Kisan Credit Card: Benefit Eligibility and Features and Benefits

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KCC Card

Kisan Credit Card: Benefit Eligibility and Features and Benefits

Kisan Credit Card: Benefit Eligibility and Features and Benefits: The Kisan Credit Card (KCC) is a government-sponsored scheme in India that aims to provide affordable and timely credit to farmers for their agricultural and allied activities. It was introduced in 1998 by the Government of India in collaboration with the Reserve Bank of India (RBI) and the National Bank for Agriculture and Rural Development (NABARD).

The Kisan Credit Card is designed to meet the short-term credit requirements of farmers, including crop production, post-harvest expenses, working capital for maintenance of farm assets, and consumption needs. The primary objective of the scheme is to enable farmers to have easy access to credit and to ensure the availability of funds when needed, thereby reducing their dependence on informal sources of credit.

Key features of the Kisan Credit Card scheme include:

Simplified Application Process: The application process for obtaining a Kisan Credit Card is straightforward and requires minimal documentation.

Flexible Credit Limit: The credit limit is determined based on the farmer’s cropping pattern, scale of finance, and other factors. The card allows for multiple withdrawals within the sanctioned limit.

Interest Subsidy: Farmers are eligible for interest subsidies on timely repayment. The subsidy helps reduce the cost of credit and encourages prompt repayment.

Insurance Coverage: The Kisan Credit Card often includes insurance coverage to protect farmers against crop failure, natural disasters, and accidental death or disability.

Validity and Renewal: The Kisan Credit Card is valid for up to five years and can be renewed upon satisfactory repayment performance.

The Kisan Credit Card has played a significant role in improving rural credit accessibility and enhancing agricultural productivity in India. It has simplified the credit process, reduced the burden of paperwork, and offered timely and affordable credit to farmers across the country. The scheme has contributed to financial inclusion and has been instrumental in promoting agricultural development and rural livelihoods.

Objective Of Kisan Credit Card 

The primary objective of the Kisan Credit Card (KCC) scheme in India is to provide timely and affordable credit to farmers for their agricultural and allied activities. The scheme aims to meet the short-term credit requirements of farmers and provide them with easy access to formal credit sources, thereby reducing their dependence on informal sources of credit.

Some of the specific objectives of the KCC scheme are:

To provide farmers with timely and adequate credit to meet their production credit requirements (cultivation expenses, post-harvest expenses, etc.) as well as consumer credit needs (education, healthcare, household expenses, etc.).

To ensure the availability of credit at a reasonable cost, thereby reducing the cost of credit for farmers and making it more affordable.

To provide farmers with a flexible and hassle-free credit facility that enables them to withdraw and repay credit as per their requirements.

To promote the adoption of modern agricultural practices, including mechanization, irrigation, and improved crop varieties, by providing credit for such activities.

To provide insurance coverage to farmers to protect them against crop failure, natural disasters, and other risks.

To promote financial inclusion by enabling farmers to participate in formal banking channels and access other financial services.

Overall, the Kisan Credit Card scheme aims to enhance the livelihoods of farmers and promote agricultural development in the country. The scheme is an important initiative by the Indian government to address the credit needs of farmers and improve their access to formal credit sources.

Implementing Agency Of KCC

The implementing agency of the Kisan Credit Card (KCC) scheme in India is the National Bank for Agriculture and Rural Development (NABARD). NABARD is a specialized development financial institution established by the Indian government to promote agriculture and rural development in the country.

NABARD is responsible for formulating policies and guidelines for the KCC scheme and providing the necessary support to banks and financial institutions for its implementation. It collaborates with various commercial banks, regional rural banks (RRBs), and cooperative banks to ensure the effective delivery of KCCs to farmers.

The role of NABARD in the implementation of the KCC scheme includes:

Policy Formulation: NABARD formulates the policies and guidelines related to the KCC scheme, taking into account the evolving needs of farmers and the changing agricultural scenario.

Capacity Building: NABARD conducts training programs and workshops for banks and their staff to enhance their understanding of the KCC scheme and its implementation procedures. It also provides guidance and support to banks in implementing the scheme effectively.

