What is Kisan credit card?

Kisan Credit Card is a bespoke credit card product offered exclusively to the farmers in India.Thisscheme was introduced in the year 1998 by the government of India, wherein apart from the government, the Reserve Bank of India (RBI) & NABARD are the key partners in implementing the scheme. Since the inception, this credit card has materialized as a ground-breaking timely & hassle-free credit delivery mechanism towards achieving the credit crunch of the farmers in India.

With few impediments in the erstwhile implementation plan, Government has taken several steps and hence constituted a Working committee under T. M. Bhasin, CMD of Indian Bank with the intention of assessingthis unique product and recommend changes to be made in the scheme to make it hassle free financial tool.This Credit Card scheme aims to provide sufficient, opportune and money-spinning credit facility from the banking system to suit the needs of farmers with respect to cultivation and other allied needs. Farmers with these cards can purchase necessary agricultural inputs as well as withdraw cash from ATMs for their personal needs.

Kisan credit cards now days are offered through a cosmic institutional credit support which involves various Commercial Banks, Cooperatives and RRBs. The product has set asidethe time-consuming credit screening processes of banks and allows the farmers to avail cash credit easily. In the event of any bad crop season, the repayment can be carried overto another term and if required the repayments can be extended further up to 4 years. The cardsare generally valid for 5 years & subject to renewal on an annual basis. Under this credit card facility, the farmer can withdraw using withdrawal slips from his account, perform ATMwithdrawal using the credit card or the passbook issued under his name.

Features of Kisan Credit Cards

• Kisan credit cards are valid for a period between 3 years to maximum 5 years
• The loan limit and working capital are subject to annual revision.
• The credit Limit of is based on the quantum of finance.
• The repayment period in Kisan credit card is up to maximum 12 months.
• The card can be operated at branches using cheque facility or withdrawal slip or at ATM or POS (point of sales)
• Simpleone-time documentation at first application andhenceforth simple declaration from next year onwards.
• Credit facility is offered for both agricultural as well as other agro-allied activities.
• Supplementary credit is available for crop production and any other financial contingencies.
• Insurance cover provided by this credit card is available for the Card holder’s life as well as the crop insurance is available on certain crops as a part of National Crop Insurance scheme.
• Fortification under the insurance scheme is against any loss of crops as a direct or indirect impact such as pest attacks or natural calamities, etc.
• While In few cases collateral security is required to be provided. In case the loan amount is beyond  Rs. 100000/-, then the Kisan credit card holder has to duly pledge his agricultural land as registered mortgage as well as hypothecate the yield or crops raised on the land.
• Revolving credit limit is assigned for any amount and number of withdrawals and thereafter the repayment has to be made within the assigned credit limit.
• The credit limit is generally fixed based on the farmer’s land holdings, quantum of finance, total annual production and the credit needs.
• However banks at their own discretion may increase the credit limits to take meet the requirement as per change in cropping pattern, cost of production etc. as aservice gesture for soundcredentials and repayment capacity on the card usage.
• In the case of notified Cooperative Banks, the operations will be available either though PACS.
• In case of other banks, the issuing branch will handle the operations as per their working module.
• The required Collateral Security is the registered mortgage of the land wherein the availed loan is more than Rs. 100000/- and subsequent hypothecation of crops is required.
• The short term credit limit for the first year is fixed. For subsequent years the limit is proposed to be stepped up @10 %.
• The short term credit limit approved for fifth year will be approx 150% as against the first year limit sanctioned to farmers.
• All the expenses towards post-harvest/ household / consumption requirements
• The Kisan credit card holders are provided a plastic credit card-cum-passbook with name & address incorporated, apart from the details of land, validity period , credit limits etc
• All the withdrawal and payments  are duly recorded on the passbook issued on an continuing basis and the Kisan credit card holding farmer have to submit the issued passbook while carrying  out the transactions in account
• The expected incremental revenue of the farmer has to be adequate to pay off any advance leaving ample amount for the farmer’s daily needs.
• The credit limit endorsed on the card is consequential on the farmer’s operational land holding, pattern of crop & quantum of finance required.
• For the Kisan credit card limit, the total operational land holdings include the net leased-in land &exclusive of leased out land.

