In a significant move aimed at benefiting small and marginal farmers, the Reserve Bank of India (RBI) has raised the limit for collateral-free agricultural loans from ₹1.66 lakh to ₹2 lakh per borrower. This increase will provide better access to credit for farmers, especially in light of rising agricultural input costs and overall inflation.
Governor Shaktikanta Das made the announcement following the Monetary Policy Committee (MPC) meeting, explaining that the hike was essential to support farmers who are facing increased financial pressures. He mentioned, “Considering the increase in agricultural input costs and overall inflation, it has been decided to raise the collateral-free agriculture loan limit to ₹2 lakh per borrower.” This It will improve access to credit for small and marginal farmers.
The RBI emphasized that this decision will provide more financial resources to the agricultural sector, helping farmers with the costs associated with cultivation and other agricultural activities. A separate circular will soon be issued by the central bank to notify the details of this enhancement.
This move comes after the last revision in 2019, when the collateral-free loan limit was raised from ₹1 lakh to ₹1.6 lakh. With the new change, the RBI aims to provide greater support to the farming community during challenging economic times.
This initiative is expected to provide a significant boost to the rural economy by easing the financial burden on farmers and ensuring they have access to the necessary funds to maintain and grow their agricultural activities.
