Kisan Credit Card: Know the Basic Rules, Benefits, Insurance Scheme and Interest Subsidy

Although the Government has been initiating different schemes for the welfare of the farmers, the reality is, very few are rewarded with the proper implementation.  Agriculture is the major sector of the Indian economy and crop loans helped in increasing agricultural production which apparently helps in growing sustainable and profitable farming systems. As per the report, the number of small and marginal farmer’s families in the state is 92.5 percent while 79.5 percent of marginal families and 13.0 percent of small families are from the agricultural background.

Out of 79.5 percent of farmers in the marginal category, 73.2 percent of farmer’s land holdings are less than 0.5 ha and their average holding is 0.27 ha. Moreover, their economic conditions are not allowing them to adopt new technology and do scientific farming in the absence of adequate holdings.

On the other hand, the availability of low interest and adequate crop loans to farmers, mainly small and marginal farmers, through the commercial banks not only helps in increasing the productivity of their crops but also strengthen their economic condition.  The government of India is trying to connect with more and more people and asked them to use the banking system and crop loans from commercial banks to improve their farming scenario.

Here, we will discuss the main guidelines of Kisan Credit Card: -

Assessment of crop loan component·  

Finance for crop + insurance installment × crop area limit + post-harvest / 10 percent of loan limit for household/use needs + 20% for farm asset maintenance expenses.

Who is eligible for a Kisan Credit Card Loan Scheme?

You are eligible for a Kisan Credit Card if you:

• Are an individual farmer who is an owner-cultivator.

• Belong to a group and are joint borrowers. The group has to be owner-cultivators.

• Are a sharecropper, tenant farmer, or an oral lessee.

• Are a self-help group (SHG) or joint liability group (JLG) of sharecroppers, farmers, tenant farmers, etc.

Eligible beneficiaries under this scheme under fisheries and animal husbandry are:

Inland Fisheries and Aquaculture: Fish farmers, fishers, SHGs, JLGs, and women groups. As a beneficiary, you must own or lease any activity related to fisheries. This includes owning or leasing a pond, an open water body, a tank, or a hatchery among others.

Marine Fisheries: You own a registered boat or any other type of fishing vessel and you have the necessary license or permissions for fishing in estuaries or the sea.

Poultry: Individual farmers or joint borrowers, SHGs, JLGs, and tenant farmers of sheep, rabbits, goats, pigs, birds, poultry, and have sheds they have owned, rented, or leased.

Dairy: Farmers, dairy farmers, SHGs, JLGs, and tenant farmers who own lease, or rent sheds.

Basic Rules of KCC-

Flexi Kisan Credit Card with general assessment prescribed for marginal farmers.

The validity of Kisan Credit Card - 5 years.

There is no need to insist on separate margins for crop loans, as the margin is already included in the finance.

No withdrawal from the account will remain outstanding for more than 12 months; there is no need to void the debit amount in the account at any time.

Interest assistance/incentive for timely payment will be available as per the Government of India and / or State Government norms. No processing fees up to the limit of Rs 3.0 lakh. Lump-sum documentation at the time of first withdrawal and general declaration by the farmer (in respect of crops grown/proposed).

The aim of the center is to provide adequate and timely crop loans to the farmers through the Kisan Credit Card through the available commercial, rural and cooperative banks working in the state so that the farmers can contribute to the agricultural development by fulfilling his farming and other farming-related needs.  

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.

The Kisan Credit Card has the following benefits -·        

• Flexible repayment options and hassle-free disbursement procedures.

• 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 the withdrawal of the required funds from the issuing bank.

• Funds can be withdrawn from any of the bank’s branches across the country.

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, installments 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 changes in cropping patterns, 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.