Kisan Credit Card: Big news for farmers. In India, various banks and financial institutions offer multiple programs to provide financial assistance to agriculture and its associated activities. One of the most vital and well-liked schemes is the Kisan Credit Card (KCC) initiative. Introduced by public sector banks in August 1998, this plan supplies prompt and cost-effective credit to farmers for their agricultural requirements. Initially, it was primarily designed to cover seasonal crop expenses, but it has since been broadened to encompass endeavors such as dairy farming, poultry, fisheries, animal husbandry, and beekeeping.
How to obtain a highly affordable loan through the Kisan Credit Card?
The standout characteristic of the Kisan Credit Card is its remarkably low interest rates and government grants. Through the Government of India’s revised interest subsidy program, banks are supported in offering loans at a mere 7% per annum on a maximum loan amount of up to Rs 3.00 lakh under the Kisan Credit Card. Farmers who repay their loans punctually are granted an additional 3% interest reduction by the central government. Consequently, farmers who repay their loans on time receive a loan at a reduced rate of 4% per annum. This interest deduction is applicable for a maximum period of one year, from the loan disbursement date to the actual repayment date or the bank’s designated date, whichever comes first.
Who is eligible to apply?
Farmers and livestock breeders from all backgrounds can benefit from the Kisan Credit Card Scheme. The eligible categories of applicants under the scheme are as follows:
Individual/Joint Landowners: Farmers who work on their own land.
Tenants and Sharecroppers: Tenant farmers, verbal tenants, and sharecroppers.
Groups and Institutions: Self-help groups (SHGs) or joint liability groups (JLGs) of farmers, tenants, or sharecroppers.
Farmers engaged in various activities: Individuals involved in animal husbandry, dairy farming, fisheries, beekeeping, sericulture, mushroom cultivation, and other activities.
As per government regulations, linking bank accounts with Aadhaar is compulsory to access the revised interest subvention under the KCC scheme.
KCC loan limit and available funds
The loan ceiling under KCC is determined based on the farmer’s land holdings, crop type, and undertakings. The scheme also specifies fund limits. A maximum credit cap of Rs 3 lakh is set for farming and post-harvest outlays. Working capital limits of up to Rs 2 lakh are provided for animal husbandry, dairy farming, fisheries, sericulture, beekeeping, etc. Smallholder farmers with land holdings up to 1 hectare are entitled to a Flexi KCC ranging from Rs 10,000 to Rs 50,000. This limit remains in effect for a 5-year period for farming expenses, household necessities, and the acquisition of minor equipment, without being tied to the land’s value.
How is the credit cap and loan amount computed?
The KCC loan limit is established for a 5-year period and functions as a revolving credit line. The loan cap for the initial year is calculated using the following formula:
First year limit = (Crop scale determined by District Level Technical Committee × Cultivated area) + (10% of the limit for post-harvest/domestic requirements) + (20% of the limit for farm asset repairs and maintenance) + Crop/Accident insurance premium.
Limit from 2nd to 5th year: The limit increases by 10% as cost escalation for each subsequent year (2nd, 3rd, 4th, and 5th year).
Term Loan: A term loan element is also included for a 5-year period for land enhancement, irrigation, equipment procurement, etc. The card’s maximum allowable limit is calculated by the short-term limit set for the 5th year and the total term loan amount.
Key features and utility of KCC credit
The Kisan Credit Card Scheme offers a comprehensive solution for all farmers’ needs. Short-term crop necessities encompass seasonal crops, veggies, fruits, flowers, plantations, spices, and medicinal plants. Loans can be obtained for post-harvest expenses and for loans against e-NWR (Electronic Negotiable Warehouse Receipt). Interest subsidy is granted in the first year for restructuring crop loans for farmers impacted by natural calamities.
Moreover, within the KCC scheme, to prevent small and marginal farmers from being compelled to sell their harvest immediately after harvesting at lower prices, they receive interest benefits for up to 6 months on stored produce in warehouses registered with the Warehousing Authority.
Where to get KCC and application process?
Farmers can apply to various financial institutions to obtain a Kisan Credit Card. Authorized institutions to issue KCCs include public-sector banks, private-sector scheduled commercial banks, regional rural banks, rural cooperative banks, small finance banks, and computerized primary agricultural credit societies.
KCC Application Process
Farmers can submit the application form online or offline by visiting their nearest bank branch or through the bank’s official website/portal. The application must be accompanied by an identity card, proof of residence, land documents (or proof of tenure), and Aadhaar card. After the bank verifies eligibility and documents, the KCC is issued.