Kisan Credit Card (KCC) is a credit programme launched in 1998 by Reserve Bank of India and National Bank for Agriculture and Rural Development (NABARD). The main objective of the scheme was to meet the short term credit needs of the farmers during the crop season. The scheme is offered by all state cooperative banks, RRBs, public sector banks, small finance banks. The scheme was also introduced to reduce the dependence of Indian farmers on informal banking sector. It help the farmer by providing timely credit at low interest rates in simple and hassle free manner.
Then Finance Minster, Yashwant Sinha proposed the scheme in Budget session in the year 1998-99. As a result, the model scheme was prepared by National Bank for Agriculture and Rural Development (NABARD) on the recommendation of R.V Gupta committee to provide credit for agriculture needs of the farmers.
The scheme was further extended for the investment credit requirement of farmers viz. allied and non farm activities in 2004. The scheme was further revisited in 2012 by a working Group under the Chairmanship of Shri T. M. Bhasin, CMD, Indian Bank with a view to simplify the scheme and facilitate issue of Electronic Kisan Credit Cards.
Important developments in KCC scheme implementation
- 14 Aug 1998 – Introduction of KCC Scheme and circulation of Model KCC scheme to banks
- 14 Jun 2001 – Personal Accident Insurance Scheme (PAIS) for KCC holders introduced
- 09 Aug 2004 – (i) Scheme to cover term loan for agriculture & allied activities under KCC introduced (ii) Validity of Kisan Credit Card increased from 3 years to 5 years
- 01 Jun 2006 – In response to Union Finance Minister’s budget announcement (2006-07), interest on short term credit to farmer was fixed at 7% up to KCC upper limit of Rs. 3.0 lakh on principal amount.
- 31 Oct 2006 – KCC scheme for the borrowers of Long Term Cooperative Credit Structure i.e., State Coop Agri & Rural Dev Banks introduced
- 29 Mar 2012 – Kisan Credit Card – a comprehensively revised KCC scheme incorporating many new components (composite loan, 10% & 20% provisions for consumption & asset maintenance, year-wise drawing power for five years, etc.) was launched
- 09 Nov 2012 – Scheme for issue of KCC in the form of interoperable RuPay Cards
- 15 Nov 2012 – In a meeting of Union Finance Minister with Banker, it was decided to convert all old KCCs into ATM-cum-Debit/RuPay Cards
- 01 Aug 2014 – Support for ICT solutions through POS/ micro-ATMs and RuPay Kisan Cards under KCC scheme
- 08 Jul 2015 – Coverage of KCC holders under Atal Pension Yojna (APY)
Objective of Kisan Credit Card (KCC)
The Kisan Credit Card scheme was launched to provide adequate, timely and cost effect credit to the farmers during the crop season.
As earlier, a large number of farmers used to depend on informal sources of credit like money lender to purchase seeds, fertilizer, pesticides and other cultivation needs. The informal sources of credit are not expensive but also counter productive. So they were unable to pay huge interest to the lender.
So, Kisan Credit Card (KCC) was introduced to extend credit support to farmers using simplified and flexible procedures by Indian Banks.
So key objectives of Kisan Credit Card (KCC) includes-
- To meet short term credit needs of farmers for crop cultivation
- Post harvest expenses
- Produce marketing loan
- Consumption requirements of farmer household
- Working capital requirement maintenance of farm assets and allied activities to agriculture
- Investment credit need for agriculture and allied activities.
Features of Kisan Credit Card (KCC)
Kisan Credit Card (KCC) is offered by all regional rural banks, Cooperative Banks, PSBs. The scheme was launched to provide easy short term loan to all farmers including small and marginal farmers, share croppers and tenants. It was further extended to term loans for agriculture and allied activities (pump sets, land development, plantation, drip irrigation). Here are some features of Kisan Credit Card –
- Eligibility : All farmers including individual / joint borrowers, tenant farmers, oral lessees and share croppers are eligible for the scheme. Self Help Groups or Joint Liability Groups of farmers which include tenant farmers, share croppers etc are also eligible for KCC.
- One time documentation at the first time of availment of KCC loan, thereafter simple declaration about crops to be raised by farmer from subsequent years..
- There is quick and timely availability of credit because of simplified documentation and procedures in KCC.
- The scheme provide credit to meet financial needs of farmers for agriculture and allied activities.
- It also offers flexible repayment schedule post harvest season and enables rescheduling of period of payment in case of a bad crop season.
- The credit limit is decided on the basis of land holding, income and credit history of the farmer.
- Insurance coverage is also available for Kisan Credit Card holders to protect them against any loss of crops due to natural calamities, pest attacks etc.
- Kisan Credit Card holders are covered under National Crop Insurance Scheme which provide insurance cover for crop loans given under KCC scheme for notified crops.
- In case of credit limit above ₹ 1 lakh, card holder has to hypothecate the crops or pledge his land as mortgage. However, collateral security may be obtained at the discretion of bank in some cases.
- Interest subvention / incentive for prompt repayment as advised by GoI / State Govt.
- KCC holder also have option to avail benefits of any type of asset insurance, accident insurance (including PAIS), health insurance and have premium paid through his/her KCC account.
- Kisan Credit Card is valid for 5 years subject to annual review which may result in enhancement or cancellation of the limit / withdrawal of facility depending upon increase in cropping area/pattern and performance of the borrower.
- Security, Margin, Interest Rates etc. are set as per RBI guidelines.
Benefits of Kisan Credit Card
- The procedure to disburse credit to farmer become easy and simplified with easy documentation.
- There is flexiblility of repayment schedule for farmer.
- Repayment post harvest season
- Farmer can avail single credit facility for all type of crops
- so there is no need to apply for different loans for other type of crops
- Reduced Interest rates as compared to other informal sources of credit.
- Credit is available easily at any time as per farmer’s convenience
- No restriction on cash withdrawals subject to credit limit
- Maximum credit limit on the basis of agriculture income
- Margin, security, documentation, terms and conditions as applicable to agriculture advance.
- Accidental Insurance cover for card holders
Kisan Credit Card – Benefits for Banks
- Reduced workload on Staff – As there is no need for repeat documentation and appraisal under Kisan Credit Card.
- Minimum Paper Work and Simplified Documentation Procedure
- Reduced Transaction Cost and easy recovery of loan
How to use Kisan Credit Card ?
The short term component of KCC account is in nature of revolving cash credit facility. There is no restrictions on number of transactions – debit and credit subject to credit limit.
Under Kisan Credit Card, farmers can withdraw the funds using withdrawal slips and Kisan credit card-cum-passbook.
However, following delivery channels are put in place by banks so that Kisan Credit Card is used by farmers to transact in their KCC account
- Withdrawal through ATMs
- Withdrawal through BCs using smart cards
- PoS machine through input dealers
- Mobile Banking with IMPS capabilities.
- Aadhaar enabled cards
What is Person Accident Insurance Cover for Kisan Credit Card holders ?
There is a Personal Accident Insurance Cover (PAIS) for all the farmers holding Kisan Credit Card. The Insurance cover is as follows-
- Death due to accident – ₹ 50,000/-
- Permanent Total Disability – ₹ 50,000/-
- Loss of two limbs or two eyes or one limb and one eye – ₹ 50,000/-
- Loss of one limb or one eye – ₹ 25,000/-
Annual Premium payable on personal accident insurance scheme (PAIS) – ₹ 15/- while ₹ 45/- for 3 year policy.