Honorable Union Finance Minister announced in his budget speech for 1998-99 that NABARD would formulate a Model scheme for issue of Kisan Credit Cards to farmers, on the basis of their land holdings, for uniform adoption by banks, so that the farmers may use them to readily purchase agricultural inputs such as seeds, fertilisers, pesticides, etc. and also draw cash for their production needs'.
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NABARD formulated a Model Kisan Credit Card Scheme in consultation with major banks.
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Model Scheme circulated by RBI to commercial banks and by NABARD to Cooperative.
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Banks and RRBs in August 1998, with instructions to introduce the same in their respective area of operation.
Objectives
As a pioneering credit delivery innovation, Kisan Credit Card Scheme aims at provision of adequate and timely support from the banking system to the farmers for their cultivation needs including purchase of inputs in a flexible and cost effective manner.
Contents of Credit Card
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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.
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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 may be fixed at the discretion of banks.
Card valid for 3 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.
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 and buy inputs.
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.
Refinance Support for ST(SAO) Loans disbursed under KCC Scheme - Operational guidelines
SCBs/DCCBs and RRBs were advised operational guidelines governing provision of refinance for their ST(SAO) disbursements under the KCC Scheme vide Circular letter No. NB.PCD(OPR)/662/A137(Spl.)/99-2000 dt.26.05.99 and Circular letter No. NB.PCD(OPR)/662-A/A137(Spl.)/99-2000 dt. 26.05.99 respectively.
The same are summarised below:
Instructions on computation of Demand, Collection and Balance (DCB) position, maintenance of Non-overdue Cover (NODC), financing of small/marginal farmers, etc, conveyed in circular letter No.NB.PCD(OPR)/5980/A.135/90-91 dated 17 December 1990 addressed to RCS and in circular letter No.NB.PCD(OPR)/1271/ 334/95-96 dated 02 November 1995 addressed to RRBs will also be, mutatis mutandis, applicable for advances made under the KCC Scheme by SCBs/DCCBs and RRBs respectively. although under the KCC Scheme, production credit for SAO, advances for allied activities, non-farm activities and consumption purposes can be covered, only the production credit for SAO is eligible for refinance from NABARD under the ST(SAO) credit limits. banks required to maintain separate details of sanctions and accounts for operations on credit limits for SAO purposes under the KCC Scheme to facilitate submission of drawal applications for obtaining refinance from NABARD in respect of eligible loans and reporting such loans in the monthly NODC statements for ST(SAO) loans and advances. short-term loans outstanding for financing ancillary activities relating to crop production such as maintenance of agricultural machinery/implements, electricity charges, etc. under the KCC Scheme also eligible for refinance from NABARD under ST(SAO) credit limits.
Applicable to Cooperatives only
Seasonality discipline: In view of flexibility and discretion provided to the farmers in both drawals and repayments, it has been decided not to insist, for the present, on compliance with the seasonality discipline in respect of KCC accounts for the purpose of allowing drawals on the ST(SAO) credit limits.
Financing of Small Farmers(SF)/Marginal Farmers(MF) : For compliance on financing of SF/MF, maximum outstanding under production credit for SAO reached in KCC accounts of such farmers during the year(April-March) would be reckoned as loans issued to SF/MF. Thus, for compliance in regard to coverage of SF/MF, the aggregate of maximum outstanding in KCC accounts of SF/MF as well as normal cash credit accounts together with the aggregate of crop loans issued to SF/MF under the normal loaning system, worked out as percentage to the maximum outstanding reached under all KCC (including normal Cash Credit) accounts and the total ST(SAO) loans issued during the year (April-March) will be reckoned.
Applicable to Both Cooperatives and RRBs
Computation of Demand, Collection and Balance (DCB) position : Maximum outstandings under ST(SAO) loans in KCC accounts reached during the year (July-June) be treated as demand, and outstandings in unrenewed KCC accounts may be reckoned as overdues. Percentage of overdues to demand calculated accordingly.
