Kisan Credit Card Scheme
In the year 1998, the Kisan Credit Scheme (KCC) was introduced under the model program of NABARD. This scheme was introduced to meet the various lending needs of the agricultural sector by providing financial support to farmers.
KCC is a credit system introduced in 1998 to issue credit card to farmers based on inventory so that banks can uniformly accept agricultural inputs such as seeds, fertilizers and pesticides so that farmers can easily purchase them.
The farmers through this card can withdraw money for their production needs. The model program was created by the NABARD, based on the recommendations of the R.V. Gupta committee to provides regular financing for agricultural needs. The Ministry of Finance oversees the implementation of the KCC program. Recently, the government has launched a mission mode initiative to saturate all PM KISAN beneficiaries with KCC for universal access to licensed institutional credit. The KCC scheme is implemented by commercial banks, RRBs, small financial banks, and co-operatives.
Features of this scheme
Eligible farmers will be provided with a Kisan credit card and passport book or card compass book. A revolving cash advance facility with any number of draws and repayments within the limits.
When setting limits, one need to consider total production credit requirements for the whole year and secondary activities related to crop production. Short-term, medium-term, and term loan sub limits are set at the bank’s discretion. The card is valid for 5 years and is subject to annual review. As an incentive for good performance, a person can raise the credit limit to account for increased costs, changes in cropping patterns, and more.
Loan conversion / rescheduling is also permitted in the event of crop damage due to a natural disaster. Securities, margins, interest rates, etc. that comply with RBI standards. Transactions may, at the discretion of the bank, be conducted through the issuing branch and through other designated branches. Receipts / check withdrawals on cards and savings books. Plant loans paid under the KCC scheme for reported plants are covered by a plant insurance system to protect farmers’ interests from loss of yield due to natural disasters and the spread of pests.
Objectives of this scheme
Under this scheme funds are provided to farmers to meet short-term credit needs for growing crops and post-harvest costs as well as creating a marketing loan. It also provides farmer consumption requirements along with working capital to maintain agricultural assets and activities. It also provides investment credit needs for allied activities and agriculture.
Eligibility for this scheme
All farm / individual borrowers who own a farm. Tenants, oral tenants, tenants, etc. A joint responsibility group of SHGs or farmers, including tenants, share farmers, etc are eligible for this scheme. Recently, the program has been extended to farmers practicing livestock and fishing.
Loan amount provided
For farmers who grow one crop a year, short-term credit limits are set in the first year, depending on a variety of factors. The limit for all subsequent years (2nd, 3rd, 4th, 5th) will be increased by 10%. Flexible limits from Rs.10,000 to Rs.50,000 are offered as Flexi KCC for farmers who are pushed to the limit. For livestock and fisheries, the loan amount is determined by the district level technical committee based on local costs. For livestock and fishing, loans have the nature of rotary cash credit restrictions.
In addition to compulsory crop insurance, KCC owners have options for property insurance, accident insurance, and health insurance of all types and pay premiums through their KCC account. is needed. Insurance premiums must be borne by the farmer / bank according to the terms of the program. The beneficiary must be aware of the coverage of the insurance available and obtain consent (excluding compulsory crop insurance) at the application stage.
Insurance is also provided under this scheme with death due to accident has an insurance cover of Rs.50,000 and any permanent disability also has a cover of Rs.50,000.
Repayment of loan
The repayment period for short-term loans can be set by the bank according to the expected harvest and sales period of the plant. Some fixed-term loans are usually repaid within 5 years, depending on the type of activity.