Kisan Credit Card: Features, Benefits, Working, Application Process

The government of India launched the Kisan Credit Card (KCC) program in 1998. The aim of KCC is to provide short-term credit to farmers in a timely and efficient manner. This is to ensure that they have the required funds for meeting their production needs as well as contingency expenses. And also to prevent farmers from borrowing from unauthorized moneylenders.

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What are the features of a Kisan Credit Card?

It simplifies the process of getting timely credit facilities for farmers who may not know a lot about banking.
Offers a flexible payment schedule which can accommodate a bad crop season.
Free ATM/debit card which farmers can use to withdraw funds and make payments.
Farmers can earn interest on credit balance in KCC account.
Interest subvention at the rate of 2% per annum is given for loans up to Rs.3,00,000. And further interest subvention of 3% per annum is given for prompt repayments.
Notified crops/areas are covered by crop insurance.

How does a Kisan Credit Card work?

KCCs work in a very simple manner.

A farmer can apply for a KCC.
Then, depending on his/her land holdings, production and income earned from it, previous credit history, etc, the bank sets a credit limit.
The farmer is then issued a ATM/debit card and passbook. (And also a chequebook if the credit limit is Rs.25,000 or more.)
So the farmer can use the credit limit/withdraw the loan amount by using the ATM/debit card or by using withdrawal slips.

Eligibility Requirements for a Kisan Credit Card

The Government launched this card to make credit easily available to all types of farmers. Hence the eligibility criteria includes:

Individual farmers/owners
Joint cultivator owners
Tenant farmers
Oral lessees
Share croppers
Self Help Groups
Joint liability groups including tenant farmers

Recently, the government has expanded the KCC program to include animal husbandry as well.

How to apply for a Kisan Credit Card?

Public sector banks, cooperative banks, and regional rural banks offer KCCs. So to apply for a KCC, please head to the nearest branch of the bank of your choice.

Some of the top banks providing KCCs are:

State Bank of India
Bank of India
IDBI
NABARD
Axis Bank
Indian Overseas Bank
Union Bank of India
Bank of Baroda
Allahabad Bank

Documents Required

To apply for a KCC, you need to submit the following:

Duly filled application form. Application forms for many banks are available online on their websites. To view a sample KCC application form, please click here. You can either download and print the form, or get it from the bank.
Identity Proof – Aadhaar card, PAN card, voter ID, driving license, passport, etc.
Address Proof – Aadhaar card, voter ID, driving license, passport, etc.

What is the rate of interest?

Simple interest at the rate of 7% per annum is charged up to one year or the repayment due date, whichever is earlier.
In case the amount is not paid by the due date, interest is charged at card rate.
Also, beyond the due date, interest is compounded on a half yearly basis.

Quantum of Loan and Repayment

The amount of the loan/credit offered in the first year is based on the cost of cultivation, harvest, post-harvest expenses, and farm maintenance. For every subsequent year, the limit is increased by around 10%. Loans may also be granted for non-farm domestic needs of farmers.

Revolving Cash Credit – A farmer can make any number of withdrawals and repayments within the set limit.

The bank fixes the repayment period based on the estimated harvest time of the crops for which the loan is taken.

Does the bank ask for collateral security?

For KCC credit limit of up to Rs.1,00,000, the bank does not ask for collateral.
And for amounts greater than that, the bank decides the collateral according to the allowed credit limit.

To read about the Kisan Suvidha app, please click here.