Fund Allocation: NABARD allocates funds to banks and financial institutions to meet the credit requirements of farmers under the KCC scheme. It ensures the availability of adequate credit for farmers through refinancing arrangements with banks.

Monitoring and Evaluation: NABARD monitors the implementation of the KCC scheme and evaluates its impact. It assesses the performance of banks in reaching out to farmers, disbursing credit, and ensuring timely repayment.

Technical Assistance: NABARD provides technical assistance to banks in adopting technology-enabled solutions for the efficient management of KCC accounts and facilitating digital transactions.

NABARD plays a crucial role in coordinating and overseeing the implementation of the KCC scheme across India. It works closely with banks, farmers, and other stakeholders to ensure the successful execution of the scheme and the provision of affordable and timely credit to farmers.

Who is Eligible For KCC Benefits 

The Kisan Credit Card (KCC) scheme in India is designed to benefit a wide range of individuals involved in agricultural and allied activities. The eligibility criteria for availing of KCC benefits are as follows:

Farmers: The primary beneficiaries of the KCC scheme are farmers, including small and marginal farmers, tenant farmers, sharecroppers, oral lessees, and individual farmers. The scheme is available to both individual farmers and joint borrowers (joint liability groups, self-help groups, etc.).

Age: There is no specific age restriction for availing of KCC benefits. Farmers of all age groups can apply for the KCC, subject to meeting other eligibility criteria.

Land Ownership: Farmers who own agricultural land or those who cultivate leased or rented land are eligible for KCC benefits.

Crops and Activities: The KCC scheme covers various agricultural and allied activities, including crop production, farm mechanization, land development, horticulture, animal husbandry, fisheries, and post-harvest expenses.

Creditworthiness: Farmers should have a satisfactory credit history and repayment track record to be eligible for KCC benefits. This factor may vary depending on the policies and risk assessment of the lending institution.

It’s important to note that specific eligibility criteria may vary slightly from one state to another and among different financial institutions. Therefore, it is advisable to check with the respective bank or lending institution for detailed eligibility requirements and documentation needed to apply for a Kisan Credit Card.

The KCC scheme aims to be inclusive and provide credit access to a wide range of farmers engaged in agricultural and allied activities, with a focus on meeting their short-term credit requirements and promoting rural livelihoods.

Salient Features Of Kisan Credit Card 

The Kisan Credit Card (KCC) scheme in India has several salient features that make it a beneficial financial tool for farmers. Here are some key features of the KCC:

Easy Application Process: The application process for obtaining a Kisan Credit Card is simple and streamlined. Farmers need to submit the required documents and meet the eligibility criteria set by the lending institution.

Multiple Withdrawals: The KCC allows farmers to make multiple withdrawals from the sanctioned credit limit as per their requirements. They can withdraw funds in installments or as a lump sum, depending on their farming activities and expenses.

Flexible Credit Limit: The credit limit under the KCC is determined based on various factors such as the farmer’s cropping pattern, the scale of finance, and the estimated cost of cultivation. The credit limit can be revised periodically to accommodate changing agricultural needs.

Interest Subsidy: Farmers who repay their KCC loans on time are eligible for an interest subsidy. The subsidy helps reduce the cost of credit and provides financial incentives for prompt repayment.

Insurance Coverage: Many KCCs come with insurance coverage to protect farmers against crop failure, natural calamities, and accidental death or disability. This provides a safety net for farmers and mitigates the risks associated with agricultural activities.

Validity and Renewal: A Kisan Credit Card is typically valid for up to five years. Upon satisfactory repayment performance, the card can be easily renewed or extended for subsequent periods.

Digitization and Technology Integration: With the increasing adoption of digital technologies, KCCs are now being integrated into digital platforms. This allows farmers to access their credit information, make transactions, and avail of other financial services conveniently through mobile or online platforms.

Wide Acceptance: KCCs are accepted across a vast network of banking institutions, making it convenient for farmers to access credit from various banks and financial institutions across the country.

