PMFBY Scheme 2026: Complete Crop Insurance Notes for Bank Promotion & IIBF Exams

The PMFBY scheme is one of the most repeated topics in every bank promotion. IIBF exam. Examiners love it.

Why? Because Pradhan Mantri Fasal Bima Yojana sits at the heart of priority-sector lending. Agriculture finance, and government schemes.

Get this chapter right and you secure easy marks.

The journey of a thousand miles begins with a single step. This guide is that step. We have rebuilt the classic Learning Sessions notes into a sharp. Exam-ready resource for 2026.

If you are sitting for your promotion exam in SBI, PNB, BOI, Canara, or any public sector bank, read this once. Revise it twice. Then attempt our mock tests to lock the concepts in.

What Is the PMFBY Scheme? (Quick Definition)

The PMFBY scheme. Or Pradhan Mantri Fasal Bima Yojana. Is a flagship crop insurance programme of the Government of India. It gives farmers a comprehensive insurance cover against the failure of crops.

The core goal is simple. It helps farmers stabilise their income after a bad harvest. It also encourages them to adopt modern. Innovative farming practices without fear of loss.

For exam purposes, remember the keyword: comprehensive risk cover. The scheme protects against natural, non-preventable risks across the full crop cycle.

Which Crops Are Covered?

PMFBY covers almost all major crop categories. Knowing this list helps you answer direct factual questions.

• Food crops such as cereals, millets, and pulses.
• Oilseeds across both seasons.
• Annual commercial and horticultural crops with available past yield data.

For commercial and horticultural crops. Coverage applies only where a set number of Crop Cutting Experiments (CCEs) are conducted. These CCEs form part of the General Crop Estimation Survey (GCES).

Why the PMFBY Scheme Matters for Your Exam

Agriculture finance is a heavily weighted topic. The PMFBY scheme connects to KCC loans. Priority-sector targets, and government subsidy flows.

Bankers process these insurance enrolments at the branch. So the exam tests whether you understand the operational rules. Not just the theory. That is why premium rates and claim triggers appear so often.

Pair this chapter with our other free guides on government schemes to build a complete revision base.

Is PMFBY Compulsory or Voluntary?

This distinction is a classic exam trap. Read it carefully.

• Compulsory: A farmer taking a crop loan or holding a Kisan Credit Card (KCC) must enrol for notified crops. Note: enrolment rules have evolved over time. So confirm the current loanee position on the latest official IIBF notification.
• Voluntary: Any other farmer with an insurable interest may join. This applies whether or not they have taken a bank loan.

The key term to remember is insurable interest. A farmer must have a genuine stake in the insured crop.

PMFBY Premium Rates: The Most Asked Table

This table is the single most tested fact from the whole chapter. Memorise it cold. The figures below are the maximum premium payable by the farmer.

A simple memory hook: Kharif is 2. Rabi is less (1.5), Commercial is the most (5). The balance of the actuarial premium is paid as government subsidy.

Who Pays the Subsidy?

The Central Government and State Government share the subsidy. They equally cover the difference between the actuarial premium. The rate paid by the farmer.

Note that the subsidy sharing ratio has been revised for certain regions. States in recent years. Always confirm the current sharing pattern on the latest official IIBF notification.

How Is the PMFBY Scheme Implemented?

Implementation runs through insurance companies, not banks. Banks act as enrolment and premium-collection points.

• Implementing Agency (IA): The Agriculture Insurance Company (AIC). Other empanelled private general insurers run the scheme.
• Selection: The state government selects the IA through a bidding process.
• Tenure: A selected IA can be appointed for at least three years.

Number of Implementing Agencies

The count depends on state size.

• Small states: Usually one implementing agency.
• Large states: Typically two to three implementing agencies.

Bidding Rules for Insurers

Empanelled companies in the bidding process must bid premium rates for all notified crops. They cannot leave any crop out.

Skipping even one crop counts as non-compliance. The company's entire bid is then rejected.

Area Approach: The Unit of Insurance

PMFBY is implemented on an area approach basis. This means losses are assessed for a defined area. Not an individual farm, for widespread risks.

Who Manages the Scheme?

Management responsibility sits with dedicated committees at multiple levels.

• State Level Coordination Committee on Crop Insurance (SLCCCI)
• Sub-Committee to the SLCCCI
• District Level Monitoring Committee (DLMC)

PMFBY Claims and Indemnity Rules

Claim rules are the practical heart of the PMFBY scheme. Expect application-based questions here.

Prevented Sowing Claims

Sometimes a majority of insured crops in a notified area cannot be sown or planted. This happens due to adverse weather.

In such cases, farmers can claim up to 25% of the sum insured. This relief applies when the expected yield is likely to fall below 50% of the normal yield.

Farmers can also claim for losses from severe drought. Floods, and unseasonal rains.

Assessment of Loss

Loss assessment depends on the type of risk. This is a frequent exam distinction.

