Under the Modified Interest Subvention Scheme, farmers borrowing short-term crop loans through Kisan Credit Cards pay a net interest rate of 4%. The base lending rate is 7%, reduced to 5.5% by a 1.5% government subvention to lenders. Prompt repayers receive an additional 3% incentive, bringing the effective rate to 4%. The scheme covers loans up to ₹3 lakh for crop cultivation, post-harvest, and allied activities, implemented through NABARD and scheduled commercial banks.

The Modified Interest Subvention Scheme (MISS) is India's primary mechanism to deliver affordable short-term agricultural credit — a core priority-sector lending instrument. It operates through a two-layer subsidy architecture built on top of the Kisan Credit Card (KCC) infrastructure.

Layer 1 — Lender-side subvention: The government compensates banks 1.5% on crop loans up to ₹3 lakh, so banks can lend at 7% gross but effectively receive 8.5%, making it commercially viable to price loans at 7% for farmers.

Layer 2 — Borrower-side prompt repayment incentive (PRI): Farmers who repay on time receive a 3% interest rebate, reducing their effective cost from 7% to 4%. This design nudges credit discipline — irregular repayers pay 7%, not 4%.

The scheme is routed through NABARD for cooperative banks and RRBs, and directly through the Ministry of Finance for scheduled commercial banks. This dual-channel delivery makes it simultaneously a NABARD refinance issue, an RBI priority-sector compliance matter, and a Union Budget fiscal outlay item.

For UPSC, the governance angle is the welfare delivery mechanism and rural credit outreach. For RBI, the KCC integration, priority-sector lending norms, and bank compliance matter. For NABARD, the refinance channel and cooperative bank participation are central. The ₹3 lakh ceiling, the 7% base rate, the 1.5% subvention, and the 3% PRI are the four numbers every examiner tests.