🌾 KCC
Kisan Credit Card - Short-term and term loans at concessional interest rates for farmers' agricultural needs
What is KCC?
The Kisan Credit Card (KCC) is a credit scheme launched in August 1998 by NABARD (National Bank for Agriculture and Rural Development) in consultation with RBI, based on the recommendations of the R.V. Gupta Committee. It provides adequate and timely credit support to farmers for their cultivation and other needs through a simplified procedure. The scheme was further refined by the Bhasin Committee (2012).
KCC works like a revolving credit facility – farmers can withdraw funds as needed up to their sanctioned limit, repay after harvest, and borrow again for the next season without applying for a fresh loan each time. Credit balance in the KCC account provides interest at Savings Bank rate.
Over 13 years of implementation, challenges were identified. GOI and NABARD studies confirmed the need for improvements. A Working Group was formed by the Ministry of Finance to review and simplify the scheme. New guidelines were issued to make KCC more farmer-friendly and hassle-free.
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What is KCC?
The Kisan Credit Card (KCC) is a credit scheme launched in August 1998 by NABARD (National Bank for Agriculture and Rural Development) in consultation with RBI, based on the recommendations of the R.V. Gupta Committee. It provides adequate and timely credit support to farmers for their cultivation and other needs through a simplified procedure. The scheme was further refined by the Bhasin Committee (2012).
KCC works like a revolving credit facility – farmers can withdraw funds as needed up to their sanctioned limit, repay after harvest, and borrow again for the next season without applying for a fresh loan each time. Credit balance in the KCC account provides interest at Savings Bank rate.
Over 13 years of implementation, challenges were identified. GOI and NABARD studies confirmed the need for improvements. A Working Group was formed by the Ministry of Finance to review and simplify the scheme. New guidelines were issued to make KCC more farmer-friendly and hassle-free.
| Parameter | Details |
|---|---|
| Launch Date | August 1998 |
| Formulated By | NABARD in consultation with RBI |
| Based On | R.V. Gupta Committee |
| Refined By | Bhasin Committee (2012) |
| Type | Revolving cash credit facility |
| Validity | 5 years (subject to annual review) |
| Implementing Banks | Commercial Banks, Small Finance Banks, RRBs, Rural Cooperative Banks |
| Not Issued By | Payment Banks (cannot provide credit facilities) |
| Repayment Schedule | Flexible, based on crop harvesting cycle |
| Priority Sector | Classified under Agricultural Loans (Priority Sector Lending) |
| Issuance Timeline | Government directed banks to issue KCC within 2 weeks |
Objectives & Purpose
The KCC scheme provides timely and adequate credit to farmers under a single-window system for various needs:
- Crop Cultivation — Short-term credit for farming expenses
- Post-Harvest Expenses — Covering storage, processing, and transportation costs
- Marketing Loan — Financial support for selling farm produce
- Household Needs — Meeting essential consumption requirements of farmers
- Farm Maintenance & Allied Activities — Working capital for dairy, fisheries, and other activities
- Investment in Agriculture — Credit for equipment like pump sets, sprayers, and dairy animals
Key Point: KCC covers a wide range — crop cultivation, post-harvest expenses, farm asset maintenance, and consumption needs. It can also be used for establishing mini dairy farms, storage of produce in warehouses, and purchase of farm equipment.
Key Features
- No Margin required (up to ₹2 lakh)
- No processing fee up to ₹3.00 lakh
- One-time documentation at the time of first availing; subsequent years require only a simple declaration of crops raised/proposed
- KCC card holders can operate the KCC account through ATMs, BC Points, PoS machines with input dealers/merchants/mandis
- KCC for Animal Husbandry and Fisheries is given in the form of Revolving Cash Credit (CC)
- Interest subvention/incentive for prompt repayment — effective rate can be as low as 4% p.a. (detailed in Interest Subvention section below)
Eligibility & Coverage
Eligible Borrowers
| Category | Who is Covered |
|---|---|
| 01 | All Farmers — Individual/Joint Borrowers who are owner cultivators |
| 02 | Tenant Farmers, Oral Lessees and Share Croppers |
| 03 | Self Help Groups (SHGs) or Joint Liability Groups (JLGs) of farmers including tenant farmers, share croppers, etc. |
JLG Scheme: The Joint Liability Groups (JLG) scheme was initiated by NABARD in 2006 to enhance credit flow to share croppers and tenant farmers who do not have land rights.
