The Kisan Credit Card is a pioneering credit delivery innovation for providing adequate and timely credit to farmers under single window, with flexible and simplified procedure, adopting whole farm approach, including the short-term credit, medium term and long term credit needs of the borrowers for agriculture and allied activities and a reasonable component for consumption needs.
Contents of Credit Card
Beneficiaries covered under the Scheme are issued with a credit card and a pass book or a credit card cum pass book incorporating the name, address, particulars of land holding, borrowing limit, validity period, a passport size photograph of holder etc., which may serve both as an identity card and facilitate recording of transactions on an ongoing basis.
Borrower is required to produce the card cum pass book whenever he/she operates the account.
Salient features of the Kisan Credit Card (KCC) Scheme
• Eligible farmers to be provided with a Kisan Credit Card and a pass book or card-cum-pass book.
•Revolving cash credit facility involving any number of drawals and repayments within the limit.
• Limit to be fixed on the basis of operational land holding, cropping pattern and scale of finance.
• Entire production credit needs for full year plus ancillary activities related to crop production to be considered while fixing limit.
• Sub-limits to cover short term, medium term as well as term credit are fixed at the discretion of banks.
• Card valid for 3 to 5 years subject to annual review. As incentive for good performance, credit limits could be enhanced to take care of increase in costs, change in cropping pattern, etc.
• Each drawal to be repaid within a maximum period of 12 months.
• Conversion/reschedulement of loans also permissible in case of damage to crops due to natural calamities.
• Security, margin, rate of interest, etc. as per RBI norms.
• Operations may be through issuing branch (and also PACS in the case of Cooperative Banks) through other designated branches at the discretion of bank.
• Withdrawals through slips/cheques accompanied by card and passbook.
• Crop loans disbursed under KCC Scheme for notified crops are covered under Rashtriya Krishi Bima Yojna (National Crop Insurance Scheme), a crop insurance scheme introduced at the behest of Government of India to protect the interest of the farmer against loss of crop yield caused by natural calamities, pest attacks etc
Advantages of the Kisan Credit Card Scheme to the farmers
• Access to adequate and timely credit to farmers.
• Full year's credit requirement of the borrower taken care of.
• Minimum paper work and simplification of documentation for drawal of funds from the bank.
• Flexibility to draw cash at any time and buy inputs as per the need of the farmer and also to repay as and when surplus fund is available.
• Assured availability of credit at any time enabling reduced interest burden for the farmer.
• Sanction of the facility for 3 years subject to annual review and satisfactory operations and provision for enhancement.
• Flexibility of drawals from a branch other than the issuing branch at the discretion of the bank.
Benefits of the Scheme to the Banks
• Reduction in work load for branch staff by avoidance of repeat appraisal and processing of loan papers under Kisan Credit Card Scheme.
• Minimum paper work and simplification of documentation for drawal of funds from the bank.
• Improvement in recycling of funds and better recovery of loans.
• Reduction in transaction cost to the banks.
• Better Banker - Client relationships.
Coverage of Crop Loans disbursed under KCC
Under the Rashtriya Krishi Bima Yojna (RKBY)
GIC has agreed that the crop loans disbursed for eligible crops under the Crop Insurance Scheme will be covered under the CCIS, now under Rashtriya Krishi Bima Yojna. However, the banks are expected to maintain all back up records relating to compliance with "RKBY" and its seasonality discipline, cut-off date for submitting declarations and end use, etc. as in the case of normal crop loans.
Objectives of the Scheme :
• To provide insurance coverage and financial support to the farmers in the event of failure of crops as a result of natural calamities, pests and diseases.
• To encourage farmers to adopt progressive farming practices, high value inputs and higher technology in agriculture.
• To help stabilise farm incomes, particularly in disaster years.
• To support and stimulate primarily production of food crops and oilseeds.
• Farmers to be covered: All farmers (both loanee and non-loanee irrespective of their size of holdings) including sharecroppers, tenant farmers growing insurable crops covered.
• Sum insured: The sum insured extends upto the value of threshold yield of the crop, with an option to cover upto 150% of average yield of the crop on payment of extra premium.
