RBI raises collateral-free agricultural loan limit to Rs.2 lakh

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The Reserve Bank of India has raised the limit for collateral-free agricultural loans from ₹1.6 lakh to ₹2 lakh per borrower, effective January 1, 2025.
This move addresses rising input costs and inflation, providing farmers with improved financial access for agricultural and allied activities.
Banks are directed to waive collateral requirements, expedite implementation of the revised guidelines, and ensure widespread awareness among farmers.
This initiative primarily benefits small and marginal farmers, who constitute over 86% of the sector, by reducing borrowing costs and enhancing credit accessibility.
It is expected to boost uptake of Kisan Credit Card loans, enabling greater investment in farming operations.
Coupled with the Modified Interest Subvention Scheme offering loans up to ₹3 lakh at 4% interest, the policy fosters financial inclusion, strengthens agriculture, and supports credit-driven economic growth, aligning with the government’s vision for sustainable agriculture.