The challenges are that all these agencies should internalize the effects of their policies on financial stability; that all these agencies should complement each other on the identification and the assessment of risks and vulnerabilities; and that policy instruments and tools should be used and calibrated by considering both the micro- and the macro-prudential perspectives to financial stability.
The Interest Subvention Scheme has been running for a decade under which banks and cooperative institutions extend short term crop loans of up to 3 lakh to farmers at a concessional rate of 7 per cent. Timely repayment is incentivised by an additional subvention of 3 per cent.