In a significant move aimed at supporting small and marginal farmers, the Reserve Bank of India (RBI) has increased the limit for collateral-free agriculture loans from Rs 1.6 lakh to Rs 2 lakh per borrower. Announced by RBI Governor Shaktikanta Das during the bi-monthly Monetary Policy Statement for December 2024, this enhancement addresses the rising costs of agricultural inputs and inflation, ensuring better financial inclusion for farmers.
Previously, the collateral-free agriculture loan limit stood at Rs 1 lakh in 2010, which was later revised to Rs 1.6 lakh in 2019. With the agricultural sector evolving, the rising cost of seeds, fertilizers, and machinery has put additional financial pressure on farmers. The RBI’s decision aims to ease this burden and promote a robust credit ecosystem.
This updated limit will particularly benefit small and marginal farmers, who constitute a significant portion of India's agrarian community but often face challenges accessing formal credit. By increasing the collateral-free limit, more farmers will have access to affordable loans without the need for guarantees, reducing dependency on informal lenders who often charge high interest rates.
The move aligns with the government’s broader vision of empowering the agricultural sector and ensuring financial security for farmers. Experts believe this step could enhance productivity, boost rural income, and contribute to the overall growth of the agriculture sector.
