Currently the banks are mandated to extend collateral-free agriculture loans up to Rs.1 lakh. This limit of Rs.1 lakh was fixed in the year 2010.In view of overall inflation and rise in agriculture input cost since 2010, Reserve Bank of India vide its circular RBI/2018-19/118 FIDD.CO.FSD.BC.No.13/05.05.010/2018-19 dated February 7, 2019 advised all the scheduled commercial banks (including RRB/SFC) to raise the limit for collateral free agriculture loans from existing level of Rs.1 lakh to Rs.1.60 lakh. Banks may also waive margin requirement for agricultural loans up to Rs.1.60 lakh. As per the Statement on Developmental and Regulatory Policies of RBI dated 07.02.2019 the above changes will enhance coverage of small and marginal farmers in the formal credit system.
