Kisan credit card – KCC was launched to save the Indian farmers from the high interest rates charged by the money lenders in the unorganized sector. Farmers can avail a loan as and when they require. The interest charged is also dynamic, meaning if customers make timely payments then they are charged a lower rate of interest. Other details of the credit card are given below.
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Objective & Features of Kisan Credit Card Loan
The main objective of Kisan Credit Card Loan is to provide loans to farmers at a low rate of interest. Before this scheme, farmers relied on money lenders who charged a high rate of interest and were rigid on the due date. This posed a lot of problems to farmers especially when they suffered calamity such as hailstorm, drought, etc.
On the other hand, Kisan credit card loans charge a lower rate of interest, offer flexible repayment schedule. Moreover, crop insurance and collateral-free insurance is also provided to the user. Details of Kisan Credit Card Loan scheme are:
- The Interest rate offered on the loan may go as low as 2.00%
- Banks will not seek security on loans up to Rs. 1.60 lakh
- Crop insurance coverage against a variety of calamities is given to the users
- Farmer is provided insurance coverage against permanent disability, death, other risks is also provided to the farmer
- The repayment period is decided on the basis of harvesting of crop and its marketing period
- Maximum loan up to Rs. 3.00 lakh can be taken by the card holder
- Farmers that deposit their money in the kisan Credit Card account will get a high rate of interest
- Farmers are charged simple interest rate when they make prompt payment
- Compound interest is charged when cardholders fail to make timely payments
Suggested Read: Kisan Credit Card: A Boon for Farmers in India
Eligibility for Kisan Credit Card Loan
Kisan credit card loan is provided to anyone who is engaged in agriculture, allied activities or other non-farming activities. Following is the detailed criteria to be eligible for Kisan Credit Card loan:
- Minimum Age – 18 years
- Maximum Age – 75 years
- In case a borrower is a senior citizen (age more than 60 years), a co-borrower is mandatory where the co-borrower should be a legal heir
- All farmers – individuals/joint cultivators, owners
- Tenant farmers, oral lessees, and sharecroppers, etc.
- SHGs or joint liability groups including tenant farmers
Credit Score plays a major role in Credit Card Approval
Documents Required for KCC Loan
The documents that might be required by the bank to process Kisan Credit Card Loan scheme in India are:
|Proof of Identity||PAN Card, Aadhaar Card, Voter’s ID Card, Passport, Driving Licence or any other government approved photo ID|
Proof of Address
|Aadhaar Card, Passport, Utility bills (not more than 3 months old) or Any other government approved address proof|
|Proof of Income||Bank statement for the last 3 months, Salary slips for the last 3 months, Audited financials for the last two years (for self-employed), Form 16, etc.|
How to Apply & Use Kisan Credit Card Loan
Using Kisan credit card loan is straight forward. The steps to avail and use the loan are:
Kisan Credit Card Loan Application
- Visit a bank of choice that is offering Kisan credit card. If the bank allows KCC online application then download it
- Fill out the application form and submit it with the loan officer
- The loan officer after considering all the factors will set the Kisan credit card loan limit and ask for collateral if the loan amount is over Rs. 1.60 lakh
- Post processing the farmer will receive their Kisan credit card
Kisan Credit Card Loan Usage
Once the customer gets their credit card they can start using it right away to make cash withdrawals or direct purchases. Some banks also issue cheque book.
Customer must ensure that they pay back the amount promptly. This will ensure that only simple interest is applied on the loan and not compound interest. If simple interest is applied the farmer will have to pay less compared to compound interest where the payout will be more.
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Institutions offering Kisan Credit Card Loan
Top banks as well as many local banks are offering Kisan Credit Card schemes to its users. Some of them are given below.
State Bank of India – Many people prefer getting State Bank of India Kisan Credit Card. This is because the interest rate charged on SBI Kisan Credit Card starts from 2.00% p.a. on loans up to Rs. 3.00 lakh.
Punjab National Bank – PNB Kisan Credit Card’s application process is easy and farmers can expect quick processing of their application.
HDFC Bank – HDFC Bank is one of the leading private banks in India. The interest rate on their loans is around 9.00% and the maximum credit limit is Rs. 3.00 lakh. Besides this, cardholders can get a cheque book with credit limit up to Rs. 25,000. The benefits do not stop there; if a farmer suffers from crop failure then they may get an extension on the loan for 4 years or more. The crops grown by using the loan fund is also insured against natural calamities or pest attacks.
Axis Bank – Axis Bank Kisan Credit Cards loans charge an interest rate of 8.85%. However, the bank provides loans which charge lower interest rate in accordance with government subvention schemes.
Read in Detail: Kisan Credit Card (KCC) and Top Banks Offering KCC in India
Moratorium on KCC Loan Repayment
The Reserve Bank of India has announced the extension of EMI moratorium on loans and credit cards for 3 more months till 31-Aug-2020. This facility can be availed by all Kisan Credit Card Loan customers whose loan repayment date is falling between 1 March 2020 and 31 August 2020. They may opt for this facility and defer the payments of their KCC Loan EMIs without late payment charges being levied.
Points to Remember
Eligibility – Anyone whose loan repayment date or dates are falling between 1 March 2020 and 31 May 2020.
How to apply – Contact your bank in order to apply for the moratorium. It would be better if you call the bank’s customer care cell instead of visiting the bank in person. Do note that some banks will automatically apply the moratorium period on the loan account if customer skips the payment during this period, 1 March 2020 and 31 Aug 2020.
What Loan Repayments are covered – The facility is available on the following payments:
- Principal and/or interest components
- Bullet repayments
- Equated Monthly Instalments (EMIs)
- Credit Card Statements
Moratorium Period – Currently, the moratorium period is of three months only.
Turn off Auto-Pay – Stop the standing instruction provided at the bank in order to use this facility.
Should you apply for the Moratorium Period?
Depends, if you feel that you may be able to tide over these difficult times even after paying the loan amount then, by all means, pay it off. As it will save you from having to pay additional interest charge that will be applicable during the moratorium period. However, if you feel that you should conserve money for an emergency or require funds to sustain yourself then apply for the moratorium.
Credit Score plays a major role in Credit Card Approval
Kisan Credit Card Loan FAQs
How can I apply for Kisan Credit Card loan?
You can visit the bank’s branch and apply for the loan directly using your Kisan Credit Card.
What is the interest rate applicable for Kisan Credit Card loan?
The interest rate is decided by the Bank and it depends on a number of factors such as past credit history of the farmer, area under farming, crop under cultivation, etc. However, RBI keeps a check on the maximum interest rate offered by the bank.
Do farmers also get insurance along with the Kisan Credit Card loan?
Yes, farmers also get insurance on Kisan credit card loans for personal accidents and assets and the National Crop Insurance Scheme covers the crops eligible for KCC.
In what areas can one use the loan on Kisan credit card?
- Expenses related to crop production
- Funds for day-to-day activities (Working Capital)
- Expenses towards the maintenance of farming assets and other allied activities such as dairy animals, etc.
- Marketing related expenses
I do not have a credit card or any loan till now. Can I apply for Kisan Credit Card?
Yes, if you are a farmer or are associated with allied activities related to farming or non-farming activities, you can apply for a Kisan Credit Card.