In a bid to provide term loan for agricultural needs of the farmers, Indian banks introduced Kisan Credit Card (KCC) scheme in August 1998. The model of KCC scheme was prepared by NABARD (National Bank for Agriculture and Rural Development) that met the recommendations of RV Gupta Committee. The KCC is available at all Indian banks, regional rural banks and the co-operative banks. The KCC scheme has short-term credit limits for crops and term loans. Farmers having KCC credit are covered under personal accidental insurance up to Rs 50,000 for permanent disability and death and up to Rs 25,000 for other risks.
Under this scheme, farmers can avail collateral free loan up to Rs 1 lakh. Quantum of loan for the 1st year under this scheme is assessed on the basis of the cost of cultivation, post-harvest expenses and farm maintenance cost. For subsequent 5 year, loan will be sanctioned on the basis of the increase in the scale of finance. The premium under this scheme is borne by both the bank and borrower in respective 2:1 ratio. The interest levied on the loan under KCC scheme is around 7 per cent simple interest per annum. In case of non-repayment within the due dates, interest is applied at card rate and beyond due date interest will be compounded half yearly.
However, to avail of this benefit, farmers need to apply for the KCC with some mandatory documents. A farmer who wishes to apply needs to visit the nearest commercial bank, regional rural bank or the co-operative bank and ask for the KCC form from the official. After properly filling the pieces of information sought into the form the applicant farmer needs to attach officially validated documents that verify their identity proof and their address proof. The officially validated documents include Aadhar Card, Voter ID, Driving License, PAN Card, Passport etc.