The salient features of the Kisan Credit Card scheme aim to provide farmers with easy access to credit, ensure flexibility in credit utilization, reduce the cost of credit, and offer insurance coverage to protect them from unforeseen circumstances. The scheme has been instrumental in promoting financial inclusion and enhancing agricultural productivity in rural India.

Loan Tenure Under KCC Scheme 

The loan tenure under the Kisan Credit Card (KCC) scheme in India is typically based on the cropping cycle or production cycle of the respective crops or activities for which the loan is taken. The loan tenure is generally set as per the convenience and repayment capacity of the farmer. Here are some key points regarding the loan tenure under the KCC scheme:

Short-term Credit: The KCC scheme primarily provides short-term credit to farmers, which means the loan tenure is relatively shorter compared to long-term loans. Short-term credit is meant to meet the immediate financing needs of farmers for agricultural and allied activities.

Crop-specific Loan Tenure: The loan tenure for each crop or activity may vary based on factors such as the gestation period of the crop, anticipated income generation, and the specific requirements of the agricultural practice. For example, for a crop with a shorter gestation period, the loan tenure may be shorter, while for crops with a longer gestation period, the tenure may be relatively longer.

Annual Review: The KCC loan tenure is typically reviewed and renewed on an annual basis. This allows for adjustments in the credit limit, interest rate, and other terms based on the farmer’s performance and changing agricultural circumstances.

Flexible Repayment Schedule: The KCC scheme offers flexibility in repayment. Farmers have the option to repay the loan in installments as per their cash flow and income generation from agricultural activities. This helps farmers manage their repayment obligations effectively.

Seasonal and Cash Credit Limits: The KCC provides both seasonal and cash credit limits. Seasonal credit limits are linked to the cropping cycle and are utilized for crop-related expenses. Cash credit limits are available for meeting working capital requirements, including maintenance of farm assets and day-to-day operational expenses.

It’s important to note that the specific loan tenure and repayment terms may vary among different banks and financial institutions. The actual loan tenure for a farmer under the KCC scheme will be determined by the lending institution based on their internal policies and the specific terms agreed upon between the farmer and the lender. Farmers should check with their respective banks or financial institution to get accurate information about the loan tenure and repayment schedule under the KCC scheme.

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Interest Subvention Scheme KCC

The Interest Subvention Scheme is a government initiative in India that is closely associated with the Kisan Credit Card (KCC) scheme. Under the Interest Subvention Scheme, the government provides interest rate subsidies to farmers on their short-term agricultural loans, including those obtained through KCCs. Here are some key points about the Interest Subvention Scheme and its relationship with the KCC:

Purpose: The Interest Subvention Scheme aims to make agricultural credit more affordable for farmers by reducing the cost of borrowing. It encourages the timely repayment of loans and provides financial support to farmers.

Subsidy on Interest Rates: Under the scheme, eligible farmers receive an interest rate subsidy, which effectively reduces the interest burden on their loans. The subsidy is typically a percentage of the loan amount or the applicable interest rate.

Applicability to KCC: The Interest Subvention Scheme applies to the short-term loans disbursed to farmers through Kisan Credit Cards. It encourages farmers to use the KCC facility and avail themselves of the interest rate subsidy.

Timely Repayment Benefit: The scheme incentivizes timely repayment by providing an additional interest rate subsidy to farmers who repay their loans promptly, usually within the specified time frame. This further reduces the effective interest rate for farmers.

Role of NABARD: The National Bank for Agriculture and Rural Development (NABARD) is responsible for implementing the Interest Subvention Scheme. It coordinates with banks and other lending institutions to ensure the proper application of interest rate subsidies to eligible farmers.

Periodic Review: The government periodically reviews and announces the Interest Subvention Scheme, including the subsidy rates and applicable terms. Farmers should stay updated with the latest announcements and guidelines to avail themselves of the benefits.

The Interest Subvention Scheme and the Kisan Credit Card Scheme together aim to provide timely and affordable credit to farmers and promote agricultural development. By reducing the cost of credit through interest rate subsidies, the scheme helps ease the financial burden on farmers and encourages them to adopt formal banking channels for their credit needs.