Kisan Credit Card scheme was implemented by NABARD (National Bank for Agriculture and Rural Development) along with RBI (Reserve Bank of India). The main objective behind the scheme is to provide instant, short-term formal credit to farmers, especially at the time of planting and harvesting season. The Kisan Credit Card (KCC) scheme was introduced to ensure that the credit requirements for farmers in the agriculture, fisheries and animal husbandry sector were being met. This was done by helping them avail short-term loans and provide them with a credit limit to purchase equipment and for their other expenses as well.
Moreover, with the help of Kisan Credit Card (KCC), farmers are exempt from the high interest rates of the regular loans offered by banks as the interest rate for KCC starts as low as 2% and averages at 4%. With the help of this scheme, farmers can repay their loans depending on the harvesting period of their crop for which the loan was given. Over the years, the government has simplified the application process along with the repayment process to reduce the debt burden of farmers. The Kisan Credit Card is readily available at various cooperative banks, public sector commercial banks and rural banks.
Objectives of Kisan Credit Card (KCC)
The main aims of this scheme are to providing adequate and timely credit to farmers under single window for their cultivation and other needs as given below:
- For short term credit requirements for cultivation of crops.
- Produce Marketing loan.
- Post harvest expenses.
- Consumption requirements of farmer household.
- Working capital for maintenance of farm assets, activities allied to agriculture, like dairy animals, inland fishery and also for floriculture, horticulture etc.
- Investment credit requirement for agriculture and allied activities like pump sets, sprayers, dairy animals, floriculture, horticulture etc.
- Short term credit requirements of rearing of animals, birds, fish, shrimp, other aquatic organisms, capture of fish.
Features of Kisan Credit Card (KCC)
The key features of the Kisan Credit Card Scheme are as given below :
- The Kisan Credit Card comes with an insurance coverage by providing protection against the loss of crops due to any natural calamity, pest attacks, etc..
- The KCC also acts as an ATM cum debit card for all borrowers.
- The loan amount for the first year is assessed based on the cultivation cost, post-harvest expenses and the cost of maintaining the farm.
- For the next 5 years, the loan will be extended based on the increase in the scale of finance.
- The Kisan Credit Card is provided with the objective of helping farmers by providing easy credit to meet the financial requirements related to agriculture and allied activities.
- The interest is charged on credit based on a simple interest method. It is charged for 1 year or up to repayment due date whichever is earlier.
Benefits of Kisan Credit Card (KCC)
- The credit disbursement is hassle-free.
- In case of maintaining credit balance in the Kisan Credit Card account, the interest rate of the savings bank is provided.
- The interest rate on Kisan Credit Card (KCC) is low.
- It provides term loan/single credit facility for all agricultural and ancillary financial needs.
- Kisan Credit Card (KCC) also provides flexible repayment alternatives to cardholders.
- The KCC Scheme helps farmers in purchase of fertilizers, seeds, etc., along with aiding them in availing discount from dealers or merchants.
- The maximum tenure for which credit is extended for 3 years, and the repayment can be made after the end of the harvesting season.
- Since the credit is easily available for farmers, their dependency on informal credit sources like money lenders decreases.
- Minimal documentation and maximum flexibility associated with the withdrawal of required funds for the cardholder from the issuing bank.
- No restriction on cash withdrawal as long as it is within the credit limit.
Eligibility Criteria for Kisan Credit Card (KCC)
Kisan Credit Card is available only to those farmers and individuals who satisfy its eligibility criteria. These criteria are:
- Any individual farmer who is an owner-cultivator.
- People who belongs to a group and are joint borrowers. The group has to be owner-cultivators.
- Sharecroppers, tenant farmers, or an oral lessee are eligible for the KCC.
- Self-help groups (SHG) or joint liability groups (JLG) of sharecroppers, farmers, tenant farmers, etc.
- Farmers involved in the production of crop or allied activities such as animal husbandry along with non-farm activities such as fishermen.
Eligible beneficiaries under this scheme under fisheries and animal husbandry are:
- The fish farmers, fishers, SHGs, JLGs and women groups are eligible, provided they own or lease any activity related to fisheries. This could mean owning or leasing a pond, an open water body, tank, a hatchery, etc.
- The applicant should own a registered fishery boat or any other fishing vessel along with having the necessary permission for fishing in sea or estuary.
- The applicant can be a farmer, a tenant farmer, SHGs, JLGs, and dairy farmer who either owns or lease or rent sheds.
- Joint or individual farmers, SHGs, JLGs, or tenant farmers of rabbit, sheep, pigs, birds, poultry, along with having a shed which they either own, rent or leased.
Documents Required to Apply for Kisan Credit Card (KCC) Loan Scheme
To get a Kisan Credit Card, a farmer is required to furnish identity and address proof. Following is the list of approved documents for the same purpose:
Duly filled-in and signed-in application form.
Copy of identity proof such as Aadhaar card, PAN card, Voter ID, driving license, etc.
Copy of address proof document such as Aadhaar card, PAN card, Voter ID, driving license. The proof should have the applicant’s current address to become valid.
A passport size photograph of the applicant.
Other documents such as security PDC as requested by the issuing bank.
The short term component of the KCC limit is in the nature of revolving cash credit facility. There should be no restriction in number of debits and credits. The drawing limit for the current season/year could be allowed to be drawn using any of the following delivery channels.
- Through branch
- By Using Cheque facility
- Through ATM / Debit cards
- Through Business Correspondents and ultra thin branches
- Through PoS available in Sugar Mills/ Contract farming companies, etc., especially for tie- up advances
- Through PoS available with input dealers
- Mobile based transfer transactions at agricultural input dealers and mandies.
- The long term loan for investment purposes may be drawn as per installment fixed.
Interest and Other Charges on Kisan Credit Cards (KCC)
The interest rate on the KCC differs from one bank to other along with its credit limit. However, the interest rate of KCC can be as low as 2% and averaging at 4%. In addition, there are certain subsidies and schemes that the government offers farmers with regard to the interest rate. These would depend on the repayment history and general credit history of the cardholder. Other fees and charges such as processing fees, insurance premium (if applicable), land mortgage deed charges etc. would be set at the discretion of the issuing bank.
Security will be applicable as per Reserve Bank of India (RBI) guidelines prescribed from time to time. Security requirement may be as under:
- Hypothecation of crops up to card limit of Rs. 1.00 lakh as per the extant RBI guidelines.
- With tie-up for recovery: Banks may consider sanctioning loans on hypothecation of crops upto card limit of Rs.3.00 lakh without insisting on collateral security.
- Collateral security may be obtained at the discretion of Bank for loan limits above Rs.1.00 lakh in case of non tie-up and above Rs.3.00 lakh in case of tie-up advances.
- In States where banks have the facility of on -line creation of charge on the land records, the same shall be ensured.