The Centre is looking to increase the Kisan Credit Card (KCC) loan limit. The Department of Financial Services, which is under the Union Finance Ministry, is actively working with the Ministry of Agriculture and Farmers Welfare to increase the limit on Kisan Credit Card (KCC) loans and float a scheme similar to Atmanirbhar Nidhi (PM-SVANidhi) scheme for tenant farmers.
“We are looking to increase the Kisan credit card loan limits, which were set three or four years ago,” MP Tangirala, Additional Secretary, department of financial services said at the CII Financing 3.0 Summit last month.
The Kisan Credit Card (KCC) Scheme was established in 1998 with the primary goal of ensuring farmers have access to sufficient and timely credit for their agricultural endeavours. The scheme, which was started in 1998, allows for a maximum credit limit of Rs 3 lakh. The outstanding credit in KCC accounts stood at Rs 9.81 lakh crore. This initiative, backed by the Centre, offers an interest subvention of 2% and a Prompt Repayment Incentive of 3% to farmers, effectively lowering the interest rate to a highly subsidised 4% per annum.
Initially focused on agricultural operations, the scheme was later expanded in 2004 to cater to the investment credit needs of farmers engaged in allied and non-farm activities. In 2012, a committee led by T. M. Bhasin, CMD of Indian Bank, reassessed the scheme to streamline its processes and enable the issuance of Electronic Kisan Credit Cards. The framework of the scheme offers general directives to banks on how to implement KCC efficiently, giving the implementing banks the flexibility to tailor the guidelines to better suit their specific institutional or location-based requirements.
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Now, after the success of PM Street Vendor’s Atmanirbhar Nidhi for street vendors, the Centre is looking at a similar arrangement for tenant farmers, Tangirala added. He further noted the need to redefine agriculture to include allied activities, which, at present, account for just 12% of credit.
The Kisan Credit Card (KCC) scheme was introduced to ensure that farmers have access to timely and sufficient credit assistance from the banking system through a single window. The scheme offers flexible and simplified procedures to assist farmers in various aspects of their agricultural activities. These include:
> Meeting short-term credit needs for crop cultivation
> Financing post-harvest expenses
> Providing produce marketing loans
> Fulfilling consumption requirements of farmer households
> Providing working capital for the maintenance of farm assets and allied agricultural activities
> Catering to the investment credit requirements for agriculture and related activities
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Last month, the Reserve Bank of India (RBI) announced the extension of the Modified Interest Subvention Scheme (MISS) for short-term loans meant for agriculture and allied activities obtained through the Kisan Credit Card within the current financial year. Consequently, eligible farmers are now able to access loans amounting to Rs 3 lakh at subsidised interest rates.
Under the Modified Interest Subvention Scheme, eligible farmers will receive loans at a reduced interest rate of 7%. Those who repay their loans on time will also receive an additional interest subvention of 3% per annum. The RBI has specified that the rate of interest subvention to lending institutions will be 1.5% for the fiscal year 2024-25. It is important to note that for the seamless facilitation of benefits to farmers under this scheme, the mandatory requirement for Aadhaar linkage will continue to be in place for accessing the specified short-term loans during the mentioned fiscal year.
In a statement during the Union Budget session in the Lok Sabha, Minister of State for Finance Pankaj Chaudhary announced that Rs 4.26 lakh crore in crop loans had been disbursed to farmers under the Kisan Credit Card scheme. This amount marks a significant increase from the 2014 figures, which were recorded at Rs 9.82 lakh crore.
Additionally, the minister underscored the government’s commitment to enhancing agricultural production and the welfare of farmers through a series of measures. He particularly emphasized the extensive outreach of the Pradhan Mantri Jan Dhan Yojana (PMJDY), noting that over 52 crore accounts had been opened to promote financial inclusion nationwide.
