Direct Answer
The Modified Interest Subvention Scheme (MISS) is a central sector scheme designed to provide short-term crop loans and working capital to farmers at highly subsidized rates to prevent them from borrowing from non-institutional moneylenders.
🧠 Pedagogical Anchor: Think of the 7% rate as the “Entry Price” of the loan. It is the guaranteed ceiling rate the bank will charge a farmer upfront, regardless of how high market interest rates climb.
🧠 Pedagogical Anchor: Think of the 7% rate as the “Entry Price” of the loan. It is the guaranteed ceiling rate the bank will charge a farmer upfront, regardless of how high market interest rates climb.
Standard Commercial Rate
~ 9% to 11%
Without government interventionMISS Concessional Rate
7% per annum
Guaranteed upfront rate for farmers via KCC
Exam tip: Do not confuse the initial disbursal rate (7%) with the effective rate (4%). If the question asks what rate the loan is initially disbursed at, it is always 7%. The government caps the farmer’s burden at 7% → The government then compensates the bank for the difference to ensure banks do not lose money by lending cheaply.
~ 9% to 11%
Without government interventionMISS Concessional Rate
7% per annum
Guaranteed upfront rate for farmers via KCC
Exam tip: Do not confuse the initial disbursal rate (7%) with the effective rate (4%). If the question asks what rate the loan is initially disbursed at, it is always 7%. The government caps the farmer’s burden at 7% → The government then compensates the bank for the difference to ensure banks do not lose money by lending cheaply.