Modified Interest Subvention Scheme (MISS): How Farmers Get Crop Loans at 4%

Last updated: 2026-11-13 · MockMentor

The Modified Interest Subvention Scheme (MISS) makes short-term crop loans cheaper. Since 2006-07, the Government has paid banks part of the interest so that farmers borrow at 7% a year. Farmers who repay on time get a further 3% Prompt Repayment Incentive (PRI), so their real cost is 4% a year.

In one line: an interest subsidy on crop loans, mostly taken through the Kisan Credit Card, that rewards timely repayment.

At a glance

Item	Details
Started	2006-07
Loan limit	Short-term crop loans up to ₹5 lakh (raised from ₹3 lakh in Budget 2025-26)
Rate to farmer	7% a year
Prompt Repayment Incentive	3%, so effective rate 4%
Subvention to lenders	1.5%
Allied activities	Animal husbandry, dairy, fisheries, beekeeping (sub-limit ₹2 lakh if exclusively allied)

A worked example

A farmer borrows ₹1,00,000 for one year on his KCC.

Step	Amount
Interest at 7%	₹7,000
Prompt Repayment Incentive (3%)	− ₹3,000
Net interest paid	₹4,000

He repays ₹1,04,000 instead of ₹1,07,000.

Special provisions

Natural calamities: restructured loans get 2% subvention for the first year; for severe calamities, up to five years plus PRI, as decided by a High Level Committee.
Post-harvest loans: small and marginal farmers with a KCC get the subvention for up to six months on loans against Negotiable Warehouse Receipts, so they need not sell at harvest-time prices.
Claims are filed digitally on the Kisan Rin Portal (September 2023).

Possible exam questions

Does interest subvention reach the farmers who need it most? Discuss.
How does the Prompt Repayment Incentive affect credit discipline in agriculture?

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