On May 28, 2025, the Union Cabinet, chaired by Prime Minister Shri Narendra Modi, approved the continuation of the Modified Interest Subvention Scheme (MISS) for the financial year 2025-26, ensuring affordable credit access for farmers through the Kisan Credit Card (KCC). This decision, with a budgetary allocation of ₹15,640 crore, reinforces the government’s commitment to enhancing agricultural productivity and financial inclusion.
Overview of the Modified Interest Subvention Scheme
Key Features of MISS
The MISS is a Central Sector Scheme designed to provide short-term credit to farmers at subsidized rates via KCC. The key components of the scheme for FY 2025-26 include:
- Loan Limit: Farmers can avail short-term loans up to ₹3 lakh at a subsidized interest rate of 7%, with a 1.5% interest subvention provided to lending institutions.
- Prompt Repayment Incentive (PRI): Farmers repaying loans on time are eligible for an additional 3% incentive, reducing the effective interest rate to 4%.
- Animal Husbandry and Fisheries: Loans for these activities are eligible for interest benefits up to ₹2 lakh.
No structural changes were proposed, ensuring continuity in the scheme’s framework. With over 7.75 crore KCC accounts nationwide, MISS plays a pivotal role in sustaining agricultural credit flow.
Agricultural Credit Growth
Significant Increase in Credit Disbursement
The scheme has significantly boosted institutional credit for agriculture, as evidenced by the following data:
| Metric | 2014 | 2023-24/Dec 2024 |
|---|---|---|
| KCC Credit Disbursement | ₹4.26 lakh crore | ₹10.05 lakh crore |
| Overall Agricultural Credit | ₹7.3 lakh crore (FY 2013-14) | ₹25.49 lakh crore (FY 2023-24) |
Digital reforms, such as the Kisan Rin Portal (KRP) launched in August 2023, have enhanced transparency and efficiency in claim processing, further strengthening the rural credit ecosystem.
Significance of the 1.5% Interest Subvention
Supporting Rural Banks and Farmers
The decision to retain the 1.5% interest subvention is driven by current lending cost trends, including median MCLR and repo rate movements. This rate is essential for supporting rural and cooperative banks, ensuring they can provide low-cost credit to farmers. The scheme’s continuation aligns with the government’s goal of doubling farmers’ income by enhancing access to affordable credit, thereby boosting agricultural productivity and financial inclusion for small and marginal farmers.
Key Highlights:
- The Union Cabinet approved the continuation of MISS for FY 2025-26 on May 28, 2025, with a ₹15,640 crore allocation.
- Farmers can avail ₹3 lakh loans at 7% interest, reducible to 4% with prompt repayment.
- KCC credit increased from ₹4.26 lakh crore in 2014 to ₹10.05 lakh crore by December 2024.
- Kisan Rin Portal (launched August 2023) enhances transparency in credit processing.
- The 1.5% interest subvention supports rural banks and ensures affordable credit access.