10 March 2026·PIB

Government Boosts Credit Flow to Agriculture Sector through Targeted Policy Measures

In this note

1. At a Glance

A bundle of Centre-led measures to deepen institutional credit to agriculture: higher collateral-free loan ceiling, expanded Kisan Credit Card (KCC) coverage, Modified Interest Subvention Scheme (MISS) at 7%, and the new PM Dhan-Dhaanya Krishi Yojana (PMDDKY) [1][2].
Implemented by Ministry of Finance (Department of Financial Services) with RBI, NABARD, and Ministry of Agriculture & Farmers Welfare [1][2].
Examinable for Prelims (scheme parameters, GLC, KCC) and Mains GS-III (agriculture, inclusive growth, food security).

PIB release dated 10 March 2026 by Ministry of Finance consolidating the package: raising collateral-free agri loans to ₹2 lakh, KCC expansion, 7% interest subvention, and PMDDKY for small/marginal farmers [1].
Operative KCC accounts crossed 7.72 crore with outstanding credit of ₹10.2 lakh crore [2].
PMDDKY launched by PM Modi on 7 November 2025 along with the Self-Reliance in Pulses Mission [3].

KCC launched in 1998-99 on the recommendation of R.V. Gupta Committee (1998); implemented through SCBs, RRBs and Rural Cooperative Banks [2].
Interest Subvention Scheme introduced in 2006-07; rebranded as Modified Interest Subvention Scheme (MISS) in 2022 [2].
Collateral-free agri loan limit raised from ₹1 lakh → ₹1.6 lakh (2019) → ₹2 lakh w.e.f. 1 January 2025 by RBI [1][2].
PMDDKY announced in Union Budget 2025-26, approved by Cabinet, formally launched Nov 2025 [3][4].

Ground Level Credit (GLC) targets: set annually, region-wise, agency-wise (SCBs/RRBs/Rural Cooperatives), and category-wise (crop/term loan) [1].
Collateral-free agri loan limit: ₹2 lakh per borrower (from 1 Jan 2025) [2].
MISS: 1.5% interest subvention to lenders + 3% Prompt Repayment Incentive to farmers → effective rate of 4% on timely repayment; concessional rate 7% p.a. on short-term crop loans up to ₹3 lakh (raised to ₹5 lakh under MISS in Budget 2025-26) [2].
KCC coverage: 7.72 crore operative cards; outstanding ₹10.2 lakh crore [2].
PMDDKY: 100 low-productivity districts; outlay ₹24,000 crore/year for 6 years from FY 2025-26; convergence of 36 schemes across 11 ministries; targets 1.7 crore farmers; tracked via 117 KPIs [3][4].
District selection: low crop productivity, low cropping intensity, low agri credit disbursement [3].

Economic

Institutional credit reduces dependence on moneylenders (informal share still ~30% per NSSO/NAFIS); lower cost of capital supports working capital for inputs [1].
Subsidised credit is a revenue expenditure with sizeable fiscal cost on Union Budget [1].

Social / Equity

Higher collateral-free ceiling specifically benefits small & marginal farmers (~86% of holdings) who lack pledgeable assets [1][2].
PMDDKY targets backward districts — addresses regional inequality in credit penetration [3].

Administrative

Federal architecture: Centre frames norms; State Level Bankers' Committees (SLBC) monitor GLC; District-level DDKY Samitis chaired by Collector under PMDDKY [1][3].
Convergence model in PMDDKY mirrors Aspirational Districts Programme template [3].

Scientific / Tech

KCC integrated with Jan Dhan-Aadhaar-Mobile (JAM) trinity; digital KCC rollout via Public Tech Platform for Frictionless Credit (RBI pilot) [2].

1 Jan 2025: Collateral-free agri loan ceiling raised to ₹2 lakh by RBI directive [2].
Feb 2025 Budget: MISS crop-loan limit hiked ₹3 lakh → ₹5 lakh; PMDDKY announced [3].
7 Nov 2025: PM launched PMDDKY + Mission for Aatmanirbharta in Pulses, total outlay ₹35,440 crore [3].
10 Mar 2026: PIB consolidated release on agri-credit measures [1].

Collateral-free agri loan limit: ₹2 lakh w.e.f. 1 January 2025 [2].
KCC scheme year of launch: 1998-99, based on R.V. Gupta Committee [2].
Effective interest rate on short-term crop loans with timely repayment: 4% [2].
MISS subvention to banks: 1.5%; Prompt Repayment Incentive: 3% [2].
MISS crop-loan ceiling raised in Budget 2025-26 from ₹3 lakh to ₹5 lakh [2].
Operative KCCs: 7.72 crore; outstanding ₹10.2 lakh crore [2].
PMDDKY covers 100 districts, outlay ₹24,000 crore/year for 6 years from FY 2025-26 [3].
PMDDKY converges 36 schemes across 11 Ministries; tracked via 117 KPIs [3].
District selection criteria for PMDDKY: low productivity, low cropping intensity, low agri credit [3].
PMDDKY targets 1.7 crore farmers [4].
GLC targets fixed by Department of Financial Services, Ministry of Finance — agency-wise (SCBs, RRBs, Rural Cooperatives) [1].
PMDDKY launched on 7 November 2025 alongside Pulses Mission; combined outlay ₹35,440 crore [3].

GS-III: Agriculture — Issues of credit, MSP, subsidies; Inclusive Growth; Food Security.
GS-II: Government schemes for vulnerable sections (small/marginal farmers).
Possible stems: 1. "Adequate, timely and affordable institutional credit is a precondition for doubling farmers' income. Critically evaluate recent measures." (GS-III, 250 marks). 2. "Discuss the convergence model of PM Dhan-Dhaanya Krishi Yojana and its potential to address regional disparities in agricultural growth." (GS-III). 3. "Examine the rationale and limitations of interest subvention as a tool for agricultural credit policy." (GS-III).

KCC is not a Ministry of Agriculture scheme operationally — credit flow is governed by DFS, Ministry of Finance with RBI/NABARD; M/o Agriculture handles farmer welfare programs [1].
7% rate is concessional after subvention; nominal rate is 9%. 4% applies only on timely repayment [2].
PMDDKY ≠ Aspirational Districts Programme; PMDDKY focuses on agriculture in 100 districts with ₹24,000 cr/yr [3].
Collateral-free limit is ₹2 lakh (Jan 2025) — earlier figure of ₹1.6 lakh (2019) is now outdated.
MISS short-term crop-loan ceiling: ₹5 lakh (Budget 2025-26), not ₹3 lakh.