MUMBAI: The Reserve Bank of India ( RBI) on Monday announced modalities for providing 2 per cent interest subsidy on short-term loans of up to Rs 2 lakh for farmers engaged in fisheries and animal husbandry through Kisan Credit Card (KCC).

With this interest subvention, such farmers will get short-term loan of up to Rs 2 lakh at a concessional rate of 7 per cent. The interest subsidy scheme is applicable for loans taken during 2018-19 and 2019-20.

Farmers paying the loans promptly will be eligible for another three per cent discount on the interest rate.

This also implies that the farmers repaying promptly would get short-term loans at the rate of 4 per cent per annum during 2018-19 and 2019-20, the RBI said.

The RBI further said interest subvention is to be provided on a maximum limit of Rs 2 lakh short-term loan to farmers involved in animal husbandry and fisheries.

The farmers already possessing KCC (crop loan) and involved in animal husbandry and fisheries activities can avail a sub-limit for such activities.

"However, the interest subvention and prompt repayment incentive benefit on short-term loan (crop loan + working capital loan for animal husbandry and fisheries) will be available only on an overall limit of Rs 3 lakh per annum and subject to a maximum limit of Rs 2 lakh per farmer involved in activities only related to animal husbandry and/or fisheries," it said.