The Reserve Bank of India (RBI), in its circular dated December 6, 2024, has raised the limit for collateral-free agricultural loans from ₹1.6 lakh to ₹2 lakh per borrower. This decision aims to address rising agricultural input costs and inflation. The revised guidelines include loans for allied activities and require banks to waive collateral security and margin requirements for loans up to ₹2 lakh. Banks are instructed to implement these changes by January 1, 2025, and to ensure the public is adequately informed about the update.
RESERVE BANK OF INDIA
Credit Flow to Agriculture – Collateral free agricultural loans
RBI/2024-2025/96
FIDD.CO.FSD.BC.No.10/05.05.010/2024-25 Dated: December 6, 2024
The Chairman / Managing Director / Chief Executive Officer
All Scheduled Commercial Banks (including Regional Rural Banks and Small Finance Banks)
All State Co-operative Banks and District Central Co-operative Banks
Madam/Sir,
Credit Flow to Agriculture – Collateral free agricultural loans
Please refer to our circular FIDD.CO.FSD.BC.No.13/05.05.010/2018-19 dated February 7, 2019 on the above subject.
2. Keeping in view the overall inflation and rise in agriculture input cost over the years, it has been decided to raise the limit for collateral free agricultural loans including loans for allied activities from the existing level of ₹1.6 lakh to ₹2 lakh per borrower. Accordingly, banks are advised to waive collateral security and margin requirements for agricultural loans including loans for allied activities upto ₹2 lakh per borrower.
3. The banks are advised to give effect to the revised instructions expeditiously and in any case not later than January 1, 2025. The banks are also advised to give adequate publicity to the above changes.
(R. Giridharan)
Chief General Manager
