In an effort to buffer the agricultural sector from the shock of COVID-19, a special saturation drive is underway to provide concessional credit to farmers through Kisan Credit Card (KCC). As on 17.08.2020, 1.22 crore KCCs have been sanctioned with credit limit of Rs. 1,02,065  crore. This will go a long way in reviving the rural economy and accelerating agricultural growth.

It may be recalled that as part of the Aatma Nirbhar Bharat Package, the Government had announced provision of a concessional credit of Rs. 2 lakh crore which is likely to benefit  2.5 crore farmers, including fishermen and dairy farmers.

About Kisan Credit Card scheme

The Kisan Credit Card (KCC) scheme is a credit scheme introduced in August 1998 by Indian banks. This model scheme was prepared by the National Bank for Agriculture and Rural Development (NABARD) on the recommendations of R.V.GUPTA committee to provide term loans for agricultural needs. The scheme was set by NABARD (National Bank for Agriculture and Rural Development) and has been followed by all the major banks in India like SBI, PNB, HDFC Bank, Axis Bank etc. The interest rate on KCC varies from bank to bank. However, most banks provide Interest subvention loans in line with the Government Schemes where the interest charged can be as low as 2.00%.

The features and benefits of Kisan Credit Card are

    • Interest rate can be as low as 2.00%

    • Collateral free loans up to Rs. 1.60 lakh

    • Crop insurance scheme is also provided to farmers

    • Following Insurance coverage is provided

    • Up to Rs. 50,000 against Permanent Disability and Death

    • Up to Rs. 25,000 is provided against other risks

    • Repayment period is based on the harvesting and marketing period of the crop for which the loan amount was taken out

    • Loan amount up to Rs. 3.00 lakh can be taken out by the card holder

    • Collateral is not required on loans up to Rs. 1.60 lakh

    • Farmers get high interest rate on the savings in their Kisan Credit Card Account

    • Simple interest rate is charged as long as the user makes prompt payment. Otherwise compound interest rate becomes applicable

Kisan Credit Card Eligibility Criteria

    • All farmers who are either individuals/Joint borrowers of the land and involved in farming or allied activities

    • Individuals who are owner cum cultivators

    • All the Tenant farmers or Oral lessees and Share Croppers in the agricultural land

    • Self Help Groups or Joint Liability Groups including tenant farmers or sharecroppers

    • Farmers should be eligible for a production credit of Rs.5,000 and above, and then he/she is entitled to a KCC.

    • All such farmers who are eligible for short term credit loan towards crop production or any allied activities as well as non-farm activities

    • The farmers should be the residents of the bank’s operational area

After Budget 2020, the government has taken a major step in the direction of making institutional credit more accessible to the farmers. They are doing this by merging the Kisan Credit Card (KCC) Scheme with the Kisan Samman Nidhi Scheme. The beneficiaries of Kisan Samman Nidhi Scheme will now be able to avail Kisan Credit Card under which they can avail loans for farming at a concessional rate of only 4%.

(The author is a trainer for Civil Services aspirants)