Increase in Collateral-free Agricultural Loan limit
In a major step to support farmers, the Reserve Bank of India (RBI) by circular no FIDD.CO.FSD.BC.No.10/05.05.010/2024-25 dated 6th December 2024 has raised the limit for collateral-free agricultural loans from ₹1.6 lakh to ₹2 lakh. This move, effective from January 1, 2025, aims to ease the financial burden on farmers, especially in light of rising input costs.
Starting January 1, 2025, banks will:
- Waive the need for collateral and margin requirements for agricultural loans up to ₹2 lakh, including loans for related activities.
- Act quickly to implement these changes, so farmers can get the help they need on time.
- Inform farmers and other stakeholders about these changes so that everyone is aware of the new rules.
Under the new guidelines, banks will be required to provide loans up to ₹2 lakh without collateral or margin requirements, including for allied activities. The aim is to make it easier for small and marginal farmers—who make up over 86% of the farming community—to access credit for their operations and development.