Age Eligibility Criteria
- Minimum Age: 18 years
- Maximum Age: 75 years
- Condition for Senior Applicants: Farmers above 60 years must have a co-borrower (legal heir or successor)
Farmer Categorization
| Sl. No. | Category | Size-Class |
|---|---|---|
| 1 | Marginal | Below 1.00 hectare |
| 2 | Small | 1.00 – 2.00 hectare |
| 3 | Semi-Medium | 2.00 – 4.00 hectare |
| 4 | Medium | 4.00 – 10.00 hectare |
| 5 | Large | 10.00 hectare and above |
Note: 1 Hectare = 2.5 Acres of Land
Components of KCC Limit & Calculation (Bhasin Committee)
The KCC limit is determined by the Scale of Finance (SoF) for the crop, plus specific additional components.
Scale of Finance (SoF)
- Scale of Finance is the finance required for raising a crop per unit cultivated area (i.e., acre or hectare)
- The SoF for different crops in a district is decided every year by the District Level Technical Committee (DLTC)
- The DLTC is typically headed by the District Collector/District Magistrate and includes representatives from the District Central Co-operative Bank, major banks in the district, State Agriculture Department officials, leading farmers, and Lead District Managers
- The DLTC meets once a year to finalize the SoF for different crops in the district
1. First-Year Loan Limit (For farmers with a single crop)
Formula: (Scale of Finance per crop × Area cultivated) + 10% (post-harvest & household expenses) + 20% (farm maintenance) + Insurance (crop, PAIS, asset)
| Component | Calculation Details |
|---|---|
| (A) Scale of Finance | Need based, calculated with reference to SoF prepared by District Technical Committee × Area |
| (B) Post-Harvest/Household/Consumption | 10% of limit (A) towards short-term needs |
| (C) Farm Maintenance | 20% of limit (A) for farm asset repairs, crop insurance, PAIS, health insurance & asset insurance |
| (D) Insurance (PMFBY) | PMFBY premium for notified crops: 1.5% of loan amount for Rabi, 2% for Kharif, 5% for Horticulture |
| Total First-Year Limit | (A) + 10% + 20% + Insurance |
Worked Example — First Year Limit
| Item | Amount |
|---|---|
| Scale of Finance | ₹50,000 per acre |
| Area Cultivated | 2 acres |
| Basic Loan Amount | ₹50,000 × 2 = ₹1,00,000 |
| Post-Harvest & Household Expenses (10%) | ₹10,000 |
| Farm Maintenance (20%) | ₹20,000 |
| Insurance (PMFBY) & Other Charges (5% estimated) | ₹5,000 |
| Total First-Year Loan Limit | ₹1,35,000 |
2. Second & Subsequent Years (Up to 5 Years)
- First-year loan limit + 10% increase each year for cost escalation & finance expansion (compounded)
- Includes term loan component for a 5-year tenure
Year-wise progression (based on above example):
| Year | Loan Limit |
|---|---|
| Year 1 | ₹1,35,000 |
| Year 2 | ₹1,48,500 |
| Year 3 | ₹1,63,350 |
| Year 4 | ₹1,79,685 |
| Year 5 | ₹1,97,653 |
3. For Farmers with Multiple Crops Per Year
- Loan limit is based on all crops grown in the first year
- Additional 10% increase each year assuming the same cropping pattern
- If cropping pattern changes, limit will be recalculated
4. Term Loans for Agricultural Investments
- Covers land development, irrigation, equipment, and allied activities
- Loan amount depends on asset cost, farm activities, and repayment capacity
- Term loan component of KCC is normally repayable within 5 years, depending on the type of investment
5. Long-Term Loan Limit
- Based on proposed investments over 5 years and repayment capacity
6. Maximum Permissible Limit (MPL)
MPL = 5th-year short-term loan limit + Estimated long-term loan = Final KCC Limit
Drawing Limit will be reduced every year based on repayment schedule of the term loan(s) availed and withdrawals will be allowed up to the drawing limit.
