Uttar Pradesh Chief Minister Yogi Adityanath has slashed the interest rate on loans from the Uttar Pradesh Cooperative Rural Development Bank (Land Development Bank) to 6 per cent, shifting the remaining burden to the state exchequer to ease small and marginal farmers’ debt load and strengthen the cooperative banking network.
In a major announcement at the Yuva Sahakar Sammelan and UP Cooperative Expo 2025 in Lucknow, CM Yogi Adityanath declared that LDB loans for small and marginal farmers will now be available at 6 per cent interest, down from roughly 11.5 per cent charged earlier.
The steep reduction is designed to make institutional credit more affordable for cultivators who often rely on high‑interest informal borrowing to pay for seeds, fertilisers, irrigation and labour.
Under the revised arrangement, the state government will bear the remaining interest component as a subsidy under the Mukhyamantri Krishak Samridhi Yojana, effectively sharing the cost of credit with farmers.
Officials say this support will not only reduce repayment stress but also enable farmers to invest in productivity‑enhancing practices, modern equipment and diversification into allied activities such as dairy and horticulture.
Addressing the gathering, Yogi Adityanath termed the move a “significant step” towards empowering small landholders, who form the backbone of Uttar Pradesh’s agrarian economy but often remain the most vulnerable to crop failures, price shocks and debt traps.
He framed cheaper loans as part of a broader effort to make cooperative institutions the primary vehicle for rural development, income generation and self‑reliance.
Farmers, Banks And Government As Stakeholders
The decision directly benefits small and marginal farmers, who typically cultivate less than two hectares and have limited collateral to secure credit from commercial banks.
For them, a 6 per cent interest rate can mean the difference between a manageable repayment schedule and a spiral of overdue instalments that pushes families towards distress sales of land or livestock.
Cooperative banks and the LDB are also key stakeholders. Officials believe that, with interest becoming more affordable and repayments less burdensome, cooperative institutions could see an improvement in recovery rates and asset quality.
Better repayment behaviour may, in turn, allow them to expand their lending portfolio, extend services to more remote villages and develop products tailored to women farmers, tenant cultivators and youth-led agri‑startups.
For the state government, the subsidy outlay represents a calculated investment in rural stability and growth. The administration expects that easier access to formal credit will reduce dependence on moneylenders, lower the risk of agrarian distress and contribute to higher agricultural output and job creation in the cooperative sector.
Politically, the move also strengthens the narrative of a pro‑farmer government ahead of the next electoral cycle.
Cooperative Banking’s Turnaround Journey
The announcement is closely linked to a broader turnaround story in Uttar Pradesh’s cooperative banking system since 2017.
Before that, 16 district cooperative banks had been declared defaulters and stripped of their Reserve Bank of India licences, raising fears over farmers’ savings and closing a crucial credit channel in many districts.
According to the chief minister, sustained clean‑up and reforms have helped recover about ₹4,700 crore of farmers’ dues, restoring confidence in cooperative institutions.
Today, all 50 district cooperative banks in the state are reported to be operating in profit, while the Uttar Pradesh State Cooperative Bank has posted a profit of over ₹162 crore in 2024–25 and mobilised deposits exceeding ₹550 crore.
Yogi Adityanath has repeatedly contrasted the current push for “one district, one cooperative bank” with what he described as the earlier era of “one district, one mafia”, suggesting that cooperative structures are being reclaimed from vested interests and reoriented towards public welfare.
The state government has also aligned its initiatives with the Union government’s emphasis on cooperative‑led growth, especially as 2025 has been designated the International Year of Cooperatives by the United Nations.
The Logical Indian’s Perspective
The interest rate cut on LDB loans is a welcome, concrete step to ease the financial strain on small and marginal farmers, provided the scheme is implemented with clarity and transparency at the village level.
For many cultivators, the real impact will depend on how quickly they can access these concessional loans, whether documentation norms are simplified, and if subsidy payments from the state arrive on time so that banks remain willing partners.
Strengthening cooperative banks, recovering farmers’ dues and reducing the sway of informal lenders can create a more just, humane financial ecosystem in rural Uttar Pradesh, but these gains must be safeguarded from political interference, corruption or elite capture.
The Logical Indian believes that reforms should prioritise dialogue with farmer groups, gender‑inclusive lending, financial literacy and grievance redressal mechanisms, ensuring that benefits reach those historically left out of formal banking.
