Amid the ongoing crisis in the country, the government decided to continue the incentive of two percent interest on crop loans to farmers and three percent on prompt repayment till 31 August 2020, in view of the lockdown implemented for prevention of coronavirus epidemic. In April, interest rebates and accelerated repayment incentives were extended until the end of May.

Apart from this, the Reserve Bank in a notification asked banks to give benefits of these two schemes to farmers on short-term crop loans. Earlier, on 23 May 2020, the Reserve Bank of India gave the approval to extend the moratorium by three months to all lending institutions from payment of loan instalments. The Reserve Bank said in the notification, "To ensure that farmers do not have to pay much interest during the extended period of moratorium, the government continues to give two percent interest rebate and three percent prompt payment incentives to farmers till August 31, 2020. 

RBI said, this benefit will be applicable to all short term loans for agriculture and animal husbandry, dairy and fisheries (AHDF) up to Rs 3 lakh per farmer (up to Rs 2 lakh for AHDF farmers). To give short-term crop loans of up to Rs 3 lakh to farmers at an interest rate of 7 per cent per annum, the government gives interest subvention of 2 per cent per annum to the banks. In addition, 3 per cent interest subvention is given to those farmers who own their loans. Pay soon. For such farmers, the effective interest rate is 4 percent.

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