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The Kisan Credit Card (KCC) programme was launched by the NDA government in 1998. With this scheme, the government aimed to fulfil timely and short-term credit needs of the farmers of India during the planting and harvesting season. It was also introduced to reduce the dependence of Indian farmers on the informal banking sector like moneylenders. It was initially proposed in the budget session in the year 1998-99 by the then Finance Minister, Yashwant Sinha. As a result, NABARD (National Bank for Agriculture & Rural Development) had come up with a Model Kisan Credit Card Scheme after a long discussion with some major banks in the country.
Kisan Credit Cards are offered by cooperative banks, public sector banks, and regional rural banks. They can be availed by any farmer in India. Tenants and sharecroppers can also use this card. This scheme not only simplifies the credit delivery and screening process for farmers who may not know about banking practices and procedures but also provides flexible payment schedule after the harvest season using which the borrower can push his payments in case they suffer a bad crop season. Kisan Credit Card scheme also works as a single credit facility that farmers can use to fulfil all their agricultural needs.
Kisan Credit Card facility was initially proposed by the Finance Minister Yashwant Sinha in the financial year 1998-1999 Budget, with the objective of providing easily accessible short-term credit to farmers to meet their immediate credit needs during the crop season. Reserve Bank of India (RBI), along with National Bank for Agriculture and Rural Development (NABARD) took up the cause and initiated the introduction of Kisan Credit Cards in India.
There are several hurdles faced by farmers in the process of acquiring adequate finance from banks, such as long drawn-out documentation and processing, complicated practices followed by banks and other financial institutions, delay in processing and also lack of awareness among farmers regarding banking practices and benefits. Most farmers depend on non-institutional means of credit for their immediate needs such as purchase of seeds, fertilizers, pesticides etc. and this in turn affects them negatively since non-institutional credit is costly and counter-productive. The Kisan Credit Card scheme intends to remove such complications by offering cost effective credit to farmers for agricultural and allied purposes in a timely manner, from reliable banking systems. Agriculturists can purchase items related to their farming needs using their Kisan Credit Cards and also withdraw the required amount for related expenses.
The operation of this facility is simple and straightforward. Based on the land holdings and the income earned from it, banks issue farmers Kisan Credit Cards. The farmers should have a good credit history in order to be eligible for the same. Those who receive the Kisan Credit Card, get facilities like passbook with the name, particulars of land holding, address, validity period, credit limit, etc., which serves as the customer’s unique identification as well as a system for tracking their transactions. This credit cards can be used at outlets, as well as to withdraw cash from credit card to make the necessary purchases.
Under the Kisan Credit Card scheme, farmers can withdraw the loan amount in form of cash withdrawals using withdrawal slips and the Kisan credit card-cum-passbook. Kisan Credit Card holders who have a credit limit of Rs. 25,000 can also avail cheque books.
Regional Rural Banks, Cooperative Banks and Public Sector Commercial Banks have implemented the Kisan Credit Card scheme. 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 scheme currently offers:
Kisan Credit Card interest rates as well as credit limits varies from bank to bank. Generally, the applicable interest rate per annum for Kisan Credit Cards is 9%, for a credit limit of maximum Rs. 3 Lakh. Central government allows certain subsidies on interest rate applicable by the financing institutions, provided that the cardholder’s credit history is good. The additional interest subsidy provided is 2% and if the customer has a sound track record for three years, he/she is eligible for an increase in the credit limit. Other charges and fees involved in taking credit under this scheme are: insurance premium, processing fees, passport photo charges, charges on land mortgage deed, etc.
This scheme is beneficial to banks since it is time and cost-efficient. There is no need for an elaborate documentation process or continuous appraisals under the Kisan Credit Card Scheme. Withdrawal of cash using the credit card requires very little paperwork and is simple and hassle-free for not just the card holder but for the Bank as well. Some other highlights include: no transaction costs, lesser risks in loan recovery, etc.
As per the Reserve Bank of India (RBI) guidelines, documents required to process an application of Kisan Credit Card should be as per the offering bank’s internal guidelines. Hence, each bank has a different set of required documents.
Listed Below Are A Basic Set Of Documents Required To Apply For A Kisan Credit Card.
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.
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 your profile is eligible for the applied card, the bank 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.
Once the documents are picked-up along with the application form, the bank will process your credit card in next 7-10 working days. You will receive an acknowledgement slip on which you can find the application number. You can use the number to track your credit card application status online.
There is a personal accident insurance cover for farmers who have a Kisan Credit Card, as soon as the customer avails the scheme. The individual gets a personal accident cover of Rs. 50,000 in the event of death and Rs. 25,000 in case of disability. In order to be eligible to avail this insurance cover, the customer should not be above 70 years of age at the time of obtaining the Kisan Credit Card.
|Banks||Credit Limit||Maximum Tenure||Insurance Coverage|
|Axis Bank||Credit limit up to Rs. 250 lakhs||5 years||up to Rs. 50,000/-|
|Bank of India||25% of the farmer’s gross estimated income, or a maximum of Rs.50,000/||Credit upto Rs.10 lakhs can be offered to a farmer for extended period of 12 months||N/A|
|State Bank of India||Short term credit limit is fixed for the first year depending upon the crops cultivated as per proposed cropping pattern & scale of finance||12 months for long term crops||Personal Accident Insurance Scheme (PAIS), Asset insurance and Crop insurance is covered by the scheme.|
|Indian Overseas Bank (IOB)||Credit Limit is based on the scale of finance, cropping pattern and the extent of cultivation.||5 years||N/A|
The credit limit offered on a Kisan Credit Card for the initial year is based on:
Yes, revolving cash credit facility is available on a Kisan Credit Card, with any number of withdrawals, repayments, etc. made within the limit.
Generally, the premium payable on personal accident insurance scheme for a year is Rs.15/-, and for 3 years the premium to be paid is Rs.45/-