Kisan Credit Card

The Kisan Credit Card scheme is a Government initiative introduced in 1998 to provide timely and adequate credit to farmers for their agricultural activities. The scheme offers the Kisan Credit Card at an attractive interest rate of 4% p.a. with an additional 2% interest subvention and a 3% Prompt Repayment Incentive from the Government.

The Kisan Credit Card can be implemented by various banks including commercial banks, regional rural banks, and cooperatives. Providing financial assistance for crop cultivation, purchase of farm equipment, and other agricultural expenses. And helping farmers enhance their productivity and manage their agricultural activities efficiently.

Kisan Credit Card Overview

Given below is an overview of the scheme and what it offers to farmers in the farming and non-farm sectors:

• Loan amount for farmers other than marginal farmers: Short-Term Credit Limit for the First Year will be Scale of finance for the crop × Extent of area cultivated, 10% for post-harvest, household, and consumption needs, 20% for repairs and maintenance of farm assets and costs for crop insurance, PAIS, and asset insurance Moreover, for each successive year, the credit limit increases by 10%.
• Loan amount for farmers other than marginal farmers: Short-Term Credit Limit for the First Year will be Scale of finance for the crop × Extent of area cultivated, 10% for post-harvest, household, and consumption needs, 20% for repairs and maintenance of farm assets and costs for crop insurance, PAIS, and asset insurance Moreover, for each successive year, the credit limit increases by 10%.
• Term Loans: For investments in land development, irrigation, farm equipment, and related activities, the loan amount is determined by the cost of assets, current activities, and repayment capacity. The long-term loan limit is set based on planned investments over five years and the borrower’s ability to repay.
• Maximum Permissible Limit: MPL includes the short-term loan limit for the 5th year with the estimated long-term loan needs.
• Marginal Farmers: Flexible limit from ₹10,000 to ₹50,000 (Flexi KCC) based on land, crops, and expenses.
• Animal Husbandry and Fisheries: Finance scale set by DLTC; working capital specified for these activities.
• Disbursement: Revolving cash credit with multiple withdrawal options. Term loans are disbursed in fixed instalments.
• Rate of Interest (ROI): Linked to the Base Rate, determined by banks.
• Repayment Period: Set by banks based on crop cycles. Term loans are usually repaid within 5 years.
• Security: Follows RBI guidelines; includes crop hypothecation and collateral based on loan size.
• Other Features: Mandatory crop insurance, with other optional insurances. Interest incentives for prompt repayment. Simple documentation after the first year.

Objectives of Kisan Credit Card

The Kisan Credit Card has several main objectives, which are as follows:

• Provide Access to Credit: Provide farmers with easy and timely access to credit, reducing their dependence on informal sources like moneylenders.
• Affordable Interest Rates: Offer loans at affordable interest rates, making it easier for farmers to finance their agricultural needs and non-farm requirements.
• Comprehensive Financial Support: Address the full range of credit requirements, including crop cultivation, post-harvest expenses, and working capital for allied activities like animal husbandry and fisheries.

Kisan Credit Card Eligibility Criteria

The eligibility criteria for the Kisan Credit Card are:

• Farmers (Individual/Joint): Individuals who own agricultural land and are engaged in farming activities, either independently or jointly.
• Tenant Farmers and Sharecroppers: Farmers who lease agricultural land and sharecroppers are also eligible.
• Self-Help Groups (SHGs) and Joint Liability Groups (JLGs): Groups of farmers or agricultural workers who come together to apply for a KCC.
• Fishermen and Animal Husbandry Farmers: Those engaged in fishing, animal husbandry, or related activities can also apply.

Documents Required for Kisan Credit Card

To apply for the Kisan Credit Card, certain documents must be submitted, these are:

• Identity Proof: Aadhar card, Voter ID, or PAN card.
• Address Proof: Aadhar card, Voter ID, Utility bills, or any other government-issued document.
• Land Ownership Proof: Documents proving ownership or lease agreement of agricultural land.
• Photographs: Recent passport-sized photographs of the applicant.
• Application Form: Duly filled and signed application form provided by the bank.

Kisan Credit Card Interest Rates & Charges

The interest rates on Kisan Credit Cards are generally lower compared to other types of loans, making them an affordable financing option for farmers. The interest rate is usually linked to the base rate of the bank and can vary depending on the loan amount and the repayment tenure. Furthermore, there will be other charges like processing fees, insurance premiums, and stamp duty as well.

Factors Affecting KCC Interest Rates

Several factors play a role when determining the KCC interest rates, these are:

• Base Rate of the Bank: The bank’s base rate plays a significant role in determining the KCC interest rate.
• Loan Amount: Higher loan amounts may attract different interest rates.
• Repayment History: The farmer’s credit history and repayment track record can impact the interest rate offered.
• Government Subsidies: Interest subvention schemes by the government can reduce the effective interest rate on KCC loans.

Features of Kisan Credit Card

The Kisan Credit Card offers many attractive features, these are:

• Revolving Credit Facility: Farmers can withdraw funds as needed and repay them as per their cash flow, within the credit limit.
• Interest Subvention: The government offers interest subvention on timely repayment of loans, effectively reducing the interest burden.
• Flexible Repayment: The repayment schedule is aligned with the harvesting and sale of crops, providing flexibility to farmers.
• Insurance Coverage: KCC holders are provided with insurance coverage against crop failure, natural calamities, and other risks.
• Personal Accident Insurance: Some banks offer personal accident insurance coverage for KCC holders.

Benefits of Kisan Credit Card

Farmers can benefit a lot by using the Kisan Credit Card, some of these benefits include:

• Easy Access to Credit: Farmers can access credit easily and quickly, without cumbersome procedures.
• Low-Interest Rates: The interest rates on KCC loans are lower than regular loans ranging from 2% – 4% p.a., reducing the financial burden on farmers.
• Multi-Purpose Credit: The credit can be used for a variety of agricultural and allied activities, ensuring comprehensive support.
• Cash Withdrawal Flexibility: Farmers can withdraw cash as needed, providing them with the flexibility to manage their finances.
• Risk Mitigation: Insurance coverage for crops and personal accidents helps mitigate risks associated with farming activities.

Steps to Apply for Kisan Credit Card Online

To apply for the Kisan Credit Card online, here are the steps you can follow:

Step 1: Visit the official website of the bank of your choice that is offering the KCC scheme.

Step 2: Register or log in to your online banking account.

Step 3: Fill out the application form with the required details.

Step 4: Upload Documents: Upload the necessary documents, such as identity proof, address proof, land ownership proof, and more.

Step 5: You can then submit the application online.

Steps to Apply for Kisan Credit Card Offline

You can also apply for the Kisan Credit Card offline by following the steps below:

Step 1: Visit the nearest bank branch that is offering KCC.

Step 2: Collect the KCC application form and fill it with accurate information.

Step 3: Attach all the required documents including identity proof, address proof, land ownership proof, and more.

Step 4: Submit the completed application form and documents to the bank officer who will process your application.

Steps to Download Kisan Credit Card Application Form

To avoid delays or queues at the bank, you can download the Kisan Credit Card application form before visiting the bank. Here is how you do it:

Step 1: Go to the official website of the bank offering KCC.

Step 2: Find the Kisan Credit Card section on the website.

Step 3: Look for the application form link and download it in PDF format.

Step 4: You can then print out the form and fill it out with the necessary details.

Step 5: You can then take the completed form to the bank and submit it along with the required documents.

Besides Kisan Credit Card, you can also check other topics related to saving schemes & farmers below: