💳 KCC

KCC

• The Kisan Credit Card (KCC) scheme was introduced in August 1998 in collaboration with National Bank for Agriculture and Rural Development (NABARD).
• The Kisan Credit Card (KCC) scheme was developed based on the recommendations of the R. V. Gupta Committee. This committee was constituted by the Reserve Bank of India (RBI) in 1998 to address the credit needs of farmers and streamline the process of providing them with timely and adequate credit.
• Aimed to provide timely and adequate credit to farmers for their agricultural and allied activities.
• To issue Kisan Credit Cards to farmers on the basis of their holdings for uniform adoption by the banks so that farmers may use them to readily purchase agriculture inputs such as seeds, fertilizers, pesticides etc. and draw cash for their production needs (Cultivation expenses).
• The scheme was further extended for the investment credit requirement of farmers viz. allied and non-farm activities in the year 2004.
• The scheme was further revisited in 2012 by a working Group under the Chairmanship of Shri T. M. Bhasin, CMD, Indian Bank with a view to simplify the scheme and facilitate issue of Electronic Kisan Credit Cards.
• The scheme is implemented by Commercial Banks, RRBs, Small Finance Banks and Cooperatives.

Purpose

• The Kisan Credit Card scheme aims at providing adequate and timely credit support from the banking system under a single window with flexible and simplified procedure to the farmers for their cultivation and other needs as indicated below:
  • a. To meet the short term credit requirements for cultivation of crops;
  • b. Post-harvest expenses;
  • c. Produce marketing loan;
  • d. Consumption requirements of farmer household;
  • e. Working capital for maintenance of farm assets and activities allied to agriculture;
  • f. Investment credit requirement for agriculture and allied activities.
• The aggregate of components ‘a’ to ‘e’ above will form the short term credit limit portion and the aggregate of components under ‘f’ will form the long term credit limit portion.

Eligibility

• Farmers - individual/joint borrowers who are owner cultivators;
• Tenant farmers, oral lessees & share croppers;
• Self Help Groups (SHGs) or Joint Liability Groups (JLGs) of farmers including tenant farmers, share croppers etc.

Scale of Finance

• The scale of finance will be fixed by the District Level Technical Committee (DLTC) based on local cost worked out on the basis of per acre/hectare.
• Members from NABARD, RBI, PSB banks, RRBs, cooperatives, agriculture experts of the Govt. and progressive entrepreneurs may be made members of the DLTC for giving technical inputs for assessing the cash credit requirement.

Fixation of credit limit / Loan amount

• The short term limit to be arrived for the first year (For cultivating single crop in a year):
  • Scale of finance for the crop (as decided by District Level Technical Committee) 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 and/or accident insurance including PAIS, health insurance & asset insurance.
• Limit for second & subsequent year: First year limit for crop cultivation purpose arrived at as above plus 10% of the limit towards cost escalation / increase in scale of finance for every successive year (2nd, 3rd, 4th and 5th year) and estimated term loan component for the tenure of Kisan Credit Card, i.e., five years.
• Term loan for investment: The term loan for investment is to be made towards land development, minor irrigation, purchase of farm equipment and allied agricultural activities. The banks may fix the quantum of credit for term and working capital limit for agricultural and allied activities, etc., based on the unit cost of the asset/s proposed to be acquired by the farmer, the allied activities already being undertaken on the farm, the bank’s judgment on repayment capacity vis-a-vis total loan burden devolving on the farmer, including existing loan obligations. The long term loan limit should be based on the proposed investment(s) during the five year period and the bank’s perception on the repaying capacity of the farmer.

Security

• Primary: Hypothecation of Crops grown / assets to be created out of Bank finance. For KCC limit upto ₹ 1.60 lakh banks are to waive margin/security requirements.
• With tie-up for recovery: Banks may consider sanctioning loans on hypothecation of crops up to card limit of ₹ 3.00 lakh without insisting on collateral security.
• Collateral: Equitable mortgage / registered mortgage of land / immovable property as applicable of the value of 100 % loan. However, collateral is waived for KCC limit up to Rs. 1.60 lakh and up to Rs.3.00 lakhs, in case of tie up arrangement.

Other Guidlines

• All new KCC must be issued RuPay Kisan Debit Cards.
• Validity: KCC is generally issued for 5 years and can be renewed or extended based on the farmer’s needs.

  

Interest Subvention Scheme (ISS)

