About the Scheme

• The Kisan Credit Card (KCC) scheme was introduced in 1998 with the aim of 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:

1. To meet the short term credit requirements for cultivation of crops;
2. Post-harvest expenses;
3. Produce marketing loan;
4. Consumption requirements of farmer household;
5. Working capital for maintenance of farm assets and activities allied to agriculture;
6. Investment credit requirement for agriculture and allied activities.

• Note: 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.
• Under the KCC Scheme, a flexible limit of Rs.10,000 to Rs.50,000 has been provided to marginal farmers (as Flexi KCC) based on the land holding and crops grown.
• The beneficiaries under the scheme will be issued with a Smart card/ Debit card.
• It enables farmers to purchase agricultural inputs such as seeds, fertilizers, pesticides, etc. and draw cash to satisfy their agricultural and consumption needs.
• The Scheme is implemented by Commercial Banks, RRBs, Small Finance Banks and Cooperatives.

Eligibility

• Farmers – individual/joint borrowers who are owner cultivators;
• Tenant farmers, oral lessees & sharecroppers;
• Self Help Groups (SHGs) or Joint Liability Groups (JLGs) of farmers including tenant farmers, sharecroppers etc.
• In 2019, KCC was extended to farmers who are involved in activities related to animal husbandry and fisheries.

Why in News?

• A study conducted by the State Bank of India (SBI) revealed that the KCC scheme has been instrumental in bringing a large number of farmers (currently about 73.7 million active KCCs) under the ambit of a formal credit mechanism at subsidised rate of interest from institutional players.
• However, the study noted that the current regulatory norms take too much of the banks’ time in renewing and expanding KCCs. If simplified, they could save a lot of time, which could be then reallocated for fresh lending.
• It suggested a Livelihood Credit Card (LCC) encompassing a multi-purpose loan covering a rural household’s entire activities for ease of doing business.

Reference:

1. https://www.rbi.org.in/commonman/English/Scripts/Notification.aspx?Id=2311