Collateral-Free Agriculture Loan Limit Increased: Relief for Farmers

The Reserve Bank has increased the limit for collateral-free agriculture loans from Rs 1.6 lakh to Rs 2 lakh per borrower, responding to inflation and rising farm input costs. This move aims to improve access to credit for small and marginal farmers.

The Reserve Bank announced an increase in the collateral-free agriculture loan limit to Rs 2 lakh per borrower on Friday. This decision reflects the ongoing inflationary pressures and rising costs of farm inputs.

Banks, which had been providing collateral-free agriculture loans up to Rs 1.6 lakh, will need to adjust to this increased threshold. The previous limit was raised from Rs 1 lakh in 2019.

RBI Governor Shaktikanta Das highlighted that this initiative will expand the reach of formal credit systems to small and marginal farmers. The central bank plans to issue a formal circular soon to implement these changes.

(With inputs from agencies.)