Kisan Credit Card – Application Procedure, Benefits , Objectives and Required Documents

The Kisan Credit Card (KCC) plan was started by the Government of India in 1998. It aims to give farmers loans at low costs and at the right time. This new idea tries to make farmers less dependent on informal credit sources, which often charge very high interest rates. By offering short-term loans at fair rates, the KCC scheme helps farmers meet their farming needs and improve their overall financial well-being.

In this detailed article, we will look at the different parts of the Kisan Credit Card scheme. We will explore the main goals and features of the KCC, showing the advantages it provides to farmers. We will also discuss who can apply, interest rates, and the application process for getting a Kisan Credit Card. Plus, we will give an overview of the top banks offering KCC loans, making sure farmers clearly understand their choices.

Kisan Credit Card Objectives and Features

The Kisan Credit Card plan was introduced to give farmers an easy way to get loans through a simple process. By offering a single window system, the KCC aims to make loan applications and approvals easier, making sure farmers get financial help on time for their farming activities. This full credit facility meets the different needs of farmers, from short-term crop growing costs to long-term investments in farm infrastructure.

The KCC scheme has many objectives designed to help farmers at every stage of the farming cycle:

  • Providing short-term loans for buying seeds, fertilizers, and other important inputs needed for growing crops
  • Financing expenses after harvest, such as storage, transportation, and processing of farm products
  • Offering loans to help sell farm products, allowing farmers to get better prices
  • Supporting the daily needs of farmer families, ensuring their overall well-being and quality of life
  • Giving working capital for maintaining farm assets, such as machinery and equipment
  • Promoting other farming activities like animal care, fisheries, and horticulture to increase income sources
  • Providing long-term investment loans for land development, irrigation, and farm mechanization

The Kisan Credit Card has several notable features that make it a good choice for farmers:

  • Revolving cash credit, allowing farmers to withdraw and repay money based on their farming cycle and cash flow
  • Flexible credit limit decided based on the farmer’s land, crops grown, and other relevant factors
  • Option to reschedule repayments and change loans if crops are damaged due to natural disasters
  • Yearly increase in the maximum credit limit based on the farmer’s repayment history and ability to pay back
  • Three-year validity without needing a seasonal review, reducing paperwork and saving time
  • Simple documents needed, making it easier for farmers to apply for and keep their KCC

Kisan Credit Card Loan and Advantages

The Kisan Credit Card loan gives farmers access to credit based on their specific farming needs. The credit limit is decided by looking at things like the crops grown, farming costs, and the value of farm assets owned by the farmer. This makes sure the loan amount meets the unique money needs of each farmer, helping them manage their farming operations well.

Farmers can enjoy many benefits by using the KCC loan scheme:

  • Good credit limits of up to Rs.1.60 lakh without security and Rs.3 lakh with security, providing a lot of financial help
  • Low interest rates, making borrowing cheaper for farmers compared to other credit sources
  • Choice to repay the loan in flexible monthly payments, matching the farmer’s cash flow and income patterns
  • Ability to get government help on farm inputs, reducing the overall cost of growing crops
  • Personal accident insurance coverage of up to Rs.50,000, providing financial safety to farmers and their families
  • Maximum Permissible Limit (MPL) idea, which considers both short-term and long-term credit needs for a full financing solution
  • Dividing credit limits into separate sub-limits for short-term cash credit and term loans, making operations easier

Interest Rates and Things That Affect Them

The interest rates charged on Kisan Credit Card loans may be different at various banks and financial groups. However, on average, the interest rates are between 2% to 4% per year. It’s important to know that the government offers different rewards and help to farmers, which can further reduce the actual interest rate based on their repayment history and how quickly they pay back what they owe.

Several factors play a role in deciding the interest rates for Kisan Credit Card loans:

  • Loan Amount: Usually, loans up to Rs.3 lakhs have lower interest rates compared to bigger loan amounts, making credit easier to get for small and medium farmers.
  • Interest Subsidy: Some banks offer an interest subsidy of 2% to 3% per year on KCC loans, as per the rules set by the Reserve Bank of India. This subsidy helps reduce the interest burden on farmers.
  • On-Time Repayment Reward: Farmers who always repay their loans on time may be able to get an extra subsidy of around 3%, further reducing the actual interest rate and encouraging good money habits.
  • Interest Calculation Method: Banks usually charge simple interest on KCC loans when repayments are made within the set timeframe. However, if payments are late, compound interest may be applied, increasing the overall cost of borrowing.

