Prompt repayment incentive
Also called: PRI · Topic: Rural Credit, Microfinance and Financial Inclusion · NCERT: Beyond NCERT
Meaning
The prompt repayment incentive (PRI) is an extra interest subsidy for farmers who repay their short-term crop loans on time. It is part of the Modified Interest Subvention Scheme (MISS). Interest subvention means the government pays part of the interest so that borrowers pay less than the market rate. Under MISS, crop loans are given at 7%, and the government pays lenders a 1.5% subvention. Farmers who repay on time get a further 3% off. The incentive rewards timely repayment and supports a healthy repayment culture.
Example
A farmer takes a crop loan at 7% under MISS and repays it on time. With the 3% PRI, the farmer's effective interest rate falls to 7% − 3% = 4%. The loan limit under MISS was raised from ₹3 lakh to ₹5 lakh in Budget 2025-26.
Don't confuse with
- Farm loan waiver: this writes off loans that farmers have not repaid. PRI does the opposite: it rewards farmers who do repay.