Collateral-Free Agricultural Loans Up to ₹2 Lakh from 1st Jan 2025: RBI Orders Banks to Publicise
Starting from January 1, 2025, farmers will be eligible for agricultural loans up to ₹2 lakh without the need to provide any collateral security or margin requirements
Agricultural Loans – RBI Orders Banks to Publicise – RBI – Taxscan
Agricultural Loans – RBI Orders Banks to Publicise – RBI – Taxscan
The Reserve Bank of India ( RBI ) has notified that collateral-free agricultural loans will be available up to Rs. 2 lakh for farmers per borrower. The banks were advised to expedite the procedures not later than 1st January 2025 and publicise the same.
Aiming to provide financial relief to farmers and supporting the agriculture sector, the apex bank has increased the limit for collateral-free agricultural loans. Starting from January 1, 2025, farmers will be eligible for agricultural loans up to ₹2 lakh without the need to provide any collateral security or margin requirements.
Previously, the limit for collateral-free agricultural loans, including loans for allied activities, was capped at ₹1.6 lakh per borrower. The RBI’s decision to raise this limit to ₹2 lakh is expected to provide much-needed financial assistance to farmers, enabling them to invest in agricultural activities and allied sectors like dairy, poultry, fisheries, and agro-processing.
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The step also intends to make it easier for farmers to access credit, which is often a major challenge due to the lack of assets for collateral.
Under the new directive, banks are required to waive collateral security and margin requirements for loans up to ₹2 lakh for agricultural purposes, including those related to allied activities.
This is a part of the government's broader effort to ensure that farmers have better access to formal credit, which is essential for improving agricultural productivity and supporting rural development.
RBI has instructed banks to implement the revised instructions promptly and ensure that they are in effect no later than January 1, 2025. The central bank has also emphasized the importance of adequately publicizing these changes to ensure that farmers are well-informed about the new loan limits and the relaxed collateral requirements.
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Publicity efforts will include reaching out to farmers through various channels, such as bank branches, digital platforms, and rural outreach programs, to ensure that the information reaches those who will benefit most from the revised loan provisions.
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