Kisan Credit Accounts are normally short term crop loans emerged as an innovative credit delivery mechanism to meet the production credit requirements of the farmers in a timely and hassle-free manner. The repayment period may be fixed as per the anticipated harvesting and marketing period for the crops for which a loan has been granted. Now KCC facilities extended to animal-husbandry and fisheries.
Kisan Credit card (KCC) is a type of credit card specially designed for farmers as a form of credit for their cultivation and other needs. Banks may choose to issue EMV (Europay, MasterCard, and VISA) chip and RUPAY compliant chip cards with magnetic stripe and pin with ISO IIN. The farmers can use their KCC to purchase agriculture inputs such as seeds, fertilizers, pesticides, etc. and draw cash for their production needs such as to meet the short term credit requirements for cultivation of crops, Post-harvest expenses, Produce Marketing loan, Consumption requirements of farmer household, Working capital for maintenance of farm assets and activities allied to agriculture, like dairy animals, inland fishery, etc. In addition to the above short term credit limit, farmers are also eligible for a long term credit limit for pump sets, sprayers, dairy animals, etc.
Pursuant to the announcement in the interim budget 2019, the Reserve Bank of India carried out circular asking banks to extend the facilities of Kisan Credit Card (KCC) to Animal Husbandry farmers and Fisheries to help them meet their working capital requirements. According to RBI circular FIDD.CO.FSD.BC.12/05.05.010/2018-19 dated Feb 4, 2019, the new KCC facility will include the short term credit requirements of the rearing of animals, birds, fish, shrimp, other aquatic organisms, the capture of fish.
The usage of Kisan credit card has many advantages. The borrower needs not to worry about the timings of his bank or bank holidays to withdraw the cash. The ATMs in the neighborhood provide round the clock payment services. This helps cardholders to draw money, at any time convenient to them. The cash can also be withdrawn through BC (banking correspondent). The Payment to the input dealers can be made by swiping the card on the POS machine held by the dealer. Payment of Utility bills electric bill, water bill, etc. can be made through online card payment which saves time and money to visit bill collection offices for cash payment. The other advantage of payment made through KCC is that it is error-free. In cash payments, there is a possibility of short payment or excess payment or difficulties in tendering exact changes at payment counters. The Kisan cardholders do not face the danger of inadvertently accepting counterfeit notes as it happens in cash transactions. Carrying Kisan credit cards while traveling is much safer compared to carrying cash. The cash if stolen, the chance of getting back is difficult, whereas if the card is stolen the thief cannot utilize the card unless he knows the numeric password (PIN). The Cardholder can also immediately report to the card-issuing bank to stop the transactions of the lost card.
Fixation of credit limit / Loan amount: For cultivating a single crop (short term crop) in a year, the credit limit under the Kisan Credit Card is fixed on the following assessment. The 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. For subsequent years, the first-year limit for crop cultivation purpose arrived at as above plus 10% of the limit towards cost escalation/increase in the scale of finance for every successive year (2nd, 3rd, 4th, and 5th year). For marginal farmers, a flexible limit of Rs.10, 000/- to Rs.50, 000/- be provided (as Flexi KCC) based on the landholding and crops grown.
For the long term loan limit, the following method is adopted.
The short term loan limit arrived for the 5th year plus the estimated long term loan requirement will be the Maximum Permissible Limit (MPL) and is to be treated as the Kisan Credit Card limit. The credit limit of the card will vary according to the repayment schedule drawn as per the economic life of the proposed investments. However, the total liability at any point in time should be within the drawing limit of the concerned year.
Validity / Renewal
Banks may determine the validity period of KCC and its periodic review. Such a review may result in the continuation of the facility, enhancement of the limit, or cancellation of the limit/withdrawal of the facility, depending upon an increase in cropping area/pattern and performance of the borrower. In case of the limit extension and/or re-scheduled period of repayment beyond crop season on account of natural calamities affecting the farmer, the aggregate of debits for which extension is granted is to be transferred to a separate term loan account with the stipulation for repayment in installments.
Hypothecation of crops up to card limit of Rs. 1.00 lakh is as per the extant RBI guidelines. Wherever tie-up arrangements available for recovery banks may consider sanctioning loans on hypothecation of crops up to card limit of Rs.3.00 lakh without insisting on collateral security. Collateral security may be obtained at the discretion of the Bank for loan limits above Rs.1.00 lakh in case of non- tie-up and above Rs.3.00 lakh in case of tie-up advances. The bank may ask for suitable collateral security if warranted as per their policy.