Cabinet continues Modified Interest Subvention Scheme for KCC loans in 2025-26
The Union Cabinet on 28 May 2025 approved continuing the interest subvention component of the Modified Interest Subvention Scheme for 2025-26 at the existing 1.5%, keeping KCC loans up to ₹3 lakh at 7% (4% with prompt repayment).
Summary
The Union Cabinet approved continuation of the interest subvention component of the Modified Interest Subvention Scheme (MISS) for 2025-26 on 28 May 2025, with the existing 1.5% subvention to lending institutions. MISS, a Central Sector Scheme, provides short-term loans of up to ₹3 lakh to farmers through Kisan Credit Cards at 7% interest; prompt repayers get an incentive of up to 3%, bringing the effective rate to 4%. For loans only for animal husbandry or fisheries, the benefit applies up to ₹2 lakh. There are more than 7.75 crore KCC accounts in the country.
Key facts
- Approved
- 28 May 2025, Union Cabinet
- Interest subvention
- 1.5% to lending institutions (unchanged)
- KCC loan
- Up to ₹3 lakh at 7%
- Prompt Repayment Incentive
- Up to 3% (effective 4%)
- AH/fisheries-only loans
- Up to ₹2 lakh
- KCC accounts
- 7.75 crore+
Practice MCQs 3 questions
At what rate is interest subvention provided to lending institutions under the Modified Interest Subvention Scheme continued for 2025-26?
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Correct answer: C — 1.5%
The Cabinet continued MISS with the existing 1.5% interest subvention; 3% is the Prompt Repayment Incentive.
Under MISS, what is the effective interest rate on KCC loans for farmers who repay promptly?
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Correct answer: A — 4%
Loans are at 7%; a Prompt Repayment Incentive of up to 3% brings the effective rate to 4%.
Consider the following statements about the Modified Interest Subvention Scheme: 1. Farmers can get short-term loans of up to ₹3 lakh through KCC at a subsidised rate. 2. For loans taken exclusively for animal husbandry or fisheries, the interest benefit applies up to ₹2 lakh. Which of the statements given above is/are correct?
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Correct answer: C — Both 1 and 2
Both are correct as per the Cabinet release.