The Reserve Bank of India (RBI) has raised the limit for lending collateral-free agri loans to farmers from Rs 1.6 lakh to Rs 2 lakh, the regulations of which will come into effect from January 1, 2025.

• This decision is part of a broader effort to provide financial relief to small and marginal farmers who are struggling with rising input costs.
• The collateral-free agricultural loan limit was Rs 10,000 in 2004. Currently, it is at Rs 1.6 lakh which will increase to Rs 2 lakh from January.
• The Agriculture Ministry stated that this decision was prompted by the increasing input costs and the necessity to enhance credit access for farmers.