• Premium subsidy: 50% subsidy in premium allowed to Small and Marginal Farmers, to be shared equally by the Government of India and State Government/Union Territory. Premium subsidy to be phased out over a period of 5 years.
Personal Accident Insurance Scheme -Salient features :
• Scheme covers risk of KCC holders against death or permanent disability resulting from accidents caused by external, violent and visible means, as under:
Death due to accident (within 12 months of the accident)
caused by outward, violent and visible means -- Rs.50,000/-
Permanent total disability -- Rs.50,000/-
Loss of two limbs or two eyes or one limb and one eye -- Rs.50,000/-
Loss of one limb or one eye -- Rs.25,000/-
• Nominated office of insurance company to issue a Master Insurance Policy to each DCCB/RRB covering all its KCC holders.
• Premium payable Rs.15/- for a one year policy while Rs.45/- for a 3-year policy.
• Designated insurance company will nominate one office at district level to function as nodal office for co-ordinating implementation of personal accident insurance scheme for KCC holders in the district.
• Insurance coverage available under Policy only from date of receipt of premium at insurance company
• Banks to ensure to incorporate name of Nominee in Kisan Credit Card-cum-Pass Book.
• Simplified claim settlement procedure evolved under Scheme whereby an Enquiry-cum-Verification Committee comprising Branch Manager of implementing bank, Lead Bank Officer and representative of insurance company to certify nature of accident causing disability/death and recommend settlement of insurance claims.
Govt. of India initiatives
• KCC holders have been covered under Personal Accident Insurance Scheme against accidental death or permanent disability, upto maximum amount of Rs. 50000/- and Rs. 25000/- respectively. The premium burden will be shared by the card issuing institutions and the borrower in the ratio of 2:1.
• Bankers were also advised to issue KCC to tenant farmers/ share croppers/oral lessee/Joint liability groups.
• Banks were advised to cover all eligible farmers under KCC scheme.
• With a view to make the scheme more effective at ground level and serve the farmers in the way in which it was expected to do, GoI had constituted a High Level Task Force which shall interalia examine and suggest measures for improving efficiency of KCC scheme. The report from task force has been submitted to GoI on 30 June 2010.
• As desired by Hon’ble Finance Minister, bankers were advised to increase KCC coverage by 20% in number and also in amount during the financial year 2010-11 over the year 2009-10. Similar increased coverage is expected during 2011-12.
Major Steps taken by NABARD:
• Co-op Banks and RRBs were advised to enlarge the scope of the KCC Scheme to cover term loans for agriculture and allied activities, including a reasonable component to meet the consumption needs, besides the existing facility of providing crop loan limit.
• The coverage of KCC was extended to landless labourers, oral lessees, tenant farmers including defaulters.
• The concept of KCC has been extended to the borrowers of the long term cooperative structure.
• A Brochure on KCC Scheme highlighting the salient features, advantages and other relevant information about the Scheme was brought out by Head Office and ROs were asked to circulate the brochure to State govt. departments, Commercial Banks, Cooperative Banks, RRBs and other concerned agencies/officers so as to generate wider awareness about the Scheme.
• Minimum Floor limit of Rs.5000/- for issue of KCC stands withdrawn.
• Studies on KCC Scheme have been conducted by NABARD periodically to facilitate feedback on the ground level issues/problems so that changes, where necessary, could be considered.
• On the lines of instructions of RBI to Commercial Banks, Cooperative Banks and RRBs have been advised that they may, at their discretion, pay interest at a rate based on their perception and other relevant factors on the minimum credit balances in the cash credit accounts under the Kisan Credit Cards of farmers during the period from 10th to the last day of each calendar month.
• RRBs were advised to initiate innovative publicity campaign in each area of operation in order to cater all eligible farmers under KCC.
Progress in implementation of the Scheme
• Since launching in August 1998, around 10.09 crore Kisan Credit Cards issued upto 31 March 2011 by Cooperative Banks, Regional Rural Banks and Commercial Banks put together.
• Scheme implemented in all States and Union Territories (except Chandigarh, Daman & Diu and Dadra & Nagar Haveli) with all Cooperative Banks, RRBs and Commercial Banks participating.