Interest Subsidy for Agricultural Crop Loans (Zero-Interest Crop Loan)
Farmers who borrow through Karnataka’s cooperative credit network pay no interest on short-term crop loans; the state pays the interest for them.
Run by: Department of Co-operation, Government of Karnataka
- Short-term crop loan interest
- 0%
- Limit on the department’s page
- Up to ₹3 lakh
- Medium and long-term loans
- 3% up to ₹10 lakh
- 2026-27 lending target
- ₹30,000 crore, 38 lakh farmers
Overview
Most small farmers in Karnataka borrow for seed, fertiliser and labour from their village Primary Agricultural Cooperative Society (PACS). It gets its money from the District Central Cooperative Bank and the state Apex Bank. Under this scheme the state government pays the interest to these cooperative institutions, so the farmer does not pay it.
The Department of Co-operation’s own page says short-term farm loans up to ₹3 lakh are given at 0% interest, and loans for animal husbandry and fisheries up to ₹2 lakh are also at 0%. Medium and long-term farm loans up to ₹10 lakh are given at 3% interest. Loans to self-help groups are at 4%, a rule running since 1 April 2007. The state has run such interest support since 2004-05. The Apex Bank’s scheme note says a farmer who does not repay by the due date has to pay the normal interest rate.
On 6 March 2026 the Chief Minister presented the 2026-27 budget. He said the state would give ₹30,000 crore of zero-interest loans to 38 lakh farmers. This is a target for the year, not a promise that every farmer will be served.
The scheme depends on money being available. In March 2025 the Cooperation Minister told the Assembly that NABARD had cut its funds for subsidised farm loans by 58%, so societies could not lend to every eligible farmer. He also said ₹5,800 crore had been lent the year before. If your society says it has no funds this season, ask when the next lot arrives.
What you get
The benefit as the state notifies it — nothing here is an estimate.
- No interest on short-term crop loans taken from cooperative societies and cooperative banks — the state bears it.
- Animal husbandry and fisheries loans up to ₹2 lakh are also interest-free.
- Medium and long-term farm loans up to ₹10 lakh at only 3%.
- You borrow from the village society itself, close to home.
Who is eligible
State schemes usually state their criteria as prose rather than a checklist. This is that prose, unpacked — the department’s verification is what decides.
You qualify if
- A farmer who is a member of a Primary Agricultural Cooperative Society (PACS), or who borrows from a District Central Cooperative Bank.
- Farm loans only. Non-farm loans are not covered.
- You have not defaulted. If you do not repay on time, you pay the normal interest rate from the due date.
- The benefit applies up to the limit set for each loan type. Anything above the limit carries the normal rate.
Not covered
- Non-farm loans.
- The part of a loan above the scheme limit.
Documents you need
Have these ready before you start — most rejections are a missing paper, not a missing right.
- Land record showing your name (RTC / Pahani)
- Aadhaar card
- Membership details of your cooperative society
- Bank or society account details
- Any other paper your society asks for — ask for its full list
How to apply
Fewer steps than a central scheme, and usually one office rather than a portal.
- 1
Join your village cooperative society
If you are not a member of your PACS yet, ask the society secretary how to become one.
- 2
Ask for a crop loan before the season
Apply with your land record and Aadhaar. Ask for the current 0% limit and whether funds are available this season.
- 3
Use the loan for farm work
Buy seed, fertiliser and other inputs. Keep the bills.
- 4
Repay on or before the due date
Repay the principal on time. This keeps your interest at zero.
If something goes wrong
Missing from the list, or payment stuck — here is the channel the department itself publishes for it.
- If the society refuses a loan or delays it, go to the Assistant Registrar or Deputy Registrar of Co-operative Societies of your taluk or district. The Department of Co-operation lists these offices on its Sahakara Sindhu website.
- For anything not solved, use Janaspandana, the state grievance system, at ipgrs.karnataka.gov.in or dial 1902.
Frequently asked questions
Is the zero-interest limit ₹3 lakh or ₹5 lakh?
The Department of Co-operation’s own scheme page lists ₹3 lakh. The 2023-24 state budget announced raising the zero-interest short-term limit to ₹5 lakh, and news reports still mention ₹5 lakh. We could not find a single current order that settles it, so ask your society or Deputy Registrar what limit is being applied to your loan.
Is this the same as a loan waiver?
No. A loan waiver cancels a debt. Here you still repay the principal. Only the interest is paid by the state.
Why does my society say there is no money?
The cooperative network lends from limited funds. In March 2025 the Cooperation Minister said NABARD had cut its funds for subsidised farm loans by 58%. Ask the society when funds will come and whether you are on a waiting list.
What if I repay late?
Then normal interest applies from the due date. The Apex Bank’s scheme note says a defaulter has to repay at the normal rate of interest.
Is this connected to the Kisan Credit Card?
Both can be used through cooperative banks. The Kisan Credit Card is a central scheme with its own interest support. This scheme is the state’s. Ask your bank how the two apply to your loan so you do not miss a benefit.
Can I also borrow from a commercial bank at 0%?
This page covers loans from cooperative institutions. Other banks follow different rules. Check with the bank.
Facts checked against sahakarasindhu.karnataka.gov.in on 26 September 2026. editorial policy.