Fixation of Sub-Limits (Other Than Marginal Farmers)
- Short-Term Loans and Term Loans have different interest rates and repayment schedules
- Short-term crop loans benefit from the Interest Subvention Scheme and Prompt Repayment Incentive Scheme
- To ensure ease of operations and accounting, the KCC limit is divided into two sub-limits:
- Short-Term Cash Credit Limit (linked to a savings account)
- Term Loan Limit (for long-term agricultural investments)
Short-Term Cash Credit Rules
Drawing limit should be based on the cropping pattern:
- Usage Flexibility — Farmers can use funds for crop cultivation, farm asset maintenance, and consumption as needed
- Revision of Scale of Finance — If the district-level committee revises the scale beyond a 10% notional hike, a new drawable limit should be set and informed to the farmer
- Limit Enhancement — If required in the 4th or 5th year, the card limit may be increased, and the farmer should be notified
- Term Loans — Withdrawals should align with investment needs and repayment schedules based on the economic life of assets
- Liability Control — At any time, the total liability must remain within the approved drawing limit for the year
- Collateral Requirement — If the revised limit/liability needs additional security, banks may take suitable collateral as per their policy
For Marginal Farmers (Flexi KCC)
- Flexible Limit: ₹10,000 to ₹50,000 (Flexi KCC) based on landholding and crop grown
- Coverage: Includes post-harvest storage, farm expenses, consumption needs, and small-term investments
- Eligible Investments: Farm equipment, mini dairy, backyard poultry, etc.
- Approval: Branch Manager assesses without linking to land value
- Composite Limit: Fixed for five years
- Higher Limits: Can be revised based on cropping pattern changes or scale of finance
Case Study — 5 Acre Farmer (Multiple Crops)
Assumptions:
- Land Holding: 5 acres
- Cropping Pattern (3 seasons on the same land):
- Kharif: Paddy — 5 acres (SoF + crop insurance per acre: ₹11,000)
- Rabi: Wheat — 5 acres (SoF + crop insurance per acre: ₹9,000)
- Zaid: Tomato — 2 acres (SoF + crop insurance per acre: ₹18,000)
- Investments: (i) Establishment of 1+1 Dairy Unit in 1st Year (Unit Cost: ₹20,000 per animal), (ii) Replacement of Pump set in 3rd year (Unit Cost: ₹30,000)
(i) Crop Loan Component
| Item | Amount |
|---|---|
| Kharif — 5 ac Paddy (₹11,000 × 5) | ₹55,000 |
| Rabi — 5 ac Wheat (₹9,000 × 5) | ₹45,000 |
| Zaid — 2 ac Tomato (₹18,000 × 2) | ₹36,000 |
| Total Cost of Cultivation | ₹1,36,000 |
| Add: 10% towards post-harvest/household expense/consumption | ₹13,600 |
| Add: 20% towards farm maintenance | ₹27,200 |
| Total Crop Loan limit for 1st year | ₹1,76,800 |
| Loan Limit for 2nd year (add 10% = ₹17,680) | ₹1,94,480 |
| Loan Limit for 3rd year (add 10% = ₹17,680) | ₹2,12,160 |
| Loan Limit for 4th year (add 10% = ₹17,680) | ₹2,29,840 |
| Loan Limit for 5th year (add 10% = ₹17,680) | ₹2,47,520 |
| Say (A) | ₹2,47,500 |
(ii) Term Loan Component
| Item | Amount |
|---|---|
| 1st Year: Cost of 1+1 Dairy Unit (₹20,000 × 2) | ₹40,000 |
| 3rd Year: Replacement of Pump set | ₹30,000 |
| (B) ₹70,000 |
Maximum Permissible Limit / Kisan Credit Card Limit (A) + (B) = ₹3,17,500
Interest Rate & Subvention Scheme
Rate of Interest (ROI)
- Rate of Interest is linked to Base Rate and is left to the discretion of the banks
- RBI regulates interest rates for KCC loans, including the provision of interest subvention schemes by the government
- Who decides interest rate on KCC loans? — RBI (with subvention from Government)
- Who decides margin limit in KCC? — Respective Bank
Modified Interest Subvention Scheme (MISS) - FY 2025-26
RBI Circular: RBI/2025-26/193 dated 13th January 2026 continues MISS for FY 2025-26. Cabinet approval for MISS continuation was given on 28th May 2025.
Key Points
- Provides short-term credit to farmers at 7% interest rate with an upper limit of ₹3 lakh
- Interest subvention reduced from 2% to 1.5% for FY 2022-23 and 2023-24
- 1.5% interest subvention to banks and 3% Prompt Repayment Incentive
- Short-term loan limit: ₹2 lakh for AH/Fisheries farmers and ₹3 lakh for farmers with both crop and AH/Fisheries activities
-
IMPORTANT
Latest Budget Update: The loan limit for Animal Husbandry farmers under KCC has been doubled, increasing from ₹3 lakh to ₹5 lakh.
