Kisan Credit Card Scheme / KCC Loan- A Life-Changing option for Farmers

Kisan Credit Card or KCC Loan was introduced and pioneered by the National Bank for Agriculture and Rural Development and popularly known as NABARD in consultation with the R.B.I. This Kisan Credit Card was introduced by the Government of India in August 1998.

Arrangement of funds is very crucial for running any business. Similarly, the credit facility is one of the most crucial requirements for the farmers. Farmers need credit for various purposes such as cultivation, buying seeds, buying farming equipment and land development.

Therefore, we can say that the Kisan Credit Card Scheme or KCC Loan is a medium for meeting the credit requirements of the farmers and for the holistic development of the agriculture sectors across India.

Earlier it was seen that most of the farmers heavily relied on informal and unorganised credit sources for meeting their farming-related expenses.

Since the banking facilities for such credit requirements was not adequate and also a very lengthy process, that made these informal lenders exploit these farmers to the maximum tune. They charged an interest rate well beyond the bank rates.

This caused tremendous hardship to the farmers across India. But finally, the Kisan Credit Card Scheme was launched for ensuring adequate and cost-effective credit availability to the farmers in a very simple way.

As per the latest guidelines issued under the PM-KISAN Scheme, Kisan Credit Card to ensure loans up to ₹3 lakhs at just 4% interest for farmers. Is not it a great move? What do you think?

⇒ What is a crop loan or KCC Loan?

A crop loan can be defined as a loan given for meeting farmers’ various agricultural needs. Generally, farmers need credit for the continuation of cultivation activity. A farmer is primarily given loans for two purposes such as crop loan and term loan.

Loans offered under the Kisan Credit Card Scheme or KCC loan is revolving cash credit in nature. This means this crop loan offers the flexibility of any number of withdrawals and repayment within the limit.

This facility provides flexibility to a farmer in withdrawing loan as per his convenience and repayment at the reduced interest cost. This ensures that the farmer’s profitability increases.

Most of the Indian village population primarily depend on earning from agricultural operations. The agriculture sector is one of the important sources for earning bread and butter for them.

But a few years ago there were hardly any commercial credit institutions who were very much interested in offering credit to the farmers. This caused hardships to the farmers who could not afford credit facilities extended by the Mahajans or Locan Jamindars.

So, the Kisan Credit Card Scheme came as a boon to the farmers. This loan facility has made the farmers believe in themselves and uplifted their socio-economic conditions.

Their credit requirements can be classified as following three terms such as:

1. Short-Term Credit( Up to Fifteen months):

For meeting cultivation activities such as buying seeds, planting seeds, fertilizers, pesticides, bullocks, arranging water resources and etc.

Generally, this short term credit is repaid within the next agricultural produce such as credit taken for Rabi crop and repaid after selling Kharif crop and vice-versa. This credit is generally extended by co-operative societies and commercial banks.

2. Medium-Term Credit(From 15 months to 5 years):

For buying agricultural implements, buying cattle, making water resources. This loan is repaid within the span of fifteen months to five years. This credit is generally given by co-operative societies and commercial banks.

3. Long-Term Credit(More than 5 years):

Long term credit is taken for land improvement, digging of wells, pump set installation and buying of tractors and harvesters.

This credit is generally given for a period of more than 5 years. Long term credit is given by the Primary Co-operative Agricultural and Rural Development Banks(ARDBS).

The agriculture sector across India would have vanished without the help of the NABARD. NABARD has introduced many schemes that offered credits to the informal sectors in different ways.

Today there are many financial institutions including commercial banks, Co-operative Banks and Regional Rural Banks who are ready to extend crop loans to the farmers. This crop loan or KCC loan has been able to transform the lives of the farmers across India to a great extent.

You may read the following topics:

⇒What is Kisan Credit Card?

It was really very challenging job for the financial institutions to provide farmers with timely and adequate financial help at a very low cost or interests. Extending credit used to take a very long time followed by a lengthy procedure.

This prevented the farmers from seeking financial help from the financial institutions and this made them bound to take loans from the informal sectors at very high-interest rates.

If any year, the crop production is not as desired for reason such as natural calamities, they are not in a position to repay the debts taken from outside. This caused the farmers to commit suicides. This has been the real scenario for the last few decades across India.

Therefore, the introduction of the Kisan Credit Card Scheme not only extends financial help to the farmers but also it was able to reduce the suicidal cases by so far. Kisan Credit Card Scheme meets the credit requirements for the agricultural or alied activities.

Kisan Credit Card acts like a Bank Pass Book. Every Kisan Credit Card-holder is entitled to get a Pass Book or Credit Card issued by the Primary Agriculture Co-operative Societies(PACS) or other financial institutions.

This credit card contains crucial information such as photographs of the cardholder, his specimen signature, cultivation area for each crop and lastly the amount of loan sanctioned in his favour.

⇒ What are the features of Kisan Credit Card or KCC?

1. Obtaining a Kisan Credit Card is very easy. The whole procedure is designed in a very simple way keeping in mind the status of the farmers. One can avail this card at his own suitable time with his convenience.

2. Kisan Credit Card Scheme allows one to get a loan amount from ₹50,000/- to ₹3,00,000/- per year depending on the criteria set by various financial institutions.

3. KCC holder can transact in his account any time he wishes and any amount he may like. There are no such restrictions on using this money up to his sanctioned limit.

4. Govt. of India has introduced RUPAY debit card through which a farmer can transact any amount using this card even at the ATMs at his own convenience.

