Work out farm loan interest subsidy instantly with clear inputs, formula shown and shareable results.
Interest subvention reduces the rate the borrower actually pays: the bank charges its rate and government reimburses the subvention percentage, often with an extra incentive for prompt repayment. Simple interest on the outstanding crop loan over the season gives the gross and net interest cost.
Interest with subvention
Gross interest = loan x rate x years; benefit = loan x subvention x years; effective rate = rate - subvention
Interest subvention schemes, caps and eligibility change with each annual notification. Confirm current terms with your lending bank.
Yes. Prompt repayment within the stipulated period is normally required, and the additional incentive is forfeited if the account becomes overdue — the full rate then applies retrospectively.
Schemes usually cap the subvented amount, commonly at the first few lakh of crop loan. Interest above the cap is charged at the full rate.