In a significant move aimed at providing financial relief to the agricultural community, the Uttar Pradesh government has announced a substantial cut in interest rates on loans for small and marginal farmers. Chief Minister Yogi Adityanath declared that the interest rate on credit from the UP Cooperative Rural Development Bank will be reduced from 11.5 percent to just 6 percent.
State Government to Bear the Interest Subsidy Burden
The announcement was made by the Chief Minister on December 22, 2025, during the 'Yuva Sahakar Sammelan' held in Lucknow. Adityanath detailed that under the Mukhyamantri Krishak Samridhi Yojana, loans will now be offered at the new concessional rate. The remaining interest subsidy, which bridges the gap between the market rate and the 6% offered to farmers, will be fully borne by the state exchequer.
"Loans will now be provided at six per cent interest rate through the LDB (Land Development Bank), with the remaining interest subsidy to be borne by the state government," the CM stated, highlighting the government's direct support to the farming sector.
Revival of the Cooperative Sector: A Key Promise
In his address, Chief Minister Adityanath drew a sharp contrast between the current state of cooperative banks and their condition prior to 2017. He accused previous administrations of systematically destroying the cooperative ecosystem, which he claimed fostered a "one district, one mafia" culture that led to the sector's collapse and locked up farmers' capital.
The current BJP-led government claims to have orchestrated a major turnaround. Adityanath pointed out that before 2017, sixteen district cooperative banks were declared defaulters and had their licenses revoked by the Reserve Bank of India (RBI).
"Today, these banks are healthy, contributing not only to their members but also to the prosperity of farmers," he asserted. A cornerstone of this revival was the government's move to return Rs 4,700 crore to farmers who had deposits in those 16 defunct banks. The administration is now pushing for the concept of "one cooperative bank per district" to strengthen financial access.
Broader Steps to Strengthen Trust and Self-Reliance
The interest rate cut is part of a larger strategy to rejuvenate cooperatives, which the government views as vital institutions for building rural trust, social capacity, and economic self-reliance. The CM cited ongoing initiatives like digitisation, e-governance, and transparent policies to ensure accountability within the cooperative sector.
Furthermore, Adityanath emphasized the need for proper manpower allocation in cooperative societies that manage critical agricultural inputs like fertilisers, chemicals, and pesticides. He believes such operational improvements will strengthen active farmer participation and ensure the benefits of schemes reach the intended recipients effectively.
This policy intervention is expected to ease the credit burden on countless small-scale cultivators in Uttar Pradesh, potentially boosting agricultural productivity and rural economic stability.
