The Kisan Credit Card (KCC) scheme, launched in 1998 by the Government of India in collaboration with the Reserve Bank of India (RBI) and the National Bank for Agriculture and Rural Development (NABARD), has been a lifeline for Indian farmers. Designed to provide timely and affordable credit, it has empowered millions of cultivators to purchase agricultural inputs like seeds, fertilizers, and pesticides while meeting other production needs. However, as India strides toward a digital economy, the KCC is undergoing a significant transformation with "Kisan Credit Cards 2.0" – a digital leap forward aimed at revolutionizing rural credit delivery.
Evolution of Digital KCC
The traditional KCC scheme, while impactful, faced challenges such as lengthy loan processing times (often 2-4 weeks), the need for physical branch visits, and cumbersome documentation. These hurdles disproportionately affected small and marginal farmers (SMF), who form over 86.6% of India’s farming community, according to the Agricultural Census 2015-16.
Recognizing these gaps, the scheme saw revisions in 2004 and 2012, with the latter introducing Electronic Kisan Credit Cards to simplify access. In 2019, the KCC scheme was extended to cover the working capital requirements of allied activities, viz. Animal Husbandry, Dairy and Fisheries. Yet, it’s the recent push toward end-to-end digitization that marks the advent of KCC 2.0.
In September 2022, the RBI, through its subsidiary Reserve Bank Innovation Hub (RBIH), launched a pilot project for the digitalization of KCC loans in select districts of Madhya Pradesh and Tamil Nadu, partnering with Union Bank of India and Federal Bank. This initiative is aimed to automate banking processes, integrate systems with service providers, and drastically reduce turnaround times (TAT). The results have been promising. Digital KCC platforms now enable farmers to apply for loans online, track applications in real-time, and access funds within days rather than weeks.
Key Features of KCC 2.0
The digital KCC builds on the scheme’s core strengths while leveraging technology to enhance accessibility. Farmers can now use a magnetic stripe card with a PIN or biometric authentication to withdraw cash from ATMs or micro-ATMs, a feature aligned with the scheme’s 2012 upgrade. Banks like Indian Bank have introduced digital renewal schemes, such as the KCC Digital Renewal under the WAVE (World of Advanced Virtual Experience) initiative launched in June 2022, allowing 15.84 lakh customers managing Rs. 22,300 crores in agricultural portfolios to renew their cards without visiting branches.
As announced in Budget 2025-26, the short-term loan ceiling under the Modified Interest Subvention Scheme (MISS) has been enhanced from Rs. 3 lakh to Rs. 5 lakh, benefiting 7.7 crore farmers, including those in dairy and fisheries. The Scheme provides interest subvention of 1.5% to banks for the provision of short-term agri loans through KCC up to Rs 3 lakh at a concessional interest rate of 7% per annum.
With an additional Prompt Repayment Incentive of 3% to farmers on timely repayment of loans, which reduces the interest rate to 4% for farmers, loans up to Rs 2 lakhs are extended on a collateral-free basis. This ensures hassle-free access to credit for SMF in the country. The amounts under operative KCC accounts have more than doubled from ₹4.26 lakh crore in March 2014 to ₹10.05 lakh crore in December 2024.
Impact on Farmers
The digitization of KCC has transformative potential. For instance, the pilot project’s automation has reduced operational costs for banks and borrowers alike, making credit more affordable. Smallholder farmers, who often lack the resources to navigate traditional banking, benefit from simplified procedures and doorstep services offered by banks like IDFC FIRST Bank. Moreover, digital platforms enable real-time data collection, helping banks tailor credit limits based on cropping patterns, land holdings, and seasonal needs.
The digital shift is expected to increase penetration further, especially among tenant farmers, sharecroppers, and Self-Help Groups (SHGs), who are now explicitly eligible under the scheme. By integrating with platforms like PM-KISAN, digital KCCs also facilitate seamless disbursal of benefits, enhancing financial inclusion.
Share your comments