Interest Subsidy - Salient Features

The salient feature of the Scheme are

The scheme covers all agricultural loans – Short term (ST), Medium Term (MT), Long Term (LT) loans and is not applicable to Non farm sector loans.
The lending rate to the farmer is 4%.
This benefit is available to agricultural loans upto Rs.3.00 lakhs per farmer and any excess amount availed above this limit shall carry normal rate of interest.
The Govt. of Karnataka would provide interest subsidy to the cooperative institutions on the agricultural (ST, MT, LT) loans sanctioned with effect from 1.4.2006 as follows:

ST(A)

NABARD Refinance 3%

Own Funds of DCCB/PACS
Up to Rs 3 lakhs per borrower 5.50%
Above Rs 3 lakhs per borrower 7.50%

MT(A) 7.50%

The liability of the Scheme starts from the date of sanction / release of loan and extends up to due date of repayment of loan.
Defaulter shall be liable to repay the loan at normal rate of interest to the concerned society from the due date of repayment.

The scheme has been continued for the year 2007 – 08 also and the Government of Karnataka would provide interest subsidy to the cooperative institutions as follows:

ST(A)

NABARD Refinance 4%

Own Funds of DCCB/PACS
Up to Rs 3 lakhs per borrower 6.50%
Above Rs 3 lakhs per borrower 8.50%

MT(A) 8.50%