• The Honourable Finance Minister in his budget speech for 2006-07 announced that the Government had decided to ensure that farmers receive short term credit at 7% with an upper limit of Rs. 3.00 lakh on the principal amount.
• In pursuance of this announcement, the Government of India provided interest subvention of 2% to Public Sector Banks, Regional Rural Banks (RRBs) and Co-operative Banks in respect of short-term production credit up to Rs. 3 lakh provided to farmers out of their own resources, provided that they make available short-term credit @ 7% p.a. at ground level.
• Private Sector Banks (in respect of loans given by their rural and semi urban branches) are also covered under the scheme from the year 2013-14 with similar terms and conditions.
• Further, GOI has reduced the interest subvention from 2% to 1.5%, availed on short term loans for FY 2022-23 and 2023-24.
• Incentive to farmers on prompt repayments: Since the year 2009-10, the Government of India introduced additional subvention of 1% to farmers as an incentive for repaying the loans promptly i.e. on or before the due date or the date fixed by the bank, subject to a maximum period of one year. It has been increased to 2% for 2010-11 and 3% from 2011-12.
• In order to discourage distress sale by farmers and to encourage them to store their produce in warehouses, the benefit of Interest Subvention will be available to banks towards their lending to small and marginal farmers having Kisan Credit Card for a further period of upto six months post-harvest of the crop on the produce stored in warehouses accredited with Warehousing Development Regulatory Authority (WDRA) against negotiable warehouse receipts, at the same rate as is available on crop loans/ WC loans.
• To provide relief to farmers affected by natural calamities, the applicable rate of interest subvention for that year will be made available to Banks for the first year on the restructured loan amount. Such restructured loans will attract normal rate of interest from the second year onwards as per the extant policy laid down by the RBI.
• Interest Subvention is also provided under DAY-NRLM scheme.
• The Interest Subvention Scheme is being implemented by NABARD and RBI.
• Banks are advised to mandatorily maintain and furnish, the category-wise data of beneficiaries under the scheme on Kisan Rin Portal (KRP) from SY 2022-23 onwards.
• Aadhaar linkage has been made mandatory for availing benefit under ISS of GoI.

AHFKCC

• In the Budget 2018-19 the Union Government had announced their decision to extend the facilities of Kisan Credit Card (KCC) to Animal Husbandry farmers and Fisheries (AH & F) to help them meet their working capital requirements.
• The detailed guidelines were issued by the Reserve Bank of India (RBI) on 4th February, 2019 covering the eligibility criterion, scale of finance etc.
• For the existing KCC holders the benefits of interest subvention and prompt repayment incentive will be admissible up to the credit limit of Rs. 3 lakhs including fisheries activities.
• In the case of new card holders, the credit limit is Rs. 2 lakhs.
• In the KCC scheme, effective RoI of 7% is applied which includs 1.5% interest subvention per annum provided by Govt. of India.
• Also, another 3% per annum is provided in case of prompt repayment as an additional incentive over and above this RoI.
• Therefore, AHKCC farmers repaying promptly would get a loan at the rate of 4% per annum upto Rs 2 lakhs.
• Application received by the banks from eligible animal Husbandry, dairy and fishery activities should be processed expeditiously within a maximum period of two weeks from date of submission of complete application form.
• Purpose: The KCC facility will meet the short term credit requirements of rearing of animals, birds, fish, shrimp, other aquatic organisms, capture of fish

Eligibility

• Fishery:
  • Inland Fisheries and Aquaculture: Fishers, Fish Farmers (individual & groups/ partners/ share croppers/ tenant farmers), Self Help Groups, Joint Liability Groups and women groups. The beneficiaries must own or lease any of the fisheries related activities such as pond, tank, open water bodies, raceway, hatchery, rearing unit, possess necessary license for fish farming and fishing related activities, and any other State specific fisheries and allied activities.
  • Marine Fisheries: All the above Beneficiaries and who own or lease registered fishing vessel/boat, possess necessary fishing license/permission for fishing in estuary and sea, fish farming/mariculture activities in estuaries and open sea and any other State specific fisheries and allied activities.
• Poultry and small ruminant:
  • Farmers, poultry farmers either individual or joint borrower, Joint Liability Groups or Self Help Groups including tenant farmer of sheep/goats/pigs/poultry/birds/rabbit and having owned/rented/leased sheds.
• Dairy: Farmers and Dairy farmers either individual or joint borrower, Joint Liability Groups or Self Help Groups including tenant farmers having owned/rented/leased sheds.

Scale of Finance

• The scale of finance will be fixed by the District Level Technical Committee (DLTC) based on local cost worked out on the basis of per acre/per unit/per animal/per bird etc.
• Members from NABARD, RBI, PSB banks, RRBs, cooperatives, fisheries and animal husbandry experts of the Govt. and progressive entrepreneurs may be made members of the DLTC for giving technical inputs for assessing the cash credit requirement.

Security

• Prime: Hypothecation of Stock.
• Colleteral: No collateral is required for loan upto Rs. 1.60 lakh. In the case of farmers whose milk is procured by Milk Unions falls under tie up arrangements between the producers and processing units without any intermediaries by crediting the payment directly to their bank account and hence the credit limits without Collateral can be upto Rs.3 lakh. In this case undertaking is required from milk union.
• For more than Rs 1.60 lakh, farmers have to provide land or other mortgageable securities. Mortgage of land and /or third party guarantee in addition to hypothecated crops/assets.

General Guidlines

• Drawing power: The drawing power will be worked on the basis of the latest valuation of stocks, receivables and/or cash flows as per terms of sanction.
• Repayment: The loan will be in the nature of a revolving cash credit limit. Repayment will be fixed as per the cash flow/income generation pattern of the activity undertaken by the borrower.
• Monitoring of end use: The account/smart card for the loan issued under the scheme is to be maintained/issued separately from the existing KCC loan to monitor the utilization limit. The monitoring of end use of funds will be in line with other loans (KCC on crop loans included) viz., field visits to the site of unit/project to be carried out by the branch officials for checking the progress of the unit. Banks will periodically review the facility and continue/withdraw/scale down the facility based on the performance of the borrower.

- https://dof.gov.in/fisherieskcc#:~:text=The%20Government%20of%20India%2C%20in,criterion%2C%20scale%20of%20finance%20etc.
- https://www.rbi.org.in/commonman/English/Scripts/Notification.aspx?Id=2311
- Wikipedia