-
- Post Prompt Repayment Incentive, the effective rate for KCC is 4%
WARNING
Budget 2025, the Finance Minister announced increasing the KCC loan limit from ₹3 lakh to ₹5 lakh. However, as of now, RBI has not yet notified this revised limit. Until RBI issues a formal circular, the existing limit of ₹3 lakh remains applicable.
Interest Subvention Structure
| Loan Component | Limit | Interest Rate | Bank Subvention | Prompt Repayment Incentive | Effective Rate |
|---|---|---|---|---|---|
| Crop Loan | Up to ₹3 lakh | 7% p.a. | 1.5% to banks | 3% additional | 4% p.a. |
| Allied Activities (Dairy, Fisheries, Animal Husbandry, Bee-keeping) | Up to ₹2 lakh | 7% p.a. | 1.5% to banks | 3% additional | 4% p.a. |
| Above Limit | > ₹3 lakh | Bank rate | Nil | Nil | As per bank |
Note: Priority is given to crop loan component first. Residual amount is considered for allied activities up to ₹2 lakh cap. The combined subvention limit is ₹3 lakh per farmer (crop + allied together).
Case Study — How Subvention is Split Between Crop Loan & Allied Activities
The total subvention eligible limit is ₹3 lakh per farmer. Crop loan gets first priority. Only the remaining amount (out of ₹3 lakh) is available for allied activities, capped at ₹2 lakh.
Case 1: Crop loan ₹2.5 lakh + Dairy loan ₹1.5 lakh
| Component | Loan Amount | Subvention Eligible | Interest Rate | Why? |
|---|---|---|---|---|
| Crop Loan | ₹2,50,000 | ₹2,50,000 (full) | 4% p.a. | Crop gets first priority — fully within ₹3 lakh |
| Dairy (Allied) | ₹1,50,000 | ₹50,000 only | 4% p.a. on ₹50K | Remaining from ₹3L limit = ₹50K (₹3L – ₹2.5L) |
| Dairy (Allied) — excess | — | ₹1,00,000 | Bank rate | Exceeds combined ₹3 lakh cap |
Farmer pays: 4% on ₹3,00,000 + Bank rate on ₹1,00,000
Case 2: Crop loan ₹1 lakh + Fisheries loan ₹1.5 lakh
| Component | Loan Amount | Subvention Eligible | Interest Rate | Why? |
|---|---|---|---|---|
| Crop Loan | ₹1,00,000 | ₹1,00,000 (full) | 4% p.a. | Crop gets first priority |
| Fisheries (Allied) | ₹1,50,000 | ₹1,50,000 (full) | 4% p.a. | Remaining = ₹2L (₹3L – ₹1L), allied cap = ₹2L → ₹1.5L fits |
Farmer pays: 4% on entire ₹2,50,000 — both components fully eligible
Case 3: Crop loan ₹3 lakh + Bee-keeping loan ₹80,000
| Component | Loan Amount | Subvention Eligible | Interest Rate | Why? |
|---|---|---|---|---|
| Crop Loan | ₹3,00,000 | ₹3,00,000 (full) | 4% p.a. | Crop exhausts the entire ₹3 lakh cap |
| Bee-keeping (Allied) | ₹80,000 | ₹0 | Bank rate | No remaining amount — ₹3L cap already used by crop |
Farmer pays: 4% on ₹3,00,000 + Bank rate on ₹80,000
Key Rule: Crop loan is always adjusted first. Allied activities get subvention only on the leftover from ₹3 lakh, subject to the ₹2 lakh allied cap.
Eligible Lending Institutions
| Institution Type | Eligibility |
|---|---|
| Public Sector Banks | All branches |
| Private Sector Banks | Only Rural & Semi-Urban branches |
| Small Finance Banks | All branches |
| Computerized PACS | Using own resources |
| RRBs & Cooperative Banks | Via NABARD |
Key Subvention Rules (As per RBI Circular)
- Base Interest Rate: 7% p.a. charged to farmer before additional subsidies.
- 1.5% Interest Subvention: Approved for banks on short-term credit up to ₹3 lakh via KCC.
