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Context:
RBI Increases Collateral-Free Agriculture Loan Limit
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Highlights:
• RBI increases the limit of agriculture loans that are collateral-free to the borrower from ₹1.6 lakh to ₹2 lakh.
• The decision had been taken due to rising inflation and agricultural input prices.
• The limit was available at ₹1 lakh during 2010 and ₹1.6 lakh in 2019.
• The move seeks to enhance coverage for small and marginal farmers under formal credit.
The KCC loans exceeding ₹1.6 lakh but upto ₹3 lakh can be issued against collateral free if a Tri-Partite Agreement is in place.
Source: Business Line
