Kisan Credit Card Scheme (KCC) was launched by GOI in 1998 to support the farmers financially.
Under this scheme, Farmers are provided loans for purchasing fertilisers, pesticides, seeds, etc.
Scheme Details
This scheme was created by NABARD (National Bank for Agriculture and Rural Development) to provide farmers a short term credit :
- To meet credit requirements for cultivation of crops/poultry birds/dairy animals/fisheries/etc.
- To meet working capital requirement for maintenance of farm equipments and other assets.
- To meet consumption requirements of farmers.
- For providing post harvest expenses.
This scheme is implemented by Commercial Banks, RRBs, Small finance banks and Cooperative Societies.
This scheme offers credit at lower interest rates to famers and saves the farmers from taking loans from unorganised sector at high interest rates.
Eligibility for KCC
- An individual borrower who is an owner cultivator.
- Joint borrowers who are owner cultivators.
- A tenant famer.
- An oral lessee (Oral lessees are not the actual land holders but they cultivate crops in the lands of those who have migrated).
- A share cropper (farmer who rents land and who gives part of his or her crop as rent to the land owner).
- A Self Help Group (SHG) or Joint Liability Group (JLG) of farmers.
- Farmer Producer Organisations Or Farmer Producer Companies.
Age limit
For availing loan under KCC
Minimum age : 18 years
Maximum age : 75 years
And in case the borrower is above 60 years of age, it is compulsory to take a co borrower who is a legal heir.
Limit of KCC
The credit limit under the Kisan Credit Card is fixed as follows :
For all farmers other than marginal farmers :
1.The short term limit to be arrived for the first year (For cultivating single crop in a year):
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.
2.Limit for second & subsequent year
First year limit for crop cultivation purpose arrived at as above plus 10% of the limit towards cost escalation / increase in scale of finance for every successive year (2nd, 3rd, 4th and 5th year) and estimated term loan component for the tenure of Kisan Credit Card, i.e., five years.
To see an illustration click on below link
http://rbidocs.rbi.org.in/rdocs/content/pdfs/04MCKCC03072017_AN1.pdf
3.For cultivating more than one crop in a year
The limit is to be fixed as above depending upon the crops cultivated as per proposed cropping pattern for the first year plus an additional 10% of the limit towards cost escalation / increase in scale of finance for every successive year (2nd, 3rd, 4th and 5th year). It is assumed that the farmer adopts the same cropping pattern for the succeeding four years. In case the cropping pattern adopted by the farmer is changed in the subsequent year, the limit may be reworked.
To see an illustration follow the below link
http://rbidocs.rbi.org.in/rdocs/content/pdfs/04MCKCC03072017_AN1.pdf
4.Term loan for investment(allied activities)
The term loan for investment is provided for land development, minor irrigation, purchase of farm equipments and allied agricultural activities.
The long term loan limit is based on the proposed investments during the five year period and the bank’s perception on the repaying capacity of the farmer.
5.Maximum Permissible Limit
The short term loan limit arrived for the 5th year plus the estimated long term loan requirement will be the Maximum Permissible Limit (MPL) and is to be treated as the Kisan Credit Card limit.
6. Sub Limits
a. Drawing limit for short term cash credit is fixed based on the cropping pattern. The amount(s) for crop production, repair and maintenance of farm assets and consumption may be allowed to be drawn as per the convenience of the farmer. In case the revision of scale of finance for any year by the district level technical committee exceeds the notional hike of 10% contemplated while fixing the five year limit, a revised drawable limit may be fixed in consultation with the farmer. In case such revisions require the card limit itself to be enhanced (4th or 5th year), the same may be done and the farmer be so advised.
b. For term loans, installments may be allowed to be withdrawn based on the nature of investment and repayment schedule drawn as per the economic life of the proposed investments. It is ensured that at any point of time the total liability is within the drawing limit of the concerned year.
c.Wherever the card limit / liability so arrived warrants additional security, the banks can take suitable collateral as per their policy.
For Marginal Farmers
A flexible limit of ₹ 10, 000 to ₹ 50, 000 is provided (as Flexi KCC) based on the land holding and crops grown including post-harvest warehouse storage related credit needs and other farm expenses, consumption needs, etc., plus small term loan investment(s) like purchase of farm equipments, establishing mini dairy/backyard poultry as per assessment of the Branch Manager without relating it to the value of land. The composite KCC limit is fixed for a period of five years on this basis.
To see an illustration click on the below link
http://rbidocs.rbi.org.in/rdocs/content/pdfs/04MCKCC03072017_AN2.pdf
Withdrawals
The short term component of the KCC limit is revolving cash credit facility.There is 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,
- using cheque facility,
- withdrawal through ATM /debit cards,
- operation through Business Correspondents,
- Mobile based transfer transactions at agricultural input dealers and mandies.
The long term loan for investment purposes may be drawn as per installment fixed.
Electronic Kisan Credit Cards
Smart card cum debit card is issued to all new KCC and existing KCC at the time renewal.
The short term credit limit and the term loan limit are two different components of the aggregate KCC limit bearing different rates of interest and repayment periods so . two separate electronic cards may be issued for all new/renewed KCC.
Interest Rate
The interest rate on KCC differs from bank to bank.
Presently, as per Government guidelines, Limit upto 3 lacs is @ benchmark rate of 9.00%.
Under interest subvention scheme, subvention of 2% is provided by government to the banks, so the farmer gets the loan at 7%.
Moreover, if the farmer repays the loan on time, an additional subvention of 3% is given to the farmer as Prompt repayment incentive.
So, after applying interest subvention scheme, the farmer gets the loan of upto 3 lacs @ only 4%.
Repayment Period
The repayment period is fixed by the banks as per the anticipated harvesting and marketing period for the crops for which the loan has been granted.
The term loan component is normally repayable within a period of 5 years depending on the type of investment.
However, financing banks may provide longer repayment period for term loan depending on the type of investment.
Security/Collateral for KCC
Security requirement may be as under :
- Hypothecation of crops: For KCC limit upto ₹ 1.00 lakh banks are to waive margin/security requirements.
- With tie-up for recovery: Banks may consider sanctioning loans on hypothecation of crops up to card limit of ₹ 3.00 lakh without insisting on collateral security.
- Collateral security: Collateral security may be obtained at the discretion of Bank for loan limits above ₹ 1.00 lakh in case of non-tie-up and above ₹ 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.
How to apply for KCC?
The farmer can apply both online and offline for KCC.
Online application
Online application for availing KCC loan can be made through the concerned bank’s website.
Offline application
For offline application, the borrower should visit the branch of the bank and fill up the application form for KCC and submit it at the branch along with the necessary documents.
Documents required :
- Application Form.
- Two Passport Size Photographs.
- Any of the one ID proof such as Driving License / Aadhar Card / Voter Identity Card / Passport, etc,.
- Any one Address Proof such as Driving License, Aadhar Card, etc,.
- Proof of landholding duly certified by the revenue authorities.
- Cropping pattern (Crops grown).
- Security documents for loan limit above Rs.1.0 lakh, as applicable.
- Any other document as per bank’s requirement.
Insurance
Eligible crops may be covered under Pradhan Mantri Fasal Bima Yojana on paying applicable premium.
As per RBI master guidelines banks should provide the borrower an option to avail the benefit of any type of Asset insurance, Personal Accidental Insurance, Health insurance wherever applicable.