RBI New KCC Rules 2026: 5 Big Changes That Benefit Farmers Explained

RBI New KCC Rules: The Reserve Bank of India (RBI) has unveiled a draft for a new master direction concerning the Kisan Credit Card (KCC), which is deemed extremely beneficial for agriculture. With the introduction of these new regulations, farmers will not only gain access to increased loan amounts but will also enjoy more flexible repayment timelines. If you are a farmer or utilize a KCC card, it’s important to familiarize yourself with these five significant changes that have been under discussion since February 15th.

The card will now be valid for 6 years

Previously, Kisan Credit Cards were generally issued for a five-year term, necessitating a lengthy renewal process afterward. The RBI has suggested extending the total duration of KCCs to six years. This change will alleviate the need for farmers to frequently visit banks and deal with paperwork.

Repayment will be determined based on the crop.
RBI has associated the loan repayment guidelines with the crop cycle:

Short duration crops: A repayment cycle of 12 months has been established for these.

Long-term crops: An 18-month repayment cycle has been set for these crops.
This adjustment will ease the burden on farmers to repay loans when their crops are not yet ready for market sale.

Revised Drawing Limits

In line with the Budget 2026 indications, loan limits are also being updated. Drawing limits will now be directly tied to the Scale of Finance (SoF). This means that as farming expenses (like seeds, fertilizers, and labor) rise, a farmer’s borrowing capacity will also increase accordingly.

The use of digital payments and e-Rupee

KCC will evolve beyond just a plastic card. The RBI has instructed banks to connect KCCs with UPI and CBDC (e-Rupee). Farmers will now have the ability to make payments directly from their mobile devices when buying seeds or fertilizers in the market. This will reduce the risks associated with carrying cash and enhance transaction transparency.

Funds will also be accessible for modern farming

For the first time, the KCC’s scope has been broadened to encompass technology. Farmers will now be able to allocate a portion of their loan for the following purposes:

Soil Testing
Drones and Smart Irrigation Systems
Certification of organic farming
Real-time weather forecasting services

What are the changes to the interest rate?

The good news is that the old interest rate benefits will continue. A concessional interest rate of 7% will apply to loans up to Rs 5 lakh. If the farmer repays on time, they will receive an additional 3% discount, bringing the effective interest rate to just 4%.

These new RBI rules are open for feedback until March 6, 2026, after which they will be finally implemented. These changes will be a major step towards modernizing Indian agriculture and protecting farmers from the clutches of moneylenders.