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Escrow account mechanism operationalised across 20 States under revised crop insurance guidelines
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Tuesday, 23 December, 2025, 08 : 00 AM [IST]
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Our Bureau, New Delhi
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The escrow account mechanism under the revised Pradhan Mantri Fasal Bima Yojana (PMFBY) guidelines has been successfully implemented from the Kharif 2025 season, with 20 out of 24 participating States and Union Territories now onboard, the Ministry of Agriculture & Farmers Welfare informed Parliament.
As part of the updated PMFBY operational guidelines, 2023, States and UTs are now required to maintain an escrow account for their share of premium subsidy and related obligations. Under the framework, governments must commit their liabilities for each crop season in advance by depositing 50 per cent of the estimated premium subsidy into the escrow account. Subsequent instalments are released in line with seasonal discipline outlined in the operational norms.
The process ensures that insurance companies receive confirmation of upfront premium contributions from the concerned State or UT before enrolling farmers on the National Crop Insurance Portal (NCIP). The portal only opens for farmer enrolments once such confirmation is provided, reinforcing greater transparency and fiscal discipline in the implementation of crop insurance benefits.
Escrow accounts are managed by the respective Agriculture or Horticulture Departments of the implementing States and UTs, and are opened with scheduled commercial or cooperative banks based on local preferences. Participating State departments also enter into multi-party agreements with banks and insurance companies to govern the operation and utilisation of these accounts.
To date, 20 States/UTs have operationalised their escrow accounts, allowing them to deposit and disburse their share of premium subsidy for the current crop season. The States yet to open escrow accounts under the mechanism include Andaman & Nicobar Islands, Manipur, Mizoram and Sikkim.
Given that the mechanism has been rolled out recently, the government noted that an impact analysis is not yet feasible at this early stage.
The Escrow Account system is expected to bolster financial discipline in crop insurance implementation, improve enrolment processes and ensure timely subsidy flows to support farmers under PMFBY.
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