Good news! First Modi, and now RBI - Farmers get another big gift after cash support scheme

Agriculture loan without collateral: Days after Prime Minister Narendra Modi-led Union government announced a direct cash support scheme - PM Kisan - for farmers, here's another good news for them. Now, the Reserve Bank of India has cleared a proposal to increase the limit of collateral free agriculture loans from Rs 1 lakh to Rs 1.6 lakh. The RBI has announced several developmental and regulatory policies. For farmers, the central bank has cleared proposals related to "enhancing the limit of collateral free agriculture loans from ₹1 lakh to ₹1.6 lakh, keeping in view the overall increase in inflation and rise in agriculture input costs." The RBI said, "this is expected to enhance coverage of farmers in getting access to formal credit." 

Another decision for farmers is for "setting up of an internal working group to examine and recommend measures to address issues pertaining to the policy framework and delivery of agricultural credit in the country."

These decisions taken by the RBI "complement the monetary policy stance and action". 

The central bank has also decreased the repo rate by 0.25% in the monetary policy meeting concluded yesterday.

"On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to: reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.5 per cent to 6.25 per cent with immediate effect. Consequently, the reverse repo rate under the LAF stands adjusted to 6.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.5 per cent. The MPC also decided to change the monetary policy stance from calibrated tightening to neutral," RBI said in a statement.

The RBI decision comes close on the heels of the PM Kisan scheme which aims to provide Rs 6000/year to farmers in three instalments of Rs 6000 each. The first instalment is likely to be directly deposited in the bank accounts of eligible farmers before the end of March 2019.