- Aadhaar Linking & Portal Reporting: Mandatory for availing benefit with reporting on ISS portal/DBT platform. One Aadhaar = subvention up to ₹3 lakh.
- Prompt Repayment Incentive (PRI): Additional 3% subsidy for on-time repayment within one year. Effective rate = 4% (7% - 3%).
- Subvention Calculation Period: Calculated from date of disbursement to repayment date, up to a maximum of 1 year.
- Priority for Crop Loans: The crop loan component receives first priority for subvention. Residual amount for allied activities.
- Post-Harvest Loan Subvention: Available to Small/Marginal farmers for up to 6 months against Negotiable Warehouse Receipts (NWRs) from WDRA-accredited warehouses. Interest rate same as crop loan (7% p.a., effective 4% with PRI).
- Allied Activities Covered: Fisheries, dairy, animal husbandry, and bee-keeping eligible up to ₹2 lakh.
- Relief for Natural Calamities: 2% interest subvention available on restructured loans for 1 year (or 3-5 years for severe cases).
- Claim Submission Process: Claims must be lodged at Kisan Rin Portal (KRP) with Statutory Auditors' certificate.
Repayment Period
Repayment of Withdrawals (Short-Term)
- Withdrawals must be repaid within 12 months
- No need to bring the debit balance to zero at any time
- No withdrawal should remain outstanding for more than 12 months
- Repayment is linked to the farmer's harvesting cycle (as per crop harvesting schedule)
Term Loan Repayment
- Normally repayable within 5 years, based on actual investment type
- Follow existing investment credit guidelines
Extended Repayment Options
- Banks may allow a longer repayment period based on the type of investment
Disbursement & Withdrawal
- Unlimited debits and credits allowed (no restriction for eligible accounts)
- Withdrawal channels: Branch, Cheque, ATM/Debit cards, Business Correspondents, PoS at input dealers/mandis/APMC, and Mobile-based transfers
- Term loan withdrawals as per fixed installments aligned with investment needs
- Until a composite card with separate accounting is developed, two separate electronic cards may be issued (one for short-term, one for term loan)
Validity & Renewal
- KCC Validity & Review: Banks determine the validity period and conduct periodic reviews
- Review Outcomes: Facility may be continued, enhanced, or cancelled based on cropping area, pattern, and borrower performance
- Extension Due to Calamities: If repayment is extended due to natural calamities, the status of operations is extended accordingly
- Re-schedulement Beyond One Crop Season: Debits under extension are transferred to a separate term loan account. Repayment to be made in installments
Relief Measures (Natural Calamities)
In case of damage to crops due to natural calamities, KCC loans can be restructured:
1. Rephasement (Restructuring)
The short-term crop loan is first converted into a Medium Term Loan.
| Damage Percentage | Repayment Period Extension |
|---|---|
| 33% to 50% | 2 years |
| More than 50% | 5 years |
2. Additional Relief
- Consumption Loan: Up to ₹10,000 can be allowed depending on distress.
- Interest Subvention: available for restructured loans for 1st year.
- Severe Calamities: Relief extended for 3 years or up to 5 years.
Security Requirements
| Loan Amount | Security/Margin Rules |
|---|---|
| Up to ₹2 lakh | Hypothecation of standing crops only. No Collateral, No Margin |
| Up to ₹3 lakh | Hypothecation of crops only if there is a tie-up arrangement for loan recovery. No Collateral |
| Above ₹2 lakh (without tie-up) | Hypothecation of crops + Pledge of Jewels or Deposit receipts / LIC/NSC assignments or collateral security by way of MOD / charge creation |
| Above ₹3 lakh | Equitable/registered mortgage of land (100% loan value) |
Margin: To be decided by banks.
Processing Fee: May be decided by banks. No processing fee for loans up to ₹3.00 lakh (as per RBI guidelines post Budget 2025).
No Dues Certificate: Not to be insisted upon for any loans.
Tie-Up Arrangement
A tie-up arrangement is a collaboration or agreement between banks and other entities (like input suppliers, agricultural cooperatives, or agricultural marketing agencies) to facilitate credit delivery and recovery.
