Kisan Credit Card

The Kisan Credit Card (KCC) scheme, initiated in 1998, provides farmers with a credit facility based on their holdings for purchasing agricultural inputs like fertilizers, seeds, and pesticides, as well as for withdrawing cash to meet their production needs. The scheme, further expanded for investment and non-farm credit requirement in 2004, was revised again in 2012 to simplify processes and issue Electronic Kisan Credit Cards.

Objective of the Scheme

The Kisan Credit Card scheme aims to provide adequate and timely credit support through a streamlined banking system, offering farmers a single-window credit facility with a simplified procedure for cultivation and other agricultural needs. The key objectives are:

To meet short-term credit requirements for crop cultivation.
To cover post-harvest expenses.
To provide produce marketing loans.
To fulfill consumption needs of the farmer's household.
To provide working capital for maintaining farm assets and allied activities.
To meet investment credit needs for agriculture.

Eligibility

The following individuals and groups are eligible for the Kisan Credit Card scheme:

Farmers, including individual and joint borrower owner-cultivators.
Tenant farmers, oral lessees, and sharecroppers.
Joint Liability Groups (JLGs) or Self-Help Groups (SHGs) of farmers, including tenant farmers and sharecroppers.

Implementation of the Scheme

The implementation of the Kisan Credit Card scheme is entrusted to Commercial Banks, RRBs, Small Finance Banks, and Cooperatives.

Fixation of Credit Limit

The credit limit for the Kisan Credit Card comprises the following:

The short term limit for the first year: Scale of finance for the crop (as estimated by the District Level Technical Committee) multiplied by the area cultivated + 10% for post-harvest/household needs = 20% for maintenance expenses + insurance coverage.
Second and subsequent years: Initial year's limit plus 10% annually for cost escalation/inflation in scale of finance along with estimated term loan component for a five-year tenure.
Cultivating multiple crops: Limit set based on cropping patterns with an additional 10% for annual increases, assuming the same cropping pattern continues for four years. Adjustments are made if cropping patterns change in future years.
Term loan for investments: Credit is provided for investments in irrigation, land development, and equipment purchase. Banks decide the credit quantum and consider existing loan obligations when assessing repayment capacity.
Maximum Permissible Limit (MPL): The highest short-term loan limit for the fifth year added to estimated term loan requirements makes up the MPL or Kisan Credit Card Limit.

Fixation of Sub-limits

Short-term loans are available under different interest rates. Loans up to Rs. 3 Lakh qualify for the Interest Subvention Scheme. Thus, bifurcation into sub-limits of short-term cash credit accounts and term loans is required.
The crop pattern determines the drawing limit for cash credit. Farmers can withdraw amounts for crop production, repairs, and consumption as needed. Revisions exceeding the annually notional hike of 10% may lead to limit reevaluation, and enhanced limits may be advised.
Term loans are based on investment nature, with withdrawal schedules aligned with economic life and repayment capacity.
When limits warrant extra security, collateral may be required by banks as per their policy.

Through Kisan Credit Card, the Indian government strives to empower farmers by simplifying access to necessary funds essential for thriving agricultural activities and improving the agrarian economy.

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Frequently Asked Questions

Common questions about Kisan Credit Card Scheme for Farmers.

The Kisan Credit Card scheme is a credit facility provided by banks to farmers to meet their short-term and long-term credit needs for agricultural activities. It aims to provide timely and adequate credit support to farmers under a single window with a flexible and simplified procedure.

The Kisan Credit Card is available to individual and joint borrowers who are owner-cultivators, tenant farmers, oral lessees, sharecroppers, and Joint Liability Groups (JLGs) or Self-Help Groups (SHGs) of farmers.

The credit limit is determined based on the scale of finance for the crop, the area cultivated, post-harvest expenses, household and consumption requirements, repairs and maintenance expenses, and crop insurance. It also considers the estimated term loan component for a tenure of five years.

The Kisan Credit Card can be used to meet short-term credit requirements for cultivating crops, post-harvest expenses, produce marketing loans, consumption needs of the farmer's household, working capital for farm assets and related activities, and investment credit requirements for agriculture.

The short-term cash credit limit is fixed based on the cropping pattern, while the term loan limit is determined based on the proposed investments during the five-year period and the bank's perception of the farmer's repaying capacity.

Yes, if the revision of the scale of finance for any year by the district-level technical committee is more than the notional hike of 10% contemplated while fixing the five-year limit, a revised drawable limit may be fixed after consulting the farmer.

The short-term loan limit prescribed for the fifth year, along with the estimated long-term loan requirement, is considered the Maximum Permissible Limit (MPL) and is treated as the Kisan Credit Card Limit.

The implementation of the Kisan Credit Card scheme is vested with Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks, and Cooperatives.

Yes, when the card limit or liability arrived at warrants additional security, the banks may take suitable collateral as per their policy.

The article mentions that short-term crop loans up to Rs. 3 Lakh are included under the Interest Subvention Scheme/Prompt Repayment Incentive scheme of the Government of India, which provides subsidies or incentives for timely repayment of loans.