RBI Raises Collateral-Free Loan Limit for Farmers to ₹2 Lakh

The move aims to ease financial pressures on farmers facing rising costs, with the new limit effective from January 1, 2025.

The Reserve Bank of India (RBI) has increased the collateral-free agricultural loan limit from ₹1.6 lakh to ₹2 lakh to address inflation and rising agricultural input costs.
The updated loan cap, effective January 2025, will also apply to loans for allied agricultural activities, supporting income diversification for farmers.
Small and marginal farmers, who comprise over 86% of the farming population, are expected to benefit significantly from improved credit access.
Banks have been instructed to waive collateral and margin requirements for loans under the revised limit and to expedite implementation of the new guidelines.
The initiative aligns with government programs like the Modified Interest Subvention Scheme, promoting sustainable farming practices and rural economic growth.