MOD (Memorandum of Deposit) in Banking
- It is a legal undertaking for collateral done by the Memorandum of Deposit of Title Deeds (known as MOD or MODT)
- MOD is a legal document where the borrower deposits property deeds with the bank as collateral for a secured loan
- When the MODT is signed between the bank and the borrower, it creates a contractual relationship
- There is a stamp duty and processing charges involved in MOD charges. Normally, these charges range between 0.1% and 0.3%
Charge on Land Records
- Where online charge creation is available, banks must ensure its implementation
Credit Guarantee (CGFMU)
- Credit Guarantee for loans up to ₹10.00 lakh is available under Credit Guarantee Fund for Micro Units (CGFMU) in case of KCC
Stamp Duty Exemption
- Government has exempted payment of stamp duty and registration fee on instruments to be executed for loans sanctioned by banks to small and marginal farmers having land up to 5.00 acres of wet land or 10.00 acres of dry land up to an amount of ₹3 Lakhs
Loan Against Warehouse Receipt
- Banks will process loan requests as per established procedures and norms
- If sanctioned, it should be linked to the crop loan account (if applicable)
- Crop loan outstanding can be settled or adjusted if the farmer opts for it
Insurance for KCC Holders
- Available covers: Crop Insurance (PMFBY), Asset Insurance, Personal Accident Insurance (PAIS), and Health Insurance (if applicable)
- Premium Payment: Deducted from KCC account as per agreed ratio between bank and farmer
- Banks must inform farmers about available insurance options and obtain consent at the application stage
Classification of Account as NPA
| Category | Rule |
|---|---|
| Asset Classification for KCC | An account is "standard" if the balance outstanding is ≤ the drawing limit at any time in the past year |
| Short-term crop loans under KCC | Not classified as "out of order" if: (a) Balance remains within the drawing limit, (b) Each withdrawal is repaid within 12 months |
| Term Loan Repayment | Governed by existing prudential norms with a fixed repayment schedule |
| Interest Charging | To be applied uniformly as per agricultural loan norms |
| NPA Classification | Loan becomes NPA if instalment of principal or interest remains overdue for 2 crop seasons (short duration crops) and 1 crop season (long duration crops) |
Key Point: Short-term crop loans under KCC should be treated like cash credit accounts for prudential norms.
KCC Card & Delivery Channels
Issuance of KCC Cards
- Smart Card/Debit Card: Must be biometric-compatible for use in ATMs and handheld swipe machines
- Should store details like farmer's identity, assets, landholding, and credit profile
- Under the revised KCC scheme, RuPay Kisan Credit Cards are issued to facilitate easy transactions
- NPCI (National Payments Corporation of India) facilitates the issuance of standard KCC debit cards
Types of KCC Cards
| Card Type | Details |
|---|---|
| Magnetic Stripe Card with PIN | RBI mandated for access to all bank ATMs and micro ATMs |
| Biometric Authentication Cards | Use EMV-like biometric with magnetic stripe, PIN, and biometric authentication. Ideal for illiterate or less tech-savvy customers. Banks may use external biometric infrastructure until KYC/UIDAI authentication becomes widespread |
| EMV Contact/Chip Cards | Visa, MasterCard, and JCB/ISO global standard cards with magnetic stripe, PIN, and ISO IIN. Global standard for secure transactions |
| Common Open Standards | To facilitate transactions with input dealers and cash payments at mandis/procurement centres |
Implementation in Cooperative Banks
- CBS Migration: All cooperative banks must migrate to CBS (Core Banking System) early to adopt KCC technology enhancements
Temporary Solution (Non-CBS Banks)
- Photo identity card can be issued
Photo ID Card details: Name, address, landholding details, borrowing limit, validity period. Acts as both an identity card and transaction record book. Includes photograph of the holder for identification.
Primary Delivery Channels
- ATMs / Micro ATMs — For cash withdrawals
- Business Correspondents (BCs) using Smart Cards — To facilitate transactions in rural areas
- PoS Machines through Input Dealers — To purchase agricultural inputs
- Mobile Banking with IMPS/IVR — For fund transfers and merchant payments
- Aadhaar-enabled Cards — For authentication and transactions
Digital Platforms: KCC holders can use UPI (Unified Payments Interface) and IMPS (Immediate Payment Service) for digital transactions, fund transfers, and payments.