Benefits of Kisan Credit Card

• Flexible repayment options with option to alter tenure.
• Simple documentation and Hassle-free sanction procedure
• Option to chose either single credit loan facility or  term loan towards all agricultural requirements
• Steady and easily available finance option to lower down the interest burden on farmers
• Assistance in the purchase of various agricultural needs such as fertilizers, seeds, etc.
• Helps to earn cash discounts from various merchants/ dealerswhen using the cardwithin India.
• Availability of Credit till up to 3 years, without any prerequisite or seasonal appraisals.
• Credit limit applicableis determined as per Income from various agricultural sources.
• Repayment of loan can be donepost completion of the harvest season.
• The interest rates on balances are lower than the traditional credit products available for the farmers.
• The Margin, documentation, security and applicable terms and conditions are as same to that are applicable to other agricultural advance.
• Simple documentation and utmost flexibility is offered for funds withdrawal from the Bank.
• Simplified disbursement procedures
• Takes away farmer’s necessity to use cash or similar money instruments for each transaction
• Farmers need not to apply for a new  loan for each &every crop
• Application for this instruments can be completed in Hindi as well
• Specifically targeted at farmers as part of government scheme for Kisan.

Eligibility for Kisan credit card

The Kisan Credit Card Scheme can be offered to

1. All farmers who are either individuals/Joint borrowers of the land and involved in farming or allied activities.
2. Individuals who are owner cum cultivators.
3. All the Tenant farmers or Oral lessees and Share Croppers in the agricultural land.
4. Self Help Groups or Joint Liability Groups including tenant farmers or share croppers.
5. Farmers should be eligible for a production credit of Rs. 5000/- andabove, then he/she is entitled for a Kisan Credit Card.
6. All such farmers who are eligible for short term credit loan towards crop production or any allied activities as well as non-farm activities.
7. The farmers should hail from the branch operational area where the loan has been applied.

Banks providing Kisan credit card in India

Below are few of the renowned financial institutions which offer Kisan Credit Cards in India.

• NABARD – NABARD is one the pivotal stake holder is implementation of Kisan credit card in India. It offers term loans and credit facility which is easily accessible to the farmers to meet their fundamental agricultural expenses.
• State Bank of India  – Being one of the biggest public sector bank and with the enormous spread of branches in rural India , SBI ensures all the deserving farmers should have the credit facility for the production credit necessities, expenses linked to allied activities, as well as emergency expenses.
• Bank of India: Bank of India offers this card to carter the timely and adequate credit assistance towards the needy farmer’s cultivation needs.
• IDBI – IDBI Kisan Credit Cards are intended to assist farmers along with additional facilities such as crop loans, working capital,investment credit to meet agricultural expenses.  IDBI’s credit card for Kisanis offered to Farmers, owner cultivators, tenant cultivators, sharecroppers etc.
• Axis Bank- Axis bank offers this card with enhanced Credit limit up to Rs. 25 lakhs and an Insurance coverage up to Rs. 50,000/-
• Indian Overseas Bank (IOB) – This card offered by IOB and it brings greater flexibility and liberty to operate in credit operationfor the farmers.

Kisan Credit Card FAQs

Q1. What are the Interest rates and other charges on the card?

The interest rates offered may vary from bank to bank. Generally the interest rate offered by most of the public and private sector bank for Kisan Credit Cards is approx 9% PA. Central government has brought few subsidies on applicable interest rate by the means of financing institutions for card holders with proven track record. An additional interest subsidy of 2% provided is to such customer who have a sound track record for 3 years.

Other Fees &charges include the processing fees, insurance premium, passport photo charges, land mortgage deed etc.

Q2. What are the factors in calculating the credit limit of Kisan Credit Card?

The initial credit limit on cardisoffered on the basis of
​

1. The proposed amount of finance and the cropping pattern.
2. Pre &post-harvest expenditureand household requirements
3. Other Expenses required for  the maintenance of crop and  farm assets, Insurance towards the such as Crop and such farm Asset insurance as well the Personal Accident Insurance Scheme

Q3. How Can I apply for this credit card?

In case the farmer is eligible for this card, he/she may either apply online for card or obtain an application form by visiting the nearest bank branch or NABARD office. The application form for thiscard in Hindi is also available for farmers who cannot understand English.

Q4. What are the incentive and waivers available on these credit cards?

Banks at their own discretion generally waive off this fee

1. Processing fees forthe card within the credit limit up toRs.3 lakhs waived.
2. Collateral security for this credit card within the credit limit up toRs.1 lakh waived.

Q5. What is the insurance premium for personal accident insurance scheme available with this card?

Normally, the premium towards personal accident insurance is Rs.15/- for 1 year, and Rs.45/- for 3 years tenure.