Kisan Credit Card: A Crucial Lifeline for Indian Farmers
The Kisan Credit Card (KCC) Scheme provides farmers with a credit card that helps them easily access money to buy farming supplies like fertilisers and seeds, as well as to get cash for their production needs. In this blog let us understand the KCC Scheme and How to Apply for it thoroughly.
Introduction
Availability of timely credit is critical for Indian agriculture to achieve desired growth so that it benefits more than 50% population deriving their livelihood from agriculture. Time and again successive governments in India have formulated various financial support schemes and one such is Kisan Credit Card (KCC) Scheme, which provides institutional credit at concessional rates to farmers for their credit requirements.
Introduced in 1998 to meet the short-term funding needs of farmers, the Kisan funding Card Scheme has been an essential support system for farmers in India. The program has reduced the agricultural sector's dependence on non-institutional credit while increasing the accessibility of agricultural financing.
As of January 31, 2024, banks have disbursed 7.50 crores KCC with a maximum of INR 9.4 lakh crores.
What is Kisan Credit Card Scheme?
Kisan Credit Card (KCC) Scheme envisages issuing KCC to farmers to readily buy agriculture inputs such as fertilisers, seeds, etc and draw cash for their production needs. The KCC are issued on the basis of land holdings.
The scheme has undergone various revisions from time to time. In 2004, it was extended to meet the investment credit needs of farmers for non-farm activities. In 2012, Electronic KCC came into existence.
Recently, the government extended the benefits of interest subvention under KCC to animal husbandry and fisheries sector.
What are the Objectives of Kisan Credit Card Scheme?
The KCC initiative seeks to furnish farmers with prompt and sufficient working capital to address their short- and long-term loan needs through a streamlined single-window process. The following credit needs of farmers are covered under the scheme:
- Immediate borrowing needs.
- Growing crops.
- Farmers' needs for goods and services.
- Create loans for business purposes.
- Costs for tasks after harvesting.
- Money needed for maintaining farming equipment and related tasks.
- Long-term loan needs (Term Loan)
- Buying farm tools such as tractors.
- Investing in tasks related to farming.
- Money spent on small-scale watering and improving land.
What is the credit limit for the Kisan Credit Card Scheme?
The highest credit limit for KCC is the total of the short-term credit limit for the 5th year and the expected long-term credit need.
The total limit for KCC is 3 lakh INR per year, with a maximum of 2 lakh INR for each farmer involved in animal husbandry or fishing operations.
Marginal farmers may receive a flexible maximum of INR 10,000 to INR 50,000 through a Flexi KCC.
What are the main points of the Kisan Credit Card Scheme?
Interest Subvention: For short-term crop loans up to INR 3 lakhs, there is an interest discount of 1.50% if the loan is not paid back on time, and 3.00% if it is paid back on time. This discount applies to a 7% simple interest rate per year.
The KCC is good for 5 years, but banks will review it regularly.
payback Period: The time to pay back a crop loan depends on when the crops are expected to be harvested and sold. For term loans, it depends on the type of investment. For fisheries and animal husbandry, the payback period is set based on how money is earned from those activities.
Drawing Limit: The plan puts a limit on cash credit for short-term needs based on the type of crops. Farmers can take out money as needed for maintaining their farm, growing crops, and personal use.
There are no limits on the number of withdrawals and deposits in this plan, and the short-term part of the KCC is a cash credit option that can be used repeatedly.
Collateral Free Loan: This program allows farmers to get loans without any collateral up to INR 1 lakh. The cost of the loan is split between the bank and the borrower, with the bank covering two parts for every one part the borrower pays.
Accidental Insurance: Beneficiaries with KCC have personal accident insurance that covers up to INR 50,000 for lifelong disability and death, and up to INR 25,000 for other risks.
Electronic Kisan Cards: All new KCCs for farmers will now be smart cards that also work as bank cards. Additionally, they will receive a smart card that also works as a debit card when they refresh their current KCC.
Implementing Agency: Commercial Banks, RRBs, Small Finance Banks and Cooperatives.
Other Features: You get a RuPay Card that works at ATMs, only need to provide documents once, and there’s a built-in increase in your limit.
What are the security requirements for the Kisan Credit Card Scheme?
Hypothecation of crops as security needed for limits up to INR 1.60 lakh and limits up to INR 3 lakh (in case of tie up).
If you need a loan above the set limits, you will need to provide a mortgage on land or a promise from a third party, in addition to using your crops or assets as collateral.
Who All Are Eligible Borrowers Under Kisan Credit Card Scheme?
- Farmers are individuals or groups who own and work on their farms.
- Tenant farmers, direct landlords, and sharecroppers.
- Joint Liability Groups (JLGs) or Self-Help Groups (SHGs) are groups of farmers, including those who sharecrop or rent farmland.
What documents do you need for a Kisan Credit Card?
- Kindly submit a duly completed and signed application form together with a passport-sized photograph.
- Duplicate of Aadhaar Card with PAN Card/Form 60.
- Photo name, address and signature proof
- Information about land, including Khasra and Satbara records and a report on land value.
- Declaration for using Crop Insurance and Personal Accident Insurance Scheme (PAIS)
- Create an agreement for tie-up plans.
- Security or other relevant papers (if needed)
What is the procedure for online application of a Kisan Credit Card?
- Go to the bank's website where you want to apply for the KCC.
- Select the Kisan Credit Card choice from the list.
- Click the Apply Online button to open the application form on a new page.
- Complete the application form and press the send button.
- After you send the form, you will get a tracker ID to monitor your application. If you qualify, the bank will contact you in 3-4 days.
What are the new efforts to broaden the KCC's scope?
In 2018-19, the government expanded the KCC plan to include animal husbandry and fishing.
Since February 2020, the government has extended the plan to cover all PM-KISAN beneficiaries.
To improve digital farming loans, NABARD will connect its e-KCC loan system with the Public Tech Platform for Frictionless Credit run by the Reserve Bank Innovation Hub.
