Cabinet Approves Continuation of Modified Interest Subvention Scheme for FY 2025–26
New Delhi, 28 May 2025 — In a move to ensure affordable access to credit for farmers, the Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved the continuation of the Interest Subvention (IS) component under the Modified Interest Subvention Scheme (MISS) for the financial year 2025–26. The decision includes necessary fund allocations to sustain the scheme.
The Modified Interest Subvention Scheme (MISS), a Central Sector Scheme, is designed to make short-term agricultural loans more accessible and affordable, primarily through the Kisan Credit Card (KCC) platform. Under the scheme:
Farmers can avail of short-term loans of up to ₹3 lakh at a subsidized interest rate of 7%.
Eligible lending institutions receive a 1.5% interest subvention from the government.
Farmers who repay their loans promptly receive an additional 3% Prompt Repayment Incentive (PRI), effectively bringing down their interest rate to 4%.
For those engaged in animal husbandry and fisheries, the interest benefit is extended for loans up to ₹2 lakh.
The government has not introduced any structural changes to the scheme for FY 2025–26, maintaining continuity in its provisions.
Key Agricultural Credit Highlights:
Institutional credit disbursed through KCC has surged from ₹4.26 lakh crore in 2014 to ₹10.05 lakh crore by December 2024.
Overall agricultural credit flow has increased significantly, from ₹7.3 lakh crore in FY 2013–14 to ₹25.49 lakh crore in FY 2023–24.
Digital initiatives like the Kisan Rin Portal (KRP), launched in August 2023, have brought transparency and efficiency to the loan and interest subvention claim process.
With over 7.75 crore active KCC accounts nationwide, the continuation of the MISS is vital for ensuring a steady flow of institutional credit to the agricultural sector. The Cabinet emphasized that maintaining the 1.5% interest subvention is essential, especially in light of current lending cost trends, including movements in the Median Marginal Cost of Funds-based Lending Rate (MCLR) and the RBI’s repo rate.
This decision aligns with the Government’s long-term vision of doubling farmers’ income, enhancing financial inclusion, and promoting sustainable agricultural growth.
