The state government on Saturday urged Union Finance Minister Pranab Mukherjee to direct the banks not to charge the normal rate of interest on the rescheduled loans of flood-hit farmers in the state.
Chief Minister N Kiran Kumar Reddy, in a letter to Mukherjee, said that once the crop loans were rescheduled, they became medium term loans which were payable over a period of 3 years. These medium term loans are charged at the prevailing rate of interest by the banks.
The interest subvention available on the crop loans ceases to be applicable to the rescheduled loans, Kiran Reddy wrote.
Urging the Union Finance Minister to make use of the central scheme of interest subvention under which 3% interest was charged (inclusive of 1% for prompt payment), the Chief Minister said that this move would go a long way in helping the farmers who were in distress, and were in need of immediate relief.