Maintenance of Non Overdue Cover(NODC) : Outstanding in KCC accounts against PACS/Branches for financing SAO excluding amount outstanding under unrenewed KCC accounts will be reckoned as NODC for purpose of borrowings from NABARD. Thus, for purpose of working out the aggregate NODC for borrowings from NABARD for SAO, non-overdue short-term agricultural loans outstanding under normal loan accounts plus non-overdue outstanding under normal cash credit accounts and those under KCC Scheme will constitute NODC. Revised formats of NODC to be submitted by DCCBs/RRBs given as Annexure to our circular letter No.NB.PCD (OPR)/662 & 662A/A.137(Spl)/ 1999-2000 dated 26 May 1999.
Coverage of Crop Loans disbursed under KCC
Under the Reshtriya 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.
Hon'ble Union Finance Minister in his Budget Speech for the year 2001-02 set the future agenda for the Scheme as under :
" The innovation of KCC is proved to be very successful. Since the year of its introduction in 1998-99, almost 110 lakh KC cards have been issued. I am asking our banks to accelerate this programme and cover all eligible agricultural farmers within the next 3 years .
I am also asking the banks to provide a personal insurance package to the KCC holders as is often done with other credit cards to cover them against accidental death or permanent disability, upto maximum amount of Rs.50,000/ and Rs.25,000/- respectively. The premium burden will be shared by the card issuing institutions. "
Coverage of farmers - Future strategy
Banks, vide our Circular letter No.NB.PCD(KCC)/29/ 2001-02 dated 10 April 2001, requested to draw up an action plan immediately in consultation with our Regional Office concerned, based on their past performance and experience in implementing the scheme, to ensure the coverage of all the eligible agricultural farmers under the KCC Scheme within the next three years i.e. by 31 March 2004.
Banks to ensure that targets fixed for 2001-02, 2002-03 and 2003-04 include new agricultural farmers likely to become eligible for their KC cards after 31 March 2001 also.
Targets fixed for issue of KC Cards be disaggregated month-wise and branch/PACS-wise to facilitate close monitoring of progress vis-a-vis target and also advised to RO concerned.
In order to ensure achievement of the targets so fixed, banks requested to follow strategies suggested by NABARD from time to time. Towards this end, banks to launch a campaign approach to accelerate pace of implementation of the Scheme. Following specific steps may be taken by the banks :
Conduct of Sensitisation/training programmes for the officers of controlling offices of banks, branch managers and field level functionaries as also district level functions for distribution of cards.
Holding Banker-Farmers' Meets, as part of the Kharif 2001 campaign, in each block to identify the ground level constraints in the smooth implementation of the Scheme and to initiate remedial measures therefor.
Use of VVV Clubs fora for propagation of the scheme.
Placement of hoardings/banners etc. at prominent places, such as branch premises, Panchayat buildings, Mandis, etc.
Use of audio-video media, bringing out KCC literature in local language to create better awareness about KCC Scheme among farmers.
Issue of plastic/laminated cards to serve as Identity Cards.
Monitoring of progress in implementation of the Scheme in Board meetings as also through various state/ district and block level fora with the participation of Government functionaries, bankers, farmers etc.
Personal Accident Insurance Scheme -Salient features :
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.
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.
Insurance coverage available under Policy only from date of receipt of premium at insurance company
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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.
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/-
Major Steps taken by NABARD:
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.
Floor limit of Rs.5000/- for issue of KC Cards stands withdrawn.
Studies on KCC Scheme have been entrusted to BIRD and NABARD Staff College to facilitate feed back on the ground level issues/problems so that changes, where necessary, could be considered.
Studies on the implementation of the Scheme undertaken by NABARD periodically.
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.
Regional Rural Banks (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 2.38 crore Kisan Credit Cards issued upto 31 March 2002 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.
Agency-wise/State-wise progress in issue of cards by all banks during 2001-02 and since inception of Scheme.
