Revised Kisan Credit Card Scheme

Objective

The scheme aims at providing adequate and timely cred it for the comprehensive credit requirements of farmers under single window for their cultivation and other needs as indicated below:

• To meet the short term credit requirements for cultivation of crops
• Post harvest expenses
• Produce Marketing loan
• Consumption requirements of farmer household
• Working capital for maintenance of farm assets, activities allied to agriculture, like dairy animals, inland fishery and also working capital required for floriculture, horticulture etc.
• Investment credit requirement for agriculture and allied activities like pump sets, sprayers, dairy animals, floriculture, horticulture etc
• Short term credit requirements of rearing of animals, birds, fish, shrimp, other aquatic organisms, capture of fish.

Eligibility and credit limit

Eligibility

• All farmers-individuals/Joint borrowers who are owner cultivators.
• Tenant farmers, Oral lessees and Share Croppers etc.
• SHGs or Joint Liability Groups of farmers including tenant farmers, share croppers etc.,
• The criteria for eligible beneficiaries under KCC for Animal Husbandry and Fisheries is as follows
• Fishery
• Inland Fisheries and Aquaculture - Fishers, Fish Farmers (individual & groups/ partners/ share croppers/ tenant farmers), Self Help Groups, Joint Liability Groups and women groups. The beneficiaries must own or lease any of the fisheries related activities such as pond, tank, open water bodies, raceway, hatchery, rearing unit, possess necessary license for fish farming and fishing related activities, and any other State specific fisheries and allied activities.
• Marine Fisheries - Beneficiaries listed above, who own or lease registered fishing vessel/boat, possess necessary fishing license/permission for fishing in estuary and sea, fish farming/mariculture activities in estuaries and open sea and any other State specific fisheries and allied activities.
• Poultry and small ruminant - Farmers, poultry farmers either individual or joint borrower, Joint Liability Groups or Self Help Groups including tenant farmer of sheep/goats/pigs/poultry/ birds /rabbit and having owned/rented/leased sheds.
• Dairy - Farmers and Dairy farmers either individual or joint borrower, Joint Liability Groups or Self Help Groups including tenant farmers having owned /rented/leased sheds.

Loan amount

All farmers other than marginal farmers

For farmers raising single crop in a year

• Short term credit limit is fixed for the first year depending upon
• the crops cultivated as per proposed cropping pattern & scale of finance
• post-harvest/ household / consumption requirements
• Maintenance expenses of farm assets, crop insurance, Personal Accident Insurance Scheme (PAIS) and Asset insurance.
• Scale of finance for the crop (as decided by District Level Technical Committee) x Extent of area cultivated + 10% of limit towards post-harvest / household / consumption requirements + 20% of limit towards repairs and maintenance expenses of farm assets + crop insurance, PAIS & asset insurance.
• For every successive years (2nd, 3rd, 4th, and 5th year), the limit will be stepped up @10%.

For farmers raising more than one crop

For farmers raising more than one crop in a year, the limit is to be fixed as above depending upon the crops cultivated as per proposed cropping pattern for the first year and an additional 10% of the limit towards cost escalation / increase in scale of finance for every successive year (2nd, 3rd, 4th and 5th year). It is assumed that the farmer adopts the same cropping pattern for the remaining four years also. In case the cropping pattern adopted by the farmer is changed in the subsequent year, the limit may be reworked.

Term loans

Term loans for investments towards land development, minor irrigation, purchase of farm equipments and allied agricultural activities. The banks may fix the quantum of credit for term and working capital limit for agricultural and allied activities, etc., based on the unit cost of the asset/s proposed to be acquired by the farmer, the allied activities already being undertaken on the farm, the bank’s judgment on repayment capacity vis-a-vis total loan burden devolving on the farmer, including existing loan obligations.

The long term loan limit is based on the proposed investments during the five year period and the bank’s perception on the repaying capacity of the farmer.

Maximum Permissible Limit: The short term loan limit arrived for the 5th year plus the estimated long term loan requirement will be the Maximum Permissible Limit (MPL) and treated as the Kisan Credit Card Limit.

