Double agri subsidy to 4%: IBA to Finmin

By Gopika Gopakumar, CNBC-TV18

Give us more support: Indian Banks' Association

Banks wants the government to increase the support that it gives towards cheap farm loans. Currently, banks are forced to give agriculture loans at 7% and government offers 2% as subsidy. Banks want the government to double agri subsidy to 4%. Banks have said that the huge cost of funds is hurting performance therefore agri subsidy should be doubled to 4%.

CNBC-TV18 has learned that government is likely to hike agri subsidy to 4%. The hike in agri subsidy could put pressure on the exchequer. The Indian Banks' Association, IBA has requested Finance Ministry to repay waived farm loans before September. Banks' Q2 earnings may be hit if government does not repay loans before time. They are already facing additional burden of Rs 7,500 crore.