Great News for Farmers, RBI is Going to Change KCC Rules, Learn the Details

KCC Rules: The Reserve Bank of India has taken steps towards major changes to the Kisan Credit Card (KCC) scheme. The RBI is preparing to make this scheme more relevant and relevant to the changing needs of farmers and the agricultural sector. To this end, the RBI has issued a proposal, which includes important suggestions such as increasing loan coverage, setting credit limits, and simplifying KCC operations.

In a notification issued on February 6, the RBI clarified that new and revised guidelines related to the Kisan Credit Card will be introduced soon. The aim of modernizing this nearly three-decade-old scheme is to ensure farmers receive timely and adequate financial assistance for farming and related activities.

How much interest is to be paid on KCC?

Currently, farmers receive loans at a concessional interest rate under the Kisan Credit Card. The central government provides a 2 percent interest subsidy, and an additional 3 percent discount is available for timely repayment. Combining these two benefits, the effective interest rate for farmers is approximately 4 percent per annum. Over the years, the scope of this scheme has been expanded and now includes investment loans for farming as well as other agricultural activities.

KCC Scheme has been a success

The scope of the Kisan Credit Card Scheme was expanded in 2004 and reviewed again in 2012 to simplify the process and issue e-KCC cards. While the RBI has established guidelines, banks have been given some flexibility to adapt to local needs and institutional conditions.

Four major changes were proposed in KCC

The first change relates to the approval and repayment of crop loans. The RBI has proposed standardizing crop loans based on their duration. Crops with a maturity period of up to 12 months have been categorized as short-term, and crops with a maturity period of up to 18 months have been categorized as long-term. This will reduce the variation in regulations across states and banks.

The second change relates to setting loan tenures based on the crop. This step is considered necessary, especially for crops that mature over a long period. The RBI has suggested extending the total tenure of Kisan Credit Cards to six years to reduce repayment pressure on farmers and provide them relief.

The third change concerns loan limits. According to the proposal, farmers will be able to receive loans under the KCC based on their actual cultivation costs. Fixing limits based on the crop may alleviate the problem of underfunding and provide farmers with adequate working capital.

The fourth change focuses on promoting technology and sustainable farming. The RBI has proposed expanding the list of expenses covered under the additional 20 percent component for the repair and maintenance of agricultural assets. This will now include expenses such as soil testing, real-time weather information, and certification of organic or better agricultural practices.

RBI seeks suggestions

The RBI has issued this proposal to commercial banks, regional rural banks, and cooperative banks. Farmers, banks, and other stakeholders have been asked to provide their feedback. Interested individuals can submit their feedback through the “Connect2Regulate” platform on the RBI website or by email by March 6, 2026.