For Marginal Farmers

A flexible limit of Rs.10,000 to Rs.50,000 be provided (as Flexi KCC) based on the land holding and crops grown including post harvest warehouse storage related credit needs and other farm expenses, consumption needs, etc., plus small term loan investments like purchase of farm equipments, establishing mini dairy/backyard poultry as per assessment of Branch Manager without relating it to the value of land. The composite KCC limit is to be fixed for a period of five years on this basis. Wherever higher limit is required due to change in cropping pattern and/or scale of finance, the limit may be arrived at as per the estimation.

For Animal Husbandry and Fisheries

The scale of finance will be fixed by the District Level Technical Committee (DLTC) based on local cost worked out on the basis of per acre/per unit/per animal/per bird etc.

The working capital components in fisheries, under the scale of finance, may include recurring cost towards seed, feed, organic and inorganic fertilisers, lime/other soil conditioners, harvesting and marketing charges, fuel/electricity charges, labour, lease rent (if leased water area) etc. For capture fisheries, working capital may include the cost of fuel, ice, labouring charges, mooring/landing charges etc. may form part of the scale of finance.

The working capital components in Animal Husbandry, under the scale of finance, may include recurring cost towards feeding, veterinary aid, labour, water and electricity supply.

Disbursement

The short term component of the KCC limit is in the nature of revolving cash credit facility. There should be no restriction in number of debits and credits. The drawing limit for the current season/year could be allowed to be drawn using any of the following delivery channels.

• Operations through branch
• Operations using Cheque facility
• Withdrawal through ATM / Debit cards
• Operations through Business Correspondents and ultra thin branches
• Operation through PoS available in Sugar Mills/ Contract farming companies, etc., especially for tie- up advances
• Operations through PoS available with input dealers
• Mobile based transfer transactions at agricultural input dealers and mandies.

The long term loan for investment purposes may be drawn as per installment fixed.

For Animal husbandry and fisheries, the loan will be in the nature of a revolving cash credit limit. Repayment will be fixed as per the cash flow / income generation pattern of the activity undertaken by the borrower.

Rate of Interest (ROI)

Rate of Interest will be linked to Base Rate and is left to the discretion of the banks.

Repayment Period

• The repayment period for short terms loans may be fixed by banks as per the anticipated harvesting and marketing period for the crops for which a loan has been granted.
• The term loan component will be normally repayable within a period of 5 years depending on the type of activity / investment as per the existing guidelines applicable for investment credit.
• Financing banks at their discretion may provide longer repayment period for term loan depending on the type of investment.

Security

Security will be applicable as per RBI guidelines prescribed from time to time. Security requirement may be as under:

• Hypothecation of crops up to card limit of Rs. 1.00 lakh as per the extant RBI guidelines.
• With tie-up for recovery: Banks may consider sanctioning loans on hypothecation of crops upto card limit of Rs.3.00 lakh without insisting on collateral security.
• Collateral security may be obtained at the discretion of Bank for loan limits above Rs.1.60 lakh in case of non tie-up and above Rs.3.00 lakh in case of tie-up advances.
• In States where banks have the facility of on -line creation of charge on the land records, the same shall be ensured.

Other features

Besides the mandatory crop insurance, the KCC holder should have the option to take benefit of any type of Assets Insurance, Accident Insurance (including PAIS), and Health Insurance (wherever product is available) and have premium paid through his KCC account. Premium has to be borne by farmers/bank according to the terms of the Scheme. Farmer beneficiaries should be made aware of the insurance cover available and their consent (except in case of crop insurance, it being mandatory) is to be obtained, at the application stage itself.

Interest Subvention/Incentive for prompt repayment as advised by Government of India and / or State Governments. The bankers will make the farmer s aware of this facility.

One time documentation at the time of first availment and thereafter simple declaration (about crops raised / proposed) by farmer from the second year onwards.

