Banks will give zero-percent interest Joint Liability Group (JLG) loans to collective farming units under the Neighborhood Groups (NHGs) of the Kudumbashree. This new scheme will made available shortly to the units. The work on new scheme at Kudumbashree units has already started.
To get the unique benefit of the zero-percent interest loan scheme, the collective farming units have to qualify as Joint Liability Groups (JLGs) and NHGs, under the linkage loan scheme.
Under this scheme the collective farming units will be given loan at 9 percent interest. The banks which have joined the scheme include Canara Bank, Union Bank of India, State Bank of Travancore, Federal Bank, Dhanalakshmi Bank, South Malabar Gramin Bank, North Malabar Gramin Bank, Indian Overseas Bank and Central Bank of India.
Also the 5 percent state subsidy will bring down the interest rate to 4% and the special deduction for agricultural loans will further bring down to 2%. And the remaining interest rate will be waived by way of Kudumbashree’s mission subsidies and bank deductions.
Under this scheme there is a loan limit of Rs 1 lakh and in the present situation when it is not easy for the collective farming units to get loan from banks, this will prove beneficial for them.
However in the financial year 2008-09, the collective farming units under the NHGs had cultivated 27,270 hectares of land.
In current year’s budget finance Minister T M Thomas Isaac had announced that the State Government will provide 5 percent subsidy on the interest for the Kudumbashree loans taken from commercial and co-operative banks thus the present loan scheme is the outcome of the announcement.