The Reserve Bank of India (RBI) on Thursday said it would set up an internal working group to examine issues pertaining to agricultural loans, including regional disparity and extent of coverage.
The central bank also raised the limit for collateral-free farm loans to 1,60,000 rupees from the current 1,00,000 rupees, in view of overall inflation and a rise in agriculture input costs.
The move comes days after government pledged 75,000 crore rupees ($10.50 billion) to support poor farmers and reduced the tax burden for the middle class.
The RBI unexpectedly lowered interest rates on Thursday and shifted its stance to "neutral" from "calibrated tightening" to boost a slowing economy after a sharp fall in the inflation rate.
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