Modified Interest Subvention Scheme (MISS)

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Why in news?

Recently Indian Government approved the continuation of the Modified Interest Subvention Scheme (MISS) for 2025-26.

Modified Interest Subvention Scheme (MISS) – It provoide short-term credit at an affordable rate to farmers through Kisan Credit Card (KCC).
Launch - It is a Central Sector Scheme launched in 2006–07 by the Government of India.
Funding – Fully funded by the central government.
Implementation Mechanism – Implemented by RBI and NABARD.
Operated through
- Public Sector Banks
- Regional Rural Banks (RRBs)
- Cooperative Banks
- Private Sector Banks in rural/semi-urban areas.

Key features

Interest subvention – For Banks the interest subsidy is initially 2%, but later revised to 1.5%.
For farmers short-term loans up to ₹3 lakh at a 7% annual interest.
An additional 3% incentive for prompt repayment, lowering effective rate to 4%.
As per Union Budget 2025–26, the loan limit is enhanced to ₹5 lakh.
Loan Coverage Extended – It covers crop production loans and working capital for animal husbandry and fisheries.
Interest benefit for these allied sectors is applicable up to ₹2 lakh.
Disaster Relief Component – In case of natural calamities, restructured crop loans receive 2% interest subvention for the first year.
It supports farmers during recovery and ensures continuity of agricultural activities.

Significance

It ensures financial inclusion of rural farmers.
It boosts productivity by supporting input needs.
It protects farmers from high-interest informal loans.
It also supports rural and cooperative banks in lending at subsidised rates.
Scheme Continuation – The scheme will continue with the existing structure and 1.5% interest subvention rate for FY 2025–26.

Reference

The Hindu| Modified Interest Subvention Scheme (MISS)