Public Sector Banks (PSBs) Current Affairs - 2020

Union Cabinet approves Interest Subvention on Short-Term Crop Loan to Farmers

The Union cabinet has approved the Interest Subvention Scheme (ISS) for farmers for the year 2017-18. The Government has allocated Rs. 20,339 crore for this scheme.

Salient Highlights

The objective of the scheme is to make available agricultural credit for Short Term crop loans at an affordable rate. The scheme is expected to boost agricultural productivity and production in the country.

Under this scheme, farmers will be given a short term crop loan up to Rs. 3 lakh payable within one year at an interest rate of 4% per annum.

The scheme will be continued for 1 year and will be implemented by NABARD and RBI. 

The interest subvention will be provided to Public Sector Banks (PSBs), Private Sector Banks, Cooperative Banks and Regional Rural Banks (RRBs) and to NABARD for refinancing to RRBs and Cooperative Banks.

Interest subvention of 5% per annum will be provided to those farmers who pay the short term crop loan in time. Farmers will have to effectively pay only 4% as interest. For farmers who do not pay crop loan in time the interest subvention of only 2% will be applicable as against 5% available above.

This institutional credit is expected to demotivate farmers from taking loans from non-institutional sources of credit at high rates of interest.


Interest Subvention Scheme (ISS) has been running since 2006-07. Under this scheme, crop loans are offered at 7% rate of interest for loans up to Rs.3 lakh. Further subvention of 3% will be provided to farmers who prompt repay the loans within a period of one year from the date of advance.

The scheme also offers post-harvest loans for storage in accredited warehouses against Negotiable Warehouse Receipts (NWRs) for a period of 6 months to check distress sale.

Union Government to infuse Rs. 6,990 crore in nine public sector banks

Union Government is planning to infuse Rs. 6,990 crore in 9 Public Sector Banks (PSB’s) for enhancing their capital and meeting the global risk norms.

In this regard, Government has allocated Rs.11,200 crore in the Union Budget 2014-15, for the first tranche of capital infusion in these banks.

Capital infusion in PSBs was decided on the basis of the performance of the bank. In this case efficiency parameters for all PSBs for last three years were put together. PSBs which were above the average, were considered for capital infusion.

Two parameters were chosen to find efficiency parameters of all PSBs. They were weighted average of return on assets (ROA) and return on equity (ROE) during the last financial year.

9 PSBs are: State Bank of India (Rs 2,970 crore), Bank of Baroda (Rs 1,260 crore), Punjab National Bank (Rs 870 crore), Canara Bank (Rs 570 crore), Syndicate Bank (Rs 460 crore), Allahabad Bank (Rs 320 crore), Indian Bank (Rs 280 crore), Dena Bank (Rs 140 crore) and Andhra Bank (Rs 120 crore).