The Reserve Bank of India (RBI) has announced that starting in January 2025, farmers can take out loans up to ₹2 lakh without needing to give any collateral or mortgage. This is a step to help them manage farming costs better, especially with rising prices these days. Right now, farmers can borrow up to ₹1.6 lakh without needing collateral, but this change will make it even easier for them.
RBI’s decision is important because many farmers rely on loans to help pay for things like seeds, equipment, and fertilizers. By increasing the limit for collateral-free loans, the RBI aims to support the agricultural sector, which is a vital part of India’s economy, contributing around 18% to the country’s total income.
In the past, the RBI had also raised the limit for such loans from ₹1 lakh to ₹1.6 lakh in February 2019. Banks are now required to lend at least 40% of their total credit to important sectors, like agriculture, to help support people who depend on farming.
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