The Madhya Pradesh government has approved new terms and conditions for providing short-term crop loans to farmers at zero percent interest during the 2026-27 financial year. The decision was taken at the state Cabinet meeting chaired by Chief Minister Dr. Mohan Yadav.
Under the revised system, farmers will no longer have separate loan repayment deadlines for the Kharif and Rabi seasons. Instead, they will receive a single annual credit limit, with separate sub-limits for cash withdrawals and input purchases. The repayment deadline will be fixed at 12 months from the date the farmer first withdraws money from the approved annual credit limit.
Farmers availing short-term crop loans will receive a 1.25 percent interest subsidy, while those repaying loans by the due date will be eligible for an additional 4 percent incentive subsidy from the state government.
The state government will continue to provide interest support to ensure that eligible farmers receive crop loans at zero interest. Farmers who repay their loans on or before the due date will receive an additional interest incentive from the state government.
The interest-free crop loan scheme has been in operation in Chhattisgarh since 2012-13 through Multi-Purpose Primary Agricultural Credit Cooperative Societies linked to District Cooperative Central Banks. Under the scheme, farmers can obtain short-term crop loans of up to Rs 3 lakh without paying any interest, provided they repay the loan within the prescribed time limit.
Every year, the state government determines the lending rate for the scheme. After adjusting the interest subsidy provided by the central government, the state government bears the remaining interest cost. This arrangement enables farmers to access short-term crop loans at zero percent interest.
According to the government, the revised provisions are intended to simplify the loan process and make repayment schedules more convenient for farmers while continuing access to interest-free agricultural credit.