5. Kisan Credit Card allows a farmer interest subvention if he is able to repay his dues within the due dates.

6. Every KCC comes with crop insurance. This feature is very important from the farmer’s perspective.

7. A Kisan Credit Card is generally valid for a period of 5 years from the date of the issue.

8. The farmers who are eligible for Kisan Credit Card would be issued a smart card cum Debit card along with the KCC.

9. Easy loan availability and reduced interest cost lead to increased profitability to the farmers.

10. This Kisan Credit Card provides insurance coverage for KCC holders for their asset as well as personal accident insurance scheme.

11. KCC holder will get maximum ₹50,000/- as death coverage and ₹25,000/- for other risks.

12. The premiums of such insurance coverage are jointly borne by the banks and the farmers in 2:1 ratio.

13. Minimum documentation and flexibility in the withdrawal of funds under the Kisan Credit Card Scheme.

14. Rescheduling of loans is permissible in case if there is any damage to crops due to the natural calamities.

⇒ What are the objectives of the Kisan Credit Card Scheme or KCC Loan?

The primary objectives of the Kisan Credit Card Scheme or the KCC Loan are to bringing the agricultural industry under the banking network and to provide them credit facilities at a very affordable cost in time.

Time is the crucial factor for farmers. If a bank can not disburse loans to farmers within the crop time schedule, it will be of no use to the farmers and they will be ruined completely.

Because crop cultivation largely depends on weather conditions of particular regions. They have to have plant seeds and sow them in a very timely manner. So, helping them in buying and planting seeds within the crop time schedule is very important objectives of this Kisan Credit Card Scheme.

Therefore, this KCC ensures that no farmers are deprived of such credit facilities and this will also ensure the economic development of the agricultural industry.

So, the Kisan Credit Card Scheme or KCC loan helps a farmer by granting loans to them in meeting the following expenses such as :

1. Harvesting expenses;
2. Crop selling expenses;
3. Meeting his household expenses;
4. Meeting expenses for agricultural activities;
5. Capital expenses such as buying of land, land development expenses, purchase of tractors and harvesting machines and etc.

⇒ What is the Eligibility Criteria for the Kisan Credit Card Scheme?

A farmer has to satisfy the following conditions to get a Kisan Credit Card :

1. Farmer’s age must be between 18 years to 70 years.

2. He has to be a cultivator of his own land.

3. He must not have any previous history of non-repayment of the loan or loan defaulting history.

4. Bargadars or Patta holders or landless farmers would be issued need-based crop loans under the Joint Liability Group.

5. If a farmer aged more than 60 years applying for a loan, he must bring a person below 60 years of age as co-borrower. That means he has to apply for a joint loan in this case.

⇒How can I get Kisan Loan of KCC Loan?

Getting a Kcc loan is not very difficult. The whole process has been designed in a very simplistic manner for prompt disbursement of the loan. To get a Kisan Credit Card Loan you must satisfy the following conditions:

1. First, you have to submit an application in the prescribed format to your preferred or nearest bank.

2. Furnish information regarding his land area and also his different crop cultivation program.

⇒Documents Required for Kisan Loan of KCC Loan?

You have to submit the following documents for KCc loan:

• Identity Proof: Voter ID/Aadhar Card/PAN Card/Passport/Driving Licence etc.
• Address Proof: Voter ID/Aadhar Card/Passport/Driving Licence etc.
• Land related Documents.
• A passport-sized photo of the applicant.

⇒ What is the validity period of the Kisan Credit Card?

The validity of a Kisan Credit Card is 5 years only. However, on review by the banks, it can further be extended by up to an additional 3 years.

⇒ How do you take KCC?

Taking a KCC loan is not as difficult as you think. You can apply using both online and offline facilities. Banks have made both the facilities very simple. However, you need to satisfy some criteria and also need to follow some procedures.

⇒What is KCC limit?

The credit limit offered under the Kisan Credit Card Scheme primarily depends on the following factors such as:

• Operational land holding,
• The cropping pattern of that district,
• The Scale of Finance for different crops as decided by the District Level Technical Committee (DLTC),
• Post-harvest/household consumption requirements,
• Repairs and maintenance expenses of farm assets,
• Requirements for crop insurance and or accident insurance, health insurance & asset insurance.

The formula so given by the RBI is as follow:

Scale of finance for the crop (as decided by District Level Technical Committee) x Extent of area cultivated + 10% of limit towards post-harvest/household/ consumption requirements + 20% of limit towards repairs and maintenance expenses of farm assets + crop insurance and/or accident insurance including PAIS, health insurance & asset insurance. (Data Courtesy: Reserve Bank of India Website: https://www.rbi.org.in/ )

⇒Which banks provide Kisan card?

Different financial institutions, commercial banks, Co-operative Banks and Rural banks offer Kisan Card. The following banks offer Kisan card:

• State Bank of India(S.B.I),
• Bank of India(B.O.I),
• Bank of Baroda,
• Axis Bank,
• Industrial Development Bank of India (IDBI),
• HDFC Bank,
• National Bank for Agriculture and Rural Development (NABARD),
• National Payments Corporation of India (NPCI).

⇒ How do I apply for a KCC card online? / Kisan Credit Card Online Apply?

Banks have made provisions for making online applications for this KCC card online.

• Step-1. You need to visit the bank’s official website,
• Step-2. Now find the Kisan Credit Card tab from the available list of credit cards,
• Step-3. Now click on the Apply button tab,
• Step-4. Here, you will be redirected to the online application page,
• Step-5. Fill the required fields accurately and click on the Submit button,
• Step-6. Finally, when the application is submitted, the system will generate an application reference number. Kindly take a record of the same.

⇒ Kisan Credit Card interest rate calculator

You can visit the following link for the Kisan credit card interest rate calculator.

KCC Eligibility Calculator