Interest Subsidy - Introduction

The Karnataka State Cooperative Apex Bank has played a crucial role in the development of agricultural credit structure in the State of Karnataka and the principal function of the bank is to serve the farmers in the state by providing agricultural loans to the farmers through its network of District Central Cooperative Banks and its branches at the district level and Primary Agricultural Cooperative societies at village level.

With a view to extend substantial relief to the farmers by reducing the heavy interest burden on agricultural loans , the Government of Karnataka in the year 2004 – 05 announced a scheme for providing agricultural credit to farmers at 6% by the cooperatives. Subsidy of 5.5% would be provided to the cooperative institutions by State Government. The Scheme was continued for the year 2005 – 06 also.

In pursuance of the announcement made by the Hon’ble Finance minister Government of India in his budget speech 2006-07 that Crop loan up to Rs.3.00 lakhs will be made available to farmers at 7% interest, the Govt. of Karnataka (GO No.CO/41/CLS/2006 dt. announced a scheme for providing financial assistance to Agricultural Cooperative Credit Institutions for the year 2006-07 to enable them to lend agricultural loans to farmers at 4% .