Reserve Bank of India notified the Union Budget 2015-16 Interest Subvention Scheme

Reserve Bank of India on thirteen August 2015 notified the Union Budget-2015-16 Interest Subvention scheme (ISS) and asked all banks to provide interest concession of 2 % on short term crop loans of up to three lakh rupees.The central bank in its notification said that interest subvention of 2 % p.a. will be made available to public and private sector banks provided they lend short term credit at the bottom level at 7 % p.a. to farmers.The bank said that extra interest subvention of 3 % will be offered to farmers for repaying the loan promptly from the date of disbursement of the crop loan. This implies that farmers paying promptly would get short term crop loans at 4 % during the year 2015-16.To provide relief to farmers affected by natural calamities, the reserve bank has said that interest subvention of 2 % will continue to be available to banks for the 1st year on the restructured amount. However, such restructured loans may attract normal rate of interest from the second year onwards.
The government in the budget for 2015-16 proposed to implement interest subvention scheme during 2015-16 fiscal for short-term crop loans up to 3 lakh rupees. After that, the Union Government on twenty one July 2015 extended ISS to Public Sector Banks (PSBs), private sector commercial banks, rural regional banks (RRBs), cooperative banks and NABARD.

About RBI

The Reserve Bank of India (RBI) is India's central banking institution, which controls the monetary policy of the Indian rupee. It commenced its operations on 1 April 1935 during the British Rule in accordance with the provisions of the Reserve Bank of India Act, 1934 The original share capital was divided into shares of 100 each fully paid, which were initially owned entirely by private shareholders.  Following India's independence on 15 August 1947, the RBI was nationalised on 1 January 1949.
The RBI plays an important part in the Development Strategy of the Government of India. It is a member bank of the Asian Clearing Union. The general superintendence and direction of the RBI is entrusted with the 21-member Central Board of Directors: the Governor (Dr. Raghuram Rajan), 4 Deputy Governors, 2 Finance Ministry representatives, 10 government-nominated directors to represent important elements from India's economy, and 4 directors to represent local boards headquartered at Mumbai, Kolkata, Chennai and New Delhi. Each of these local boards consists of 5 members who represent regional interests, and the interests of co-operative and indigenous banks.The bank is also active in promoting financial inclusion policy and is a leading member of the Alliance for Financial Inclusion.