Explanation:

exp: The Hon'ble Finance Minister in his budget speech (para 49) for 2006-07 announced that the Government had decided to ensure that the farmer receives short term credit at 7%, with an upper limit of 3.00 lakh on the principal amount. The policy came into force with effect from Kharif 2006-07. The amount of subvention was to be calculated on the amount of crop loan from the date of disbursement up to the date of repayment.

In persuance of this announcement, the Government of India provided interest subvention of 2 % to Public Sector Banks, Regional Rural Banks and Cooperative Banks in respect of short term production credit up to 3.00 lakh provided to farmers out of their own resources, provided that they make available short term credit @ 7% p.a. at ground level.