The farmers in India have to face much difficulty in arranging short-term funds for the planting and harvesting season and to meet other agricultural needs. They are largely dependent on credit from the unorganized sector such as moneylenders who charge exorbitant rates of interest. Realizing the need for such short-term credit, the Kisan Credit Card Scheme was launched by the Reserve Bank of India and NABARD in August 1998. The objective of this scheme was to free the farmers from the shackles of informal lending and to meet their comprehensive credit requirements. Kisan Credit Card is offered by Commercial Banks, Regional Rural Banks (RRB) and Co-operative Banks.
How does a Kisan Credit Card work?
A Kisan Credit Card works in similar ways as a normal credit card. You can use it at ATMs and merchant POS terminals. Under the KCC Scheme, customers can avail two types of credit- cash credit and term loans. A short-term credit limit is offered on the Kisan Credit Card for smaller agricultural needs. Term loans can also be taken for crop cultivation, buying equipment, irrigation, etc. Cardholders can use the Kisan Credit Card for certain domestic needs as well.
Individuals who are eligible for a Kisan Credit Card from a bank would get a card-cum-passbook or a card and a passbook separately. The credit limit will be set by the lending bank taking into account the customer’s agricultural landholding, the scale of finance and the future projections. The credit limit may be increased at a later date if there is a change in a cropping pattern, increase in credit requirements, etc.
Features of Kisan Credit Card
Kisan Credit Cards come with the following features:
- Kisan credit cards are valid for a period between 3 years and 5 years.
- The loan limit and working capital are subject to annual revision.
- The credit limit is based on the quantum of finance.
- The repayment period in Kisan credit card is up to a maximum of 12 months.
- Simple one-time documentation is required during application.
- The 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 cardholder’s life as well as 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.
- In a few cases, collateral security is required to be provided. In case the loan amount is beyond Rs.1 Lakh, then the Kisan credit card holder has to duly pledge his agricultural land as the registered mortgage as well as hypothecate the yield or crops raised on the land.
- The Kisan credit card holders are provided with 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 a continuing basis and the Kisan credit card holding farmer have to submit the issued passbook while carrying out the transactions in the 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.
Benefits of Kisan Credit Card
With a Kisan Credit Card, farmers can enjoy the following benefits:
- Flexible repayment options with the option to alter tenure.
- Simple documentation and hassle-free sanction procedure.
- Option to choose 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/dealers when using the card within India.
- Availability of credit up to 3 years, without any prerequisite or seasonal appraisals.
- Repayment of loan can be done post 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 the same as that are applicable to other agricultural advance.
- Takes away the farmer’s necessity to use cash or similar money instruments for each transaction.
- Farmers need not apply for a new loan for each and every crop.
- Application for this instrument can be completed in Hindi as well.
- Specifically targeted at farmers as part of the government scheme for Kisan.
Eligibility for Kisan Credit Card
Here is the eligibility criteria to apply for Kisan Credit Card:
- All farmers who are either individuals/Joint borrowers of the land and involved in farming or allied activities
- Individuals who are owner cum cultivators
- All the Tenant farmers or Oral lessees and Share Croppers in the agricultural land
- Self Help Groups or Joint Liability Groups including tenant farmers or sharecroppers.
- Farmers should be eligible for a production credit of Rs.5,000 and above, and then he/she is entitled to a Kisan Credit Card.
- All such farmers who are eligible for short term credit loan towards crop production or any allied activities as well as non-farm activities.
- The farmers should be the residents of the bank’s operational area.
Top Banks Offering Kisan Credit Cards in India
Below are few of the renowned financial institutions which offer Kisan Credit Cards in India.
NABARD- National Bank for Agricultural and Rural Development (NABARD) prepared the model scheme for Kisan Credit Cards in India. It offers term loans and credit facility which is easily accessible to the farmers to meet their basic as well as large-scale agricultural expenses.
State Bank of India- Being one of the biggest public sector banks 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. SBI offers Kisan Credit Cards to farmers to help them cover such expenses.
Bank of India- Bank of India offers Kisan Credit Cards to cater to the credit needs of the farmers. They have numerous branches in remote locations which offer timely assistance to them.
IDBI- IDBI Kisan Credit Cards are intended to assist farmers along with additional facilities such as crop loans, working capital and investment credit to meet agricultural expenses. IDBI offers Kisan Credit Cards to farmers, owner-cultivators, tenant cultivators, sharecroppers etc.
Axis Bank- Axis Bank offers Kisan Credit Card with an enhanced credit limit up to Rs.25 Lakhs and an Insurance coverage up to Rs.50,000.
Indian Overseas Bank (IOB) – Kisan Credit Card is offered by IOB to bring greater flexibility and liberty in credit operation for the farmers. They can avail of this scheme to meet their short-term as well as long-term credit requirements.
Kisan Credit Card Interest Rate and Other Charges
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 7-9% per annum for a loan amount of up to Rs.3 Lakhs. 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% is provided to customers who have a sound track record for 3 years. Other fees and charges include the processing fees, insurance premium, passport photo charges, land mortgage deed etc.
Kisan Credit Card Documents Required
The applicants will have to submit the following documents at the time of applying for a Kisan Credit Card (KCC):
- Identity proof such as PAN card, Voter ID, Driving License, Passport, etc.
- Address proof such as Aadhaar card, PAN card, Voter ID, Driving License or any other government approved ID.
- Passport-sized photograph of the applicant.
- Duly filled-in and signed-in application form
Applicants should note that the documentation and other formalities may vary as per the bank’s internal guidelines. The list above only includes some basic documents.
How to Apply for Kisan Credit Card Online?
The easiest way to apply for a Kisan Credit Card is to visit the bank’s website and submit an online application. The steps of application may differ from one bank to another. Usually, you will have to visit their website and go to the agricultural/rural banking section. Find the Kisan Credit Card product and click on apply now button. You will now have to fill a detailed application form and submit the same. Alternately, the bank may just ask a few details such as your mobile number, PAN, etc. and afterwards one of their executives will give you a call and guide you through the process.
When you apply online, an application reference number will be generated. You must keep this number safe as it can be used to track your Kisan Credit Card application status.
Kisan Credit Card FAQs
Does Kisan Credit Card have a revolving credit facility?
Yes. Just like a normal credit card, the revolving credit facility is also available on Kisan Credit Card.
What are the factors in calculating the credit limit of the Kisan Credit Card?
The initial credit limit on the card is offered on the basis of:
- The proposed amount of finance and the cropping pattern.
- Pre & post-harvest expenditure and household requirements.
- 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
How Can I apply for this credit card?
In case you are eligible for this card, you may either apply online fthe or card or obtain an application form by visiting the nearest bank branch or NABARD office. The application form for Kisan Credit Card in Hindi is also available for farmers who cannot understand English.
What are the incentive and waivers available on these credit cards?
Banks at their own discretion generally waive off this fee:
- Processing fees for the card within the credit limit up to Rs.3 Lakhs is waived.
- Collateral security for this credit card within the credit limit up to Rs.1 Lakh is waived.
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.