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Kisan Credit Card

The KCC Scheme aims to provide timely and adequate credit to the farmers for their agricultural operations. It provides interest subvention of 2% and Prompt Repayment Incentive of 3% to the farmers, making the credit available at a very subsidized rate of 4% per annum. The scheme was extended for allied and non-farm activities and revised in 2012 to facilitate the issue of Electronic Kisan Credit Cards.

This topic of “Kisan Credit Card” is important from the perspective of the UPSC IAS Examination, which falls under General Studies Portion.

Ministry

Ministry of Agriculture & Farmers Welfare

Objectives

The Kisan Credit Card scheme aims to provide adequate and timely credit support from the banking system under a single window with the flexible and simplified procedures to the farmers. The following are the objectives:

  • Meet the short-term credit requirements for crop cultivation, post-harvest expenses, and produce marketing loan.
  • Consumption requirements of farmer households.
  • Working capital for maintenance of farm assets and activities allied to agriculture.
  • Investment credit requirement for agriculture and allied activities.

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Benefits

  • Fixation of credit limit/Loan amount
  • Short-term loans and term loans governed by different interest rates.
  • Repayment schedules and norms are different for short-term and long-term loans.
  • Maximum Permissible Limit (MPL) is the short-term loan limit arrived for the 5th year plus the estimated long-term loan requirement.
  • The long-term loan limit is based on proposed investments during the five-year period.
  • Short-term loan limit arrived for the first year: Scale of finance for the crop x Extent of area cultivated + 10% of limit towards post-harvest/household/consumption requirements + 20% of limit towards repairs and maintenance expenses of farm assets + crop insurance, PAIS & asset insurance.
  • For farmers raising more than one crop in a year, the limit is to be fixed as above depending upon the crops cultivated as per the proposed cropping pattern.

Eligibility

All farmers, including sharecroppers and oral lessees, are eligible for the Kisan Credit Card.

Implementation Strategy

The Kisan Credit Card is a magnetic stripe card with a PIN and an ISO IIN that enables access to all bank ATMs and micro ATMs. The following delivery channels shall be put in place to ensure the Kisan Credit Card is used by the farmers:

  • Withdrawal through ATMs/Micro ATM
  • Withdrawal through BCs using smart cards.
  • PoS machine through input dealers
  • Mobile Banking with IMPS capabilities / IVR
  • Aadhaar-enabled Cards

Banks can issue EMV and RUPAY compliant chip cards with a magnetic stripe and PIN with ISO IIN. Further, biometric authentication and smart cards may follow the common open standards prescribed by IDRBT and IBA, enabling them to transact seamlessly with input dealers and have the sales proceeds credited to their accounts.

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