Modified Interest Subvention Scheme for FY 2025–26

On 28th May 2025, the Union Cabinet approved the continuation of the Modified Interest Subvention Scheme (MISS) for the financial year 2025–26, maintaining the existing 1.5% interest subvention to eligible lending institutions.

Key Points

Scheme Purpose: MISS aims to provide short-term credit to farmers at reduced interest rates via the Kisan Credit Card (KCC) system.
Loan Details:
- Loans up to Rs.3 lakh at a standard interest rate of 7%.
- Lending institutions receive a 1.5% interest subvention, reducing their burden.
- Farmers repaying promptly get an additional Prompt Repayment Incentive (PRI) of up to 3%, effectively lowering the interest rate to 4%.
- For animal husbandry or fisheries loans, benefits apply to amounts up to Rs.2 lakh.
No Changes: The scheme’s structure and operations remain unchanged for FY 2025–26.
Coverage: Over 7.75 crore active KCC accounts currently benefit from the scheme.
Credit Growth: Agricultural credit via KCC rose from Rs.4.26 lakh crore in 2014 to Rs.10.05 lakh crore by December 2024. Overall agricultural credit increased from Rs.7.3 lakh crore (FY 2013–14) to Rs.25.49 lakh crore (FY 2023–24).
Digital Reforms: The Kisan Rin Portal (KRP), launched in August 2023, has enhanced transparency and efficiency in interest subvention claim processing.
Rationale: Continuing the 1.5% subvention is crucial given current lending costs (MCLR and repo rate trends), enabling rural and cooperative banks to offer low-cost, timely credit to farmers.