Advantages of the KCC Scheme to the farmers

• Simplifies disbursement procedures
• Removes rigidity regarding cash and kind
• No need to apply for a loan for every crop
• Assured availability of credit at any time enabling reduced interest burden for the farmer.
• Helps buy seeds, fertilizers at farmer's convenience and choice
• Helps buy on cash-avail discount from dealers
• Credit facility for 3 years – no need for seasonal appraisal
• Maximum credit limit based on agriculture income
• Any number of withdrawals subject to credit limit
• Repayment only after harvest
• Rate of interest as applicable to agriculture advance
• Security, margin and documentation norms as applicable to agricultural advance
• Access to adequate and timely credit to farmers
• Full year's credit requirement of the borrower taken care of. Minimum paper work and simplification of documentation for withdraw  of funds from the bank.
• Flexibility to draw cash and buy inputs.
• Assured availability of credit at any time enabling reduced interest burden for the farmer. Flexibility of drawals from a branch other than the issuing branch at the discretion of the bank.

Salient features Scheme

• Eligible farmers to be provided with a Kisan Credit Card and a pass book or card-cum-pass book.

• Revolving cash credit facility involving any number of drawals and repayments within the limit.

• Limit to be fixed on the basis of operational land holding, cropping pattern and scale of finance.
• Entire production credit needs for full year plus ancillary activities related to crop production to be considered while fixing limit.
• Sub-limits to cover short term, medium term as well as term credit are fixed at the discretion of banks.
• Card valid for 5 years subject to annual review. As incentive for good performance, credit limits could be enhanced to take care of increase in costs, change in cropping pattern, etc.
• Conversion/reschedulement of loans also permissible in case of damage to crops due to natural calamities.
• Security, margin, rate of interest, etc. as per RBI norms.
• Operations may be through issuing branch (and also PACS in the case of Cooperative Banks) through other designated branches at the discretion of bank.
• Withdrawals through slips/cheques accompanied by card and passbook.
• Crop loans disbursed under KCC Scheme for notified crops are covered under Crop Insurance Scheme, to protect the interest of the farmer against loss of crop yield caused by natural calamities, pest attacks etc

Contents of Credit Card

The beneficiaries under the scheme will be issued with a Smart card/ Debit card (Biometric smart card compatible for use in the ATMs/Hand held Swipe Machines and capable of storing adequate information on farmers identity, assets, land holdings and credit profile etc).

Documents required to get KCC

• Duly filled in application form
• Identity proof- Voter ID card/PAN card/Passport/ Aadhaar card,/Driving License etc
• Address proof: Voter ID card/Passport/Aadhaar card/Driving license etc

Personal Accident Insurance Scheme -Salient features

Scheme covers risk of KCC holders against death or permanent disability resulting from accidents caused by external, violent and visible means, as under: Death due to accident (within 12 months of the accident) caused by outward, violent and visible means -- Rs.50,000/- Permanent total disability -- Rs.50,000/- Loss of two limbs or two eyes or one limb and one eye -- Rs.50,000/- Loss of one limb or one eye -- Rs.25,000/-

• Nominated office of insurance company to issue a Master Insurance Policy to each DCCB/RRB covering all its KCC holders.
• Premium payable Rs.15/- for a one year policy while Rs.45/- for a 3-year policy.
• Designated insurance company will nominate one office at district level to function as nodal office for co-ordinating implementation of personal accident insurance scheme for KCC holders in the district.
• Insurance coverage available under Policy only from date of receipt of premium at insurance company
• Banks to ensure to incorporate name of Nominee in Kisan Credit Card-cum-Pass Book.
• Simplified claim settlement procedure evolved under Scheme whereby an Enquiry-cum-Verification Committee comprising Branch Manager of implementing bank, Lead Bank Officer and representative of insurance company to certify nature of accident causing disability/death and recommend settlement of insurance claims.

RuPay Kisan Credit Cards

RuPay is an Indian domestic card scheme conceived and launched by the National Payments Corporation of India (NPCI). It was created to fulfill the Reserve Bank of India’s desire to have a domestic, open loop, and multilateral system of payments in India. RuPay facilitates electronic payment at all Indian banks and financial institutions, and competes with MasterCard and Visa in India.

NABARD, in January, 2013 set up Special Project Unit- Kisan Credit Card (SPU-KCC) with a mandate for encouraging cooperative banks and Regional Rural Banks across the country to issue Rupay KCC debit cards. The overarching goal is to develop cash-less eco system by enabling the farming community to avail all new banking facilities at par with urban area of the country

Source: RBI

Related resources

• Revised Kisan Credit card scheme guidelines
• KCC personal accident policy (29.7KB)