Mobile Banking & Other Digital Channels
| Feature | Details |
|---|---|
| Interbank Mobile Payment Service (IMPS) | Allows interoperable fund transfers between banks. Supports merchant payments for agricultural purchases |
| Preferred Platform | USSD (Unstructured Supplementary Data) for secure and widespread adoption. Other Secure Modes: App-based or SMS-based banking with RBI-regulated transaction limits |
| Mobile Transaction Security | MPIN authentication for SMS-based transactions. IVR-based authentication in local languages for transparency and security |
| Customer Awareness | Banks should educate farmers on mobile banking benefits and security |
Call Center & IVR-Based Banking
- Banks with call centers/IVR systems may provide: SMS-based banking with call-back verification via IVR
- MPIN authentication through IVR for added security
- Objective: Offer a secure and accessible SMS-based mobile banking solution for KCC holders
Other Government Conditions
- NPCI designs a standardized KCC card for all banks, with individual bank branding
- New and renewed KCC must be issued as a smart card cum debit card
- GCC (General Credit Card): Non-farm entrepreneurial credit eligible under priority sector can avail GCC — the non-agricultural counterpart of KCC
- e-NAM: KCC holders can use the electronic National Agriculture Market platform for better price discovery when selling produce
Key Takeaways
| Parameter | Details |
|---|---|
| Formulated By | NABARD (in consultation with RBI) |
| Committee | R.V. Gupta (1998), Bhasin Committee (2012) |
| Short-Term Limit | (Scale of Finance × Area) + 10% + 20% + Insurance |
| Max Limit (MPL) | 5th Year Short Term Limit + Term Loan |
| Marginal Farmer Limit | ₹10,000 – ₹50,000 (Flexi KCC) |
| Effective Interest | 4% (7% – 3% incentive) |
| Upper Limit for Subvention | ₹3 lakh |
| Collateral Free | Up to ₹2 lakh (hypothecation of crops only) |
| Collateral Free with Tie-Up | Up to ₹3 lakh |
| Credit Guarantee (CGFMU) | Up to ₹10 lakh |
| No Processing Fee | Up to ₹3 lakh |
| Repayment (Short-Term) | Within 12 months |
| Repayment (Term Loan) | Within 5 years |
| Card Type Issued | RuPay Debit Card |
| Card Issuer/Facilitator | NPCI |
| Natural Calamity Relief | Convert to Medium Term (2–5 years) |
| Post-Harvest Benefit | 6 months against WDRA receipts |
| SoF Decided By | DLTC (District Level Technical Committee) |
| Issuance Timeline | Within 2 weeks |
| NPA — Short Duration Crops | Overdue for 2 crop seasons |
| NPA — Long Duration Crops | Overdue for 1 crop season |
| Stamp Duty Exemption | Small/Marginal farmers, up to ₹3 lakh |
| Priority Sector Classification | Agricultural Loans |
| AH/Fisheries KCC Form | Revolving Cash Credit |
RBI Draft Directions — Revised KCC Scheme (February 2026)
RBI Press Release: 2025-2026/2095 dated February 12, 2026 Status: Draft Directions (open for public feedback until March 6, 2026) Source: RBI Press Release
Based on the Statement on Developmental and Regulatory Policies dated February 6, 2026, RBI has issued draft directions proposing key revisions to the KCC scheme.
Applicability of Revised Directions
The revised draft directions apply to:
| Entity Type |
|---|
| Commercial Banks |
| Small Finance Banks |
| Regional Rural Banks (RRBs) |
| Rural Co-operative Banks |
Key Proposed Changes
1. KCC Tenure Extended to 6 Years
The tenure of KCC has been proposed to be extended from 5 years to 6 years, to better align loan repayment schedules with longer-duration crop cycles.
| Parameter | Current | Proposed |
|---|---|---|
| KCC Validity | 5 years | 6 years |
2. Crop Season Standardization
Crop seasons have been standardized by duration for drawing limit alignment:
| Crop Type | Loan Tenure |
|---|---|
| Short duration crops | 12 months |
| Long duration crops | 18 months |
3. Drawing Limits Aligned with Scale of Finance
Loan sanction limits are now proposed to be aligned with the Scale of Finance (SoF) applicable to each crop season, ensuring farmers receive adequate credit based on actual cultivation costs rather than a fixed formula.
4. Eligible Components Expansion — Technology Interventions
New eligible expense components have been proposed under the 20% additional component towards repairs and maintenance of farm assets:
- Soil testing expenses
- Real-time weather forecast services
- Organic/Good Agricultural Practices (GAP) certification costs
Exam Insight: The addition of technology interventions as eligible KCC components is a significant policy shift. Questions may ask about what new expenses are covered under the revised KCC scheme.
