Various governments have also required that lenders insure their loan portfolios.
The apex agricultural bank in India has insured loans in agriculture for
amounts up to 75 percent of outstanding overdues. Similar policies were pursued
in Mexico, where the principal agricultural lender has had its loan portfolio
compulsorily insured by a government-owned insurer. Because default
rates on rural loans are typically quite high, such schemes also provide an explicit
subsidy to rural financial institutions.