Kisan Credit Card Scheme: Benefits, Eligibility, and Features

Why the scheme is in the news?

As a part of the AazadiKaAmritMahostav, the Union Cabinet Minister for Fisheries, Animal Husbandry, and Dairying, Shri Parshottam Rupala, will launch the Nationwide AHDF KCC Campaign for 2023-24 on May 3rd, 2023. During the launch, he will interact with the beneficiaries of AHDF-KCC through CSC and State Animal Husbandry Department, extending the KCC facility to all small landless farmers engaged in animal husbandry and fisheries activities.

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Kisan Credit Card

The Kisan Credit Card (KCC) Scheme was initially launched in 1998 to provide farmers with financial support for purchasing agricultural inputs and withdrawing cash for their production requirements. The scheme underwent a revision in 2004, covering long-term loans and working capital loans for agriculture and allied activities. The Reserve Bank of India has now extended the KCC facility to farmers involved in animal husbandry and fisheries to meet their working capital needs.

Objective of Kisan Credit Card

1. Kisan Credit Card intends to provide financial support for short-term credit needs related to cultivation.
2. KCC aims to assist farmers in managing post-harvest expenses.
3. KCC is designed to meet the consumption requirements of farmers and their households.
4. The Kisan Credit Card is intended to provide working capital for maintaining farm assets and activities related to agriculture.
5. KCC aims to meet the investment credit requirements for agriculture-related activities.

Implementing Agency of KCC

The Kisan Credit Card scheme is implemented across the country through an extensive network of credit structures of various financial institutions such as commercial banks, Regional Rural Banks (RRBs), Small Financial Banks, and Cooperative banks. The interest rate charged is determined in accordance with the guidelines provided by the Reserve Bank of India (RBI).

Who are eligible for KCC Benefits?

KCCS are available to all categories of farmers, but they are particularly advantageous for marginal and small farmers, who constitute more than 86% of the farmers in India as per the Agriculture Census 2015-16.

In essence, the eligibility criteria include:

• Individual Farmers
• Joint Borrowers
• Tenant Farmers
• Oral Lessees
• Sharecroppers
• Self Help Groups
• Joint Liability Group of Farmers

However, landless farmers are seldom beneficiaries of KCC. According to the RBI’s 2019 report citing the All India Rural Financial Inclusion Survey 2016-17, “tenant farmers/sharecroppers/oral lessees/landless laborers face difficulty in accessing institutional credit in the absence of a proper legal framework and lack of records relating to their agricultural activity.”

Salient Features of Kisan Credit Card

1. The KCC plan offers a variety of features, such as an ATM-enabled RuPay Card, minimal documentation, in-built cost escalation in the limit, and any number of withdrawals within the limit.
2. The RuPay was created and introduced by the National Payments Corporation of India (NPCI). It was created to satisfy the Reserve Bank of India’s requirement for an open-loop, domestic, and multilateral payments system in India.
3. In 2004, the program’s scope was expanded to include the farmers’ credit requirements for investment in non-farm and allied activities.
4. KCC provides credit support for post-harvest expenses, produce marketing loans, household consumption requirements for farmers, working capital for maintaining farm assets and related activities, and investment credit requirements for agriculture and related activities.

Loan Tenure Under KCC Scheme

The duration of a short-term agriculture loan can be up to one year, while that of a long-term loan can be up to five years. However, banks have the discretion to extend the duration of the loan as they see fit.

Interest Subvention Scheme and KCC

To provide farmers with short-term Agri-loans at a concessional interest rate, the Government of India has implemented the Interest Subvention Scheme. This scheme makes farmers involved in agriculture and related activities eligible for a short-term crop loan of up to Rs. 3.00 lakh at a benchmark rate of 9%. Additionally, farmers are given an interest subvention of 2% and a Prompt Repayment Incentive of 3% on Short Term Agri Loans up to 3 lakh. This brings the effective rate of interest down to 4% per annum.

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