The Reserve Bank of India, on Friday, said all public sector banks would get an interest subsidy of 2 per cent annually against short-term production loan up to Rs.3 lakh to farmers.

“The government will provide interest subvention of 2 per cent per annum to public sector banks (PSBs) in respect of short-term production credit up to Rs.3 lakh during 2012-13,” the RBI said in a notification.

This subvention will be available to public sector banks on the condition they make available short-term production credit up to Rs.3 lakh at ground level at 7 per cent per annum, the Reserve Bank of India added.

The amount of subvention will be calculated on the crop loan amount from the date of its disbursement/drawal up to the date of actual repayment of crop loan by the farmer.

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