Launched in 1998, the Kisan Credit Card (KCC) Scheme is a significant initiative by the Government of India designed to provide farmers with timely access to credit. The scheme facilitates short-term loans for purchasing agricultural inputs like seeds, fertilizers, and pesticides, as well as for meeting other farming expenses. Over the years, KCC has evolved to include allied activities such as animal husbandry and fisheries, thereby broadening its reach and impact.
Objectives of the Kisan Credit Card (KCC) Scheme
The primary objectives of the KCC Scheme are:
- Provide Timely Credit: Ensure farmers have access to adequate and timely credit for their agricultural needs.
- Reduce Dependency on Informal Credit: Minimize farmers’ reliance on informal sources of credit, which often come with high-interest rates.
- Support Allied Activities: Extend credit facilities to allied agricultural activities, including animal husbandry and fisheries.
- Promote Financial Inclusion: Integrate farmers into the formal banking system, promoting financial literacy and inclusion
Key Features of Kisan Credit Card (KCC) Scheme
- Loan Limit: As of the Union Budget 2025-26, the loan limit under the Modified Interest Subvention Scheme (MISS) has been increased from ₹3 lakh to ₹5 lakh, providing greater financial support to farmers.
- Interest Rate: Farmers can avail short-term loans at a concessional interest rate of 7% per annum. An additional Prompt Repayment Incentive of 3% is provided to those who repay their loans on time, effectively reducing the interest rate to 4%.
- Loan Tenure: The KCC operates as a revolving cash credit facility, allowing farmers to withdraw and repay funds as per their needs, with a tenure of up to 5 years.
- Collateral-Free Loans: Loans up to ₹1.6 lakh are provided without the need for collateral, making credit more accessible to small and marginal farmers.
- Insurance Coverage: KCC holders are eligible for crop insurance under the Pradhan Mantri Fasal Bima Yojana (PMFBY), as well as personal accident insurance, providing a safety net against unforeseen events
Recent Developments and Performance
- Enhanced Loan Limit: The increase in the loan limit to ₹5 lakh under the MISS is a significant step towards providing farmers with greater financial flexibility to meet their agricultural and allied needs.
- Operational KCC Accounts: As of December 31, 2024, a total of ₹10.05 lakh crore has been disbursed under operative KCCs, benefiting 7.72 crore farmers across the country.
- Extension to Allied Activities: The scheme has been extended to cover working capital requirements for allied activities such as animal husbandry, dairy, and fisheries, thereby broadening its scope and impact.
Implementation and Impact
The KCC Scheme has significantly contributed to enhancing the financial well-being of farmers:
- Increased Credit Access: By providing timely and affordable credit, the scheme has enabled farmers to invest in quality inputs, leading to improved crop yields and income.
- Reduction in Informal Lending: The availability of formal credit through KCCs has reduced farmers’ dependence on informal lenders, who often charge exorbitant interest rates.
- Financial Inclusion: The scheme has brought a large number of farmers into the formal banking system, promoting financial literacy and inclusion.
Challenges and