• The Reserve Bank of India (RBI) raised the limit of collateral-free agricultural loans to ₹1.6 lakh from the current ₹1 lakh with a view to help small and marginal farmers.
  • The Central bank also decided to set up an internal working group (IWG) to review agricultural credit and arrive at a workable policy solution.
  • The Interim Budget had also announced measures to boost the farming sector in addition to annual payment of ₹6,000 to small and marginal farmers.
  • Currently, the banks are mandated to extend collateral-free agricultural loans up to ₹1 lakh.
  • This limit was fixed in the year 2010.
  • Keeping in view the overall inflation and rise in agriculture input costs since then, it has been decided to raise the limit for collateral-free agriculture loans from ₹1 lakh to ₹1.6 lakh.
  • This will enhance coverage of small and marginal farmers in the formal credit system.