Public Consultation
| Detail | Information |
|---|---|
| Feedback Deadline | March 6, 2026 |
| Submission Method 1 | "Connect 2 Regulate" section on RBI website |
| Submission Method 2 | Email to [email protected] |
Note: These are draft directions and may be modified based on public feedback before final implementation. Exam questions may frame these as "proposed changes" or "draft guidelines".
Summary Cheat Sheet
| Concept / Topic | Key Details / Explanation |
|---|---|
| What is KCC? | Revolving cash credit facility launched August 1998 by NABARD (with RBI) for farmers' cultivation and allied needs |
| Committees | R.V. Gupta Committee (1998) — formulation; Bhasin Committee (2012) — revision |
| Implementing Banks | Commercial Banks, Small Finance Banks, RRBs, Rural Cooperative Banks. NOT Payment Banks |
| Eligibility | Owner cultivators, tenant farmers, oral lessees, share croppers, SHGs, JLGs. Age: 18–75 years (co-borrower needed above 60) |
| JLG Scheme | Initiated by NABARD in 2006 for share croppers/tenant farmers without land rights |
| Farmer Categories | Marginal (below 1 ha), Small (1–2 ha), Semi-Medium (2–4 ha), Medium (4–10 ha), Large (10+ ha). 1 ha = 2.5 acres |
| KCC Validity | 5 years (subject to annual review) |
| Scale of Finance (SoF) | Finance per unit area per crop — decided annually by DLTC headed by District Collector |
| 1st Year Limit Formula | (SoF × Area) + 10% (post-harvest/household) + 20% (farm maintenance) + Insurance (PMFBY) |
| PMFBY Premium | 2% Kharif, 1.5% Rabi, 5% Horticulture |
| Year-on-Year Escalation | +10% per year compounded on 1st year limit |
| Maximum Permissible Limit | MPL = 5th Year Crop Limit + Term Loan |
| Flexi KCC (Marginal Farmers) | Composite limit ₹10,000 – ₹50,000, fixed for 5 years, assessed by Branch Manager |
| Sub-Limits | Two sub-limits: (1) Short-Term Cash Credit (linked to savings a/c), (2) Term Loan (for investments) |
| Interest Rate | Linked to Base Rate, decided by banks; RBI regulates with Govt subvention |
| Effective Interest Rate | 4% p.a. (7% base – 3% Prompt Repayment Incentive) |
| Interest Subvention (MISS) | 1.5% to banks + 3% PRI to farmer. Crop loan priority first, then allied up to ₹2L. Combined cap: ₹3 lakh |
| Budget 2025 Announcement | Limit increase to ₹5 lakh announced but not yet notified by RBI — ₹3 lakh remains applicable |
| Post-Harvest Subvention | Small/Marginal farmers, up to 6 months against NWRs from WDRA-accredited warehouses |
| Eligible Lending (Private Banks) | Only Rural & Semi-Urban branches |
| Repayment — Short-Term | Within 12 months, linked to crop harvesting cycle |
| Repayment — Term Loan | Within 5 years based on investment type |
| Security — Up to ₹2 lakh | Hypothecation of crops only. No collateral, no margin |
| Security — Up to ₹3 lakh | Hypothecation only if tie-up arrangement exists |
| Security — Above ₹3 lakh | Equitable/registered mortgage of land (100% loan value) |
| Processing Fee | No fee up to ₹3 lakh |
| Credit Guarantee (CGFMU) | Up to ₹10 lakh |
| Stamp Duty Exemption | Small/Marginal farmers — up to 5 ac wet / 10 ac dry land, up to ₹3 lakh |
| Natural Calamity Relief | 33–50% damage → 2 years extension; >50% → 5 years. Converted to Medium Term Loan |
| NPA Classification | Short duration crops: overdue 2 crop seasons; Long duration: 1 crop season |
| Card Type | RuPay Debit Card, facilitated by NPCI |
| Delivery Channels | ATMs, Micro ATMs, PoS, Business Correspondents, Mobile Banking (UPI/IMPS), Aadhaar-enabled |
| GCC | General Credit Card — non-farm counterpart of KCC under priority sector |
| Draft Directions (Feb 2026) | Tenure: 5 → 6 years; Short crops: 12 months, Long: 18 months; SoF-aligned drawing limits; New: soil testing, weather forecast, GAP certification as eligible expenses |
| Issuance Timeline | Banks must issue KCC within 2 weeks |
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