, approved the continuation of the Modified Interest Subvention Scheme for FY 2025-26, offering subsidized short-term agricultural loans.

In a move to support farmers, the Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved the continuation of the interest subvention component under the Modified Interest Subvention Scheme (MISS) for the financial year 2025-26, benefitting over 7.75 crore Kisan Credit Card (KCC) holders. The Centre has also approved the necessary fund allocations to sustain the scheme.

“The Union Cabinet today approved the continuation of the Interest Subvention (IS) component under the Modified Interest Subvention Scheme (MISS) for the financial year 2025-26, and approved required fund arrangements,” according to an official statement released on May 28.

The MISS, a central sector scheme, aims to provide short-term agricultural loans at subsidised interest rates through Kisan Credit Cards (KCC) to crores of small and marginal farmers across the country.

“No changes have been proposed in the structure or other components of the scheme,” according to the statement.

What is the Modified Interest Subvention Scheme (MISS)?

Interest subvention is a form of financial assistance provided by the government to reduce the effective interest rate on loans.

Under the Modified Interest Subvention Scheme, farmers receive short-term loans of up to Rs 3 lakh at a 7 per cent annual interest rate, out of which the government subsidises 1.5 per cent (interest subvention) for the eligible lending institutions, according to the statement.

Additionally, to encourage timely repayments, farmers who repay their loans on time are eligible for a Prompt Repayment Incentive (PRI) of 3 per cent, bringing down the effective interest rate to just 4 per cent, it added.

For loans specifically taken for animal husbandry and fisheries, the interest benefit is available on loans up to Rs 2 lakh, the statement said.

What is the Kisan Credit Card (KCC)?

Launched to provide farmers with access to credit in a flexible and hassle-free manner, the Kisan Credit Card is a government initiative that enables farmers to take short-term loans for crop production, animal rearing, and other allied activities. The scheme is implemented by commercial banks, regional rural banks, and cooperative banks.

There are currently more than 7.75 crore active KCC accounts across the country, according to the statement.

Through the KCC, farmers can easily access credit at concessional rates, helping them avoid high-cost borrowing from informal sources like moneylenders.

Rising Credit to Agriculture

Institutional credit disbursed through KCC increased from Rs 4.26 lakh crore in 2014 to Rs 10.05 lakh crore by December 2024. Overall agricultural credit flow surged from Rs 7.3 lakh crore in FY14 to Rs 25.49 lakh crore in FY24, according to the official statement.

To enhance transparency and streamline credit processing, the government also launched the Kisan Rin Portal (KRP) in August 2023.

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