The Bihar government has decided to provide an additional 1% interest relief to farmers on agricultural loans. For this, the state government has signed an agreement with NABARD. Officials from the Agriculture Department and NABARD signed the MoU in the presence of state Agriculture Minister Vijay Kumar Sinha.
The Agriculture Department announced the development in a post on social media, stating that farmers will receive an additional 1% interest subsidy on crop loans, Kisan Credit Card (KCC) loans and short-term agricultural loans of up to Rs 3 lakh. Small, marginal and other eligible farmers across categories will be covered under the scheme. Sharecroppers, oral lessees and members of Joint Liability Groups (JLGs) will also be eligible.
The average interest rate on agricultural loans is around 7%. The Central Government provides a 3% interest subsidy on such loans. With the additional 1% relief announced by Bihar, eligible farmers will effectively pay interest at 3% on loans of up to Rs 3 lakh, subject to fulfilment of the prescribed conditions.
The Agriculture Minister said Rs 5 crore has been allocated for the scheme for the financial year 2026-27. He said crop loans, KCC loans and short-term agricultural loans of up to Rs 3 lakh obtained from commercial banks, regional rural banks and cooperative banks will be covered under the scheme. All types of crops have been included.
The minister clarified that if a farmer has taken a loan exceeding Rs 3 lakh, the subsidy will be available only on the first Rs 3 lakh of the loan. No interest subsidy will be provided on the amount exceeding Rs 3 lakh. The benefit of the scheme will also be available only to farmers who repay their loans within the prescribed repayment period.