Santa Claus comes around just once a year. In the meantime, there are Credit Cards.
  • Kisan Credit Card Loan Scheme - 2019

     

    The Kisan Credit Card (KCC) scheme was launched in 1998 with the aim of providing short-term formal credit to farmers. Owner cultivators as well as tenant farmers can avail loans to meet their agricultural needs under this scheme at attractive rates of interest. The government has also simplified the application process to increase interest among farmers. Repayment is also simplified and dependent on the harvesting season, reducing the farmers’ debt burden.

    Key Features of Kisan Credit Cards

     

    Regional Rural Banks, Cooperative Banks and Public Sector Commercial Banks have implemented the Kisan Credit Card scheme in India. Its primary objective is to provide easily attainable short term loans to farmers. The scope of this unique facility also includes term loans for agriculture and other allied activities and is a determining factor for consumption loan.

    The basic features associated with the card are mentioned below:
    • Credit to meet the financial requirements of agricultural and other allied activities.
    • Ancillary credit for crop production and other contingencies.
    • Investment credit for agricultural requirements such as dairy animals, pump sets etc.
    • Produce marketing loans.
    • Post-harvest expenses.
    • Insurance coverage for Kisan Credit Card holders, including asset insurance and personal accident insurance scheme (PAIS).

    Salient Features of Kisan Credit Card Loan Scheme:

    Given below are some of the ancillary features available under the Kisan Credit Card Scheme as mandated by the RBI:

    • All farmers who are eligible for the Kisan Credit Card will be issued a smart card cum debit card in addition to the Kisan Credit Card.
    • The facility of revolving credit is available for any amount of withdrawals and repayments made within the credit limit. However, instalments of the amount withdrawn have to be repaid within 12 months.
    • Based on the annual review, banks will determine the validity of the existing credit card.
    • Credit limits can be increased at the issuing bank’s discretion to accommodate for changes in cropping pattern, increase in operating costs, etc. as an incentive for good record on credit card usage.
    • Conversion/rescheduling of loans also permissible in case of damage to crops due to natural calamities.
     

    Benefits of Kisan Credit Cards

     
    • Flexible repayment options and hassle-free disbursement procedure.
    • Single credit facility/ term loan for all agricultural and ancillary requirements.
    • Assistance in the purchase of fertilizers, seeds, etc. as well as in availing cash discounts from merchants/ dealers.
    • Credit is available for a period of up to 3 years and repayment can be made once the harvest season in over.
    • Minimal documentation and maximum flexibility offered for withdrawal of the required funds from the issuing bank.
    • Funds can be withdrawn from any of the bank’s branches across the country.
     

    Interest and Other Charges on Kisan Credit Cards

    According to the RBI, the fixing of Kisan Credit Card interest rates as well as credit limits can be set by the respective issuing bank. The average interest rate applicable ranges from 9-14% p.a.

    In addition, there are certain subsidies and schemes that the government offers farmers with regard to the interest rate. These would depend on the repayment history and general credit history of the cardholder.

    Other fees and charges such as processing fees, insurance premium (if applicable), land mortgage deed charges etc. would be set at the discretion of the issuing bank.

     

    Eligibility To Apply For Kisan Credit Card Loan Scheme

     
    • Should be either an individual or joint borrower who owns agricultural land.
    • The agricultural land should be under cultivation and actively generating a crop.
    • Tenant farmers, sharecroppers and oral lessees are also eligible.
    • Joint liability groups or self-help groups (SHGs) of farmers including sharecroppers, tenant farmers and others can also apply.
    • Applicants should be between the ages of 18 to 60 years at the time of applying for the card.

    Documents Required To Apply For Kisan Credit Cards

     

    As per the Reserve Bank of India (RBI) guidelines, documents required to process a Kisan Credit Card application should be as per the issuing bank’s internal guidelines. Hence, each bank has a different set of required documents.

    Listed below are the basic documents required when applying for the Kisan Credit Card:

    • Duly filled-in and signed-in application form.
    • Copy of identity proof such as Aadhaar card, PAN card, Voter ID, driving license, etc.
    • Copy of address proof document such as Aadhaar card, PAN card, Voter ID, driving license. The proof should have the applicant’s current address to become valid.
    • Land documents.
    • A passport size photograph of the applicant.
    • Other documents such as security PDC as requested by the issuing bank.
     

    How To Apply For Kisan Credit Card Online?

     

    Some banks offering Kisan Credit Cards allow you to apply online through their official websites. Follow the below mentioned steps to apply for Kisan Credit Cards online.

    Steps to apply for Kisan Credit Card online:
    • Visit the official bank website.
    • Choose ‘Kisan Credit Card’ from the available list of credit cards.
    • Click on ‘Apply’ button.
    • You will be redirected to online application page.
    • Fill required fields with accurate details before clicking on ‘Submit’.
    • Once the application is submitted, the system will generate an application reference number. Make a note of the same and use it for all future queries.

    If eligible, the bank will process the application and you will call you in 3-4 working days and will let you know further steps in the application process. You will be informed about the documents required to process the application and an appointment will be scheduled for document collection. Following successful verification of the documents submitted, the bank will send the credit card to your registered address.

     

    Insurance under Kisan Credit Card Scheme

    The Kisan Credit Card provides for personal accident insurance which farmers can opt for. Farmers will receive coverage of up to Rs.50,000 in the event of death and Rs.25,000 in the event of an accident resulting in disability. The premiums payable would be decided by the bank in conjunction with the insurance provider.

    This coverage is optional and farmers who choose to opt for it should meet the eligibility criteria as ascertained by the bank and insurance provider.

     

    Kisan Credit Cards offered by Different banks: A Brief Comparison

     
    Bank Credit Limit Maximum Tenure Insurance Coverage
    Axis Bank Up to Rs.250 lakh (in the form of a loan against the card) 5 years Up to Rs.50,000
    Bank of India Up to 25% of the farmer’s estimated income (but not exceeding Rs.50,000) 5 years N/A
    State Bank of India Based on the crop cultivation and cropping pattern 5 years Personal Accident Insurance Scheme (PAIS), asset insurance and crop insurance
     

    Kisan Credit Card Loan Scheme FAQs:

     
    How does a bank determine the credit limit on a Kisan Credit Card?

    The credit limit offered on a Kisan Credit Card for the initial year is based on:

    • The cultivation of crops according to the scale of finance and cropping pattern that was proposed.
    • Household / post-harvest consumption requirements.
    • Expenses related to the maintenance of crop insurance, farm assets, Asset insurance and Personal Accident Insurance Scheme (PAIS).
    Is revolving credit facility available on a Kisan Credit Card?

    Yes, revolving cash credit facility is available on these cards for an unlimited number of withdrawals and repayments made within the credit limit.

    What security should be provided at the time of application?

    At the time of application, the following security is to be provided:

    • For card limits up to Rs.1 lakh - Hypothecation of crops as per prevailing RBI guidelines.
    • For card limits up to Rs.3 lakh – Hypothecation of crops, additional collateral security at the issuing bank’s discretion.
    How is the quantum of loan under the scheme assessed?

    Under this scheme, the quantum of loan will be assessed based on the following points:

    • Farm maintenance.
    • Cultivation cost.
    • Expenses related to post-harvest.
      

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