• Widespread natural risks: Assessed using the area approach.
• Localised perils (hailstorm, landslide, inundation): Assessed at the individual insured field.
• Post-harvest losses (cyclone. Cyclonic rain, unseasonal rain): Assessed at the individual insured field.

Modern technology like remote sensing. Drones can be used to estimate yield losses.

Levels of Indemnity

Three indemnity levels are available for all crops. Matched to the risk profile of the area.

• 70%
• 80%
• 90%

Threshold Yield and Crop Cutting Experiments

The Threshold Yield (TY) is the benchmark yield. Insurance protection triggers when actual yield falls below this level.

Crop Cutting Experiments (CCE)

Crop Cutting Experiments measure actual yield per crop and per unit area. They are conducted on a sliding scale as per scheme guidelines.

State governments can use smartphone applications to capture. Transmit CCE data in real time. This makes yield estimation reliable and transparent.

The cost of running CCEs with technology is shared equally by the Central. State Governments.

Claim Credit and Publicity

• Claim credit: The claim amount is transferred electronically to the farmer's individual bank account.
• Publicity: Adequate advertisement is mandatory in notified villages so farmers can benefit.

Unified Package Insurance Scheme (UPIS)

The Unified Package Insurance Scheme (UPIS) often appears alongside PMFBY. It is a single-window product that bundles several covers.

UPIS was launched as a pilot project across 45 districts. The aim is to give farmers comprehensive financial protection for crops. Assets, life, and safety in one application form.

The biggest advantage is convenience. A farmer gets all required insurance products through one proposal form.

The Seven Sections of UPIS

UPIS includes seven sections. Crop Insurance is compulsory. And the farmer must choose at least two of the remaining sections.

1. Crop Insurance (PMFBY / WBCIS) — compulsory
2. Loss of Life (PMJJBY)
3. Accidental Death & Disability (PMSBY)
4. Student Safety
5. Household
6. Agriculture Implements
7. Tractor

Note that UPIS folds in two flagship schemes, PMJJBY and PMSBY. For claims other than crops, processing is based on individual claim reports.

How to Study the PMFBY Scheme for Maximum Marks

Smart revision beats blind memorising. Follow this simple plan to master the chapter fast.

1. Lock the numbers first. Premium rates, indemnity levels, and the 25% prevented-sowing rule are guaranteed scoring points.
2. Build keyword pairs. Link CCE with GCES, SLCCCI with DLMC, and PMJJBY with PMSBY.
3. Practise application questions. Examiners now favour case-based items, so attempt our mock tests regularly.
4. Revise the formula. The Threshold Yield formula is easy marks if you recall the 7-year. 2-calamity-year rule.
5. Read official updates. Scheme parameters change. So verify current figures on the latest official IIBF notification.

Common Mistakes Aspirants Make

Avoid these frequent errors that cost easy marks in the exam hall.

• Mixing up premium rates. Many swap the Kharif (2%) and Rabi (1.5%) figures. Use the memory hook above.
• Confusing loss assessment. Remember: widespread risk uses area approach. Localised and post-harvest perils use the individual field.
• Forgetting the area unit. Major crops are at village level; other crops at a higher unit.
• Ignoring UPIS sections. Crop insurance is compulsory, plus a minimum of two more sections.
• Assuming figures never change. Treat dated numbers as indicative. Confirm on the latest official IIBF notification.

Frequently Asked Questions (FAQ)

What is the full form of PMFBY?

PMFBY stands for Pradhan Mantri Fasal Bima Yojana. It is the Government of India's flagship crop insurance scheme that protects farmers against crop failure.

What is the maximum premium a farmer pays under PMFBY?

The farmer pays a maximum of 2% for Kharif food and oilseed crops. 1.5% for Rabi food and oilseed crops. And 5% for annual commercial or horticultural crops. The rest is met through government subsidy.

Is PMFBY compulsory for all farmers?

It is compulsory for loanee farmers taking notified crop loans or holding a KCC. Subject to current rules. Other farmers may join voluntarily. Confirm the present loanee position on the latest official IIBF notification.

What are the indemnity levels under PMFBY?

Three indemnity levels are available for all crops: 70%, 80%, and 90%. The level reflects the risk profile of the insured area.

How is PMFBY different from UPIS?

PMFBY is a standalone crop insurance scheme. UPIS is a single-window package that bundles crop insurance with life. Accident, household, and asset covers, with crop insurance being the compulsory section.

Final Words: Turn These Notes Into Marks

The PMFBY scheme is a high-value, low-effort scoring chapter. The facts are finite. The patterns repeat. You simply need clean notes and steady revision.

You have just covered every exam point: premium rates. Subsidy sharing. Area approach. Indemnity levels, the Threshold Yield formula, CCE, and the full UPIS package. That is a complete answer set.

Now reinforce it. Take a few mock tests, browse more free guides, and walk into your promotion exam with confidence. You are right on track. All the best!

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