Gujarat govt approves Rs 174 crore interest relief for cooperative crop loans
Gandhinagar, Oct 27
The Gujarat government has approved Rs 174.07 crore in interest assistance to cooperative banks to provide a 2 per cent interest relief on short-term agricultural loans extended to farmers from their own funds between April 1 and September 30, 2025, a move expected to benefit more than 10 lakh farmers across the state.
Agriculture Minister Jitu Vaghani said the decision, taken under Chief Minister Bhupendra Patel's leadership, was aimed at reducing the interest burden on farmers while strengthening the state's cooperative agricultural credit system.
The assistance will cover loans disbursed by cooperative banks from their own funds during the six months.
The state government said the scheme was intended to ensure that farmers could access crop loans at a concessional interest rate of 7 per cent.
"Most cooperative banks had previously charged farmers interest rates ranging from 10 per cent to 13 per cent. To make agricultural credit more affordable and ensure the sustainability of the cooperative lending system, the state government introduced the 2 per cent interest relief scheme in 2009-10," he said.
He said the government had continued the scheme because cooperative banks generally faced a higher cost of funds than other banks.
The interest assistance compensates for this difference and helps prevent the additional cost from being passed on to farmers.
Gujarat has a three-tier cooperative agricultural credit network comprising one state cooperative bank, 18 district central cooperative banks and more than 10,900 Primary Agricultural Credit Societies (PACS).
The network provides short-term crop loans to more than 10 lakh farmers across the state.
According to the minister, approximately 33 per cent of the state's small and marginal farmers are associated with the cooperative credit system. "The latest decision would be particularly beneficial to these farmers," he said.
The cooperative network also plays a significant role in rural areas where nationalised and private banks have limited or no presence.
In several gram panchayats, cooperative institutions remain the primary source of agricultural credit for farmers.
"The assistance would provide direct financial relief to farmers while helping strengthen the cooperative credit structure," he said.
The government reiterated its commitment to ensuring that farmers receive agricultural loans conveniently, on time and at affordable interest rates through cooperative banks.
— IANS
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