Operative Kisan Credit Card (KCC) Amount Crosses ₹10 Lakh Crore Benefiting 7.72 Crore Farmers

The Kisan Credit Card (KCC) scheme has played a crucial role in ensuring that farmers in India have timely access to affordable credit for agricultural and allied activities. Over the years, the scheme has undergone several modifications to enhance credit penetration in the agriculture sector. A significant milestone in this journey is the sharp increase in the operative KCC loan amount, which has more than doubled from ₹4.26 lakh crore in March 2014 to ₹10.05 lakh crore in December 2024. This substantial rise reflects the deepening of institutional credit in agriculture and a reduction in farmers’ dependence on non-institutional sources.

Understanding the Kisan Credit Card (KCC) Scheme

The Kisan Credit Card (KCC) is a banking product designed to provide farmers with short-term and affordable credit to meet their agricultural needs. The scheme was introduced with the objective of offering easy and timely credit for purchasing agricultural inputs like seeds, fertilizers, and pesticides, along with meeting cash requirements related to crop production. In 2019, the scope of KCC was expanded to cover allied activities, including Animal Husbandry, Dairy, and Fisheries, thereby extending credit benefits to a larger section of farmers engaged in diverse agricultural activities.

Rise in KCC Loans: A Reflection of Agricultural Credit Expansion

The phenomenal growth in the operative KCC loan amount, reaching ₹10.05 lakh crore by December 2024, underscores a significant expansion in agricultural credit. This increase highlights the growing adoption of institutional credit by farmers, leading to reduced dependency on high-interest informal loans. The surge in KCC credit ensures that farmers can access much-needed financial support to invest in modern agricultural practices, improve productivity, and enhance their income.

Modified Interest Subvention Scheme (MISS): Enhancing Credit Affordability

The Government of India has introduced various initiatives to make credit affordable for farmers. Under the Modified Interest Subvention Scheme (MISS), the government provides an interest subvention of 1.5% to banks for disbursing short-term agricultural loans through KCC. As a result, farmers can avail loans of up to ₹3 lakh at a concessional interest rate of 7% per annum.

Additionally, the scheme provides a Prompt Repayment Incentive (PRI) of 3% for farmers who repay their loans on time. This effectively reduces the interest rate to just 4%, encouraging farmers to adhere to timely repayment schedules and further enhancing their financial security.

Collateral-Free Loans: Supporting Small and Marginal Farmers

To promote financial inclusion among small and marginal farmers, loans up to ₹2 lakh are provided on a collateral-free basis under the KCC scheme. This provision ensures hassle-free access to credit for farmers who lack substantial landholdings or assets for securing loans. Such measures help in strengthening the rural economy and ensuring credit accessibility for all categories of farmers.

Budget 2025-26: Increased Loan Limit for Farmers

Recognizing the growing credit needs of farmers, the Finance Minister, in the Union Budget 2025-26, has announced a significant enhancement in the loan limit under the Modified Interest Subvention Scheme. The existing loan cap of ₹3 lakh has been increased to ₹5 lakh, further extending financial support to farmers. This move is expected to benefit a larger number of farmers, enabling them to invest more in their agricultural ventures, improve productivity, and enhance their earnings.

Impact of KCC Growth on Farmers and the Agricultural Sector

The expansion in KCC loans has had a profound impact on the agricultural sector. Some key benefits include:

• Increased Access to Affordable Credit: Farmers now have greater access to institutional credit, reducing their reliance on private moneylenders who charge exorbitant interest rates.
• Enhanced Agricultural Productivity: Timely credit availability ensures that farmers can purchase high-quality inputs, adopt modern farming techniques, and improve yields.
• Financial Stability for Farmers: Lower interest rates and collateral-free loans provide financial security, reducing distress and indebtedness among farmers.
• Boost to Allied Agricultural Activities: With the extension of KCC benefits to sectors like Animal Husbandry, Dairy, and Fisheries, farmers engaged in non-crop agriculture also receive financial assistance to expand their businesses.

Summary of the News

Category	Details
Why in News?	The operative Kisan Credit Card (KCC) loan amount has surpassed ₹10.05 lakh crore in December 2024, benefiting 7.72 crore farmers.
What is KCC?	The Kisan Credit Card (KCC) is a banking product that provides farmers with affordable short-term credit for agricultural and allied activities.
Growth of KCC Loans	The operative KCC loan amount has grown from ₹4.26 lakh crore in March 2014 to ₹10.05 lakh crore in December 2024, reflecting the deepening of institutional credit in agriculture.
Modified Interest Subvention Scheme (MISS)	The government provides an interest subvention of 1.5% to banks for short-term agricultural loans through KCC. Farmers can avail loans at 7% interest, which is further reduced to 4% with a 3% Prompt Repayment Incentive (PRI).
Collateral-Free Loans	Loans up to ₹2 lakh under KCC are collateral-free, promoting financial inclusion for small and marginal farmers.
Budget 2025-26 Announcement	The loan limit under the Modified Interest Subvention Scheme has been increased from ₹3 lakh to ₹5 lakh to enhance financial support for farmers.
Impact on Farmers	– Increased access to affordable credit, reducing dependency on private moneylenders. – Improved agricultural productivity through timely access to funds. – Financial stability with lower interest rates and easy credit availability. – Support for allied agricultural activities, such as Animal Husbandry, Dairy, and Fisheries.