• The Kisan Credit Scheme (KCC) was introduced in 1998 based on a model scheme prepared by the National Bank for Agriculture and Rural Development (NABARD).
  • The scheme was introduced to meet the various credit requirements of the agriculture sector by giving financial assistance to farmers.
  • The Kisan Credit Card scheme was brought about with the aim of simplifying the procedure for farmers in getting adequate and timely credit. This would help farmers in the purchases of agriculture inputs such as seeds, fertilizers, pesticides etc.
  • The scheme was further extended for the investment credit requirement of farmers viz. allied and non-farm activities in the year 2004.
  • In the Budget-2018-19, government announced the extension of the facility of Kisan Credit Card (KCC) to fisheries and animal husbandry farmers to help them to meet their working capital needs.
  • The KCC also covers post-harvest expenses, consumption requirements, investment in credit requirements for agricultural and allied activities.
  • The scheme is implemented by Commercial Banks, Regional Rural Banks (RRBs), Small finance banks and cooperatives.
  • Through the KCC scheme, farmers are exempted from the high interest rates of the loans offered by regular banks. The interest rates for KCC is between 2%-4%. This low interest rate helps farmers in repaying loans better, of course taking into account the harvesting period of the crop and the date at which the loan was granted.

Benefits and Eligibility Criteria for the KCC Scheme

The features of the Kisan Credit Card Scheme is as follows:

  • Farmers will meet their financial requirements along with any expenses incurred during the post-harvest season
  • A loan of Rs.3 lakh can be sanctioned and produce marketing loans can be obtained
  • The farmers eligible for the KCC scheme will issued a savings account with affordable interest rates
  • The scheme comes with an ATM-enabled RuPay debit card with facilities for one-time documentation, built-in cost escalation in the limit, and any number of drawals within the limit.
  • The KCC scheme will facilitate a hassle free disbursement procedure and a flexible repayment loans
  • No collateral will be required for loans that amount up to Rs. 1.6 lakh
  • For a period of 3 years, credit will be available and repayment can be made post the harvest season.
  • There are certain subsidies and schemes offered by the government regarding interest rate. Availing these subsidies is dependent on the repayment history and general credit history of the cardholder.
  • Fees and other such as processing fees, land mortgage deed charges etc would be at the discretion of the issuing bank.
  • Limit to be fixed on the basis of operational land holding, cropping pattern and scale of finance.
  • The Card has a validity of 5 years post which it will be subject to an annual review. In case of a good credit score, the card limit would be further extended to include rising costs, incidental expenses or change in cropping pattern etc
  • Rescheduling of loans and conversions will be permitted in case of any damage to crops due to an unforeseen event like natural calamity etc.

Eligibility Criteria is as follows for the Kisan Credit Card Scheme:

  • Individual farmers who are owners/cultivators
  • Sharecroppers, tenant farmers
  • Self-Help Groups of sharecroppers, farmers, tenant farmers etc.
  • Farmers involved in the production of crops or activities such as animal husbandry
  • Fish farmers, fishers, SHGs, JLGs, and women groups
  • Fishermen who own a registered boat or any other type of fishing vessel and possess the necessary license or permissions for fishing in estuaries or the sea.
  • Poultry farmers and even those who raise sheep, rabbits goats pigs etc.
  • Dairy: Farmers, dairy farmers, SHGs, JLGs, and tenant farmers who own, lease, or rent sheds.

Financial Provisions

  • To ensure availability of agricultural credit at a reasonable cost of 7% per annum to formers:
    • Government of India implements an interest subvention scheme of 2% for short term crop loans up to Rs. 3 lakh.
    • In addition, the GOI provides interest subvention of 2% and prompt repayment incentive of 3% to the farmers.

Achievements of KCC

  • As of June 2020, around 25 lakh applications have been sanctioned for Nationwide Fishery KCC.
  • As part of the Atmanirbhar Bharat Package, the Government has announced to cover 2.5 crore farmers under the Kisan Credit Card (KCC) scheme with a credit boost of Rs. 2 lakh crores through a special saturation drive.
  • As a result of concerted efforts, a major milestone target of covering more than 1.5 crore farmers under KCC, with a sanctioned credit limit of Rs. 1.35 lakh crore has been achieved.

How is KCC Misused?

  • Credit is often being transferred towards financially well-off people.
  • Funds are diverted to non-agricultural use:
    • Investment in Real Estate
    • Purchase of Vehicles
    • Higher Education of children in foreign countries
  • Quantum of land is inflated to avail higher credit.
  • KCC route is used for money laundering.
What are the Recommendations?
  • All Banks must follow the Guidelines of KCC properly, the due acknowledgment for KCC application should be given to the applicants and a timeline decision on the application should be fixed.
    • The reasons for rejection should be clearly indicated so that field officers could rectify and re-submit the forms.
  • KCC should be given to people from Maldhari (Ghumantu) Community, who do not stay in one place and have no collateral security to offer.
    • Maldharis are a tribal herdsmen community in Gujarat, India. Originally nomads, they came to be known as Maldharis after settling in Junagadh district (mainly Gir Forest).
  • KCC should be given to poor fishermen who are unable to give any collateral.

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