Kisan Credit Card Eligibility Criteria and Required Documents

To be able to get the Kisan Credit Card loan, farmers must meet certain rules. These rules make sure that the plan benefits real farmers who are actively involved in farming:

  • Applicants must be between 18 and 75 years old, so both young and experienced farmers can get the benefits.
  • Farmers should own their farm land, as the KCC scheme is meant to help land-owning farmers.
  • Having a savings bank account is a must, as it helps with getting and repaying the KCC loan.
  • Tenant farmers and sharecroppers who farm on rented land can also apply, as long as they have a valid rental agreement.
  • Applicants must show a well-planned crop production plan, showing they want to do farming in a sustainable way.
  • The farm land should be fertile and good for growing crops, making sure the farming plan will work.
  • Senior citizen applicants need to have a co-borrower, preferably a legal heir, to make sure the loan is paid back.

To apply for the KCC loan scheme, farmers need to give the following documents:

  • Filled out application form, giving correct personal and farming details.
  • Recent passport size photos for identification.
  • Valid ID proof such as Aadhaar card, voter ID, or PAN card.
  • Address proof like Aadhaar card, electricity bill, or telephone bill.
  • Proof of land ownership, such as land records or property papers.
  • Details of the crops grown, including the types of crops and the land size.
  • Security documents, if the loan limit is more than the set amount.
  • Any extra documents the bank asks for during the loan approval process.

Kisan Credit Card : How to Apply and Top Banks

The application process for the Kisan Credit Card can be done online or offline, depending on what the farmer likes and if they have access to the internet.

  • Online Process:
    1. Visit the official website of the bank offering the KCC scheme.
    2. Go to the ‘Kisan Credit Card’ section from the menu.
    3. Click on ‘Apply’ and carefully fill out the online application form.
    4. Submit the completed application and write down the reference number for future use.
    5. The bank will contact the applicant for further processing if they are eligible.
  • Offline Process:
    1. Go to the nearest branch of the bank offering the KCC scheme.
    2. Talk to the bank representative and say you want to apply for the Kisan Credit Card.
    3. Fill out the paper application form with the help of the bank representative, giving correct details.
    4. Give the completed application and the required documents to the bank.
    5. The bank will process the application and tell the applicant about the status of their KCC loan.

Many top banks in India offer the Kisan Credit Card, each with its own special features and benefits. Here’s a table showing some of the top banks and their KCC offerings:

BankCredit LimitInterest RateOther Features
State Bank of IndiaBased on crops and cropping pattern7%5 year validity
Punjab National BankUp to 25% of farmer’s estimated income (max Rs.50,000)7%N/A
HDFC BankUp to Rs.3 lakh9%5 year validity
Axis BankUp to Rs.3 lakh8.85% to 13.10%Loan extension up to 4 years for crop failure

Common Questions

What are the things covered under the Kisan Credit Card loan?

The Kisan Credit Card loan provides money for many different farming activities. It covers costs related to growing crops, such as buying seeds, fertilizers, and pesticides. The loan also helps with day-to-day farming needs. It can also be used for maintaining and taking care of farming assets, such as machinery and equipment. The KCC loan also extends to other farming activities, including animal care, fisheries, and dairy farming.

Is insurance given with the Kisan Credit Card loan?

Yes, the Kisan Credit Card scheme offers insurance to protect farmers against unexpected events. Farmers get personal accident insurance, which covers them in case of accidental death or permanent disability. The plan also includes asset insurance, protecting farmers’ investments in farm equipment and machinery. Also, crops that can be financed by KCC are automatically covered under the National Crop Insurance Scheme, giving farmers extra protection against natural disasters and crop failures.

What is the repayment time for Kisan Credit Card loans?

The repayment time for Kisan Credit Card loans is usually set at 5 years. This long repayment period lets farmers manage their money well and match their repayments with their crop cycles and cash flows. The 5-year time gives farmers the flexibility to plan their farming activities and investments over a longer period, making sure their farming business is sustainable and growing.

Can first-time borrowers apply for a Kisan Credit Card?

Yes, the Kisan Credit Card scheme is open to all farmers, including those who are applying for a loan for the first time. First-time borrowers who are involved in agriculture, animal care, fisheries, or other related activities can apply for a Kisan Credit Card. The plan aims to provide financial help and support to all farmers, no matter if they have borrowed before or not. By giving credit to first-time borrowers, the KCC scheme encourages more farmers to invest in their farming business and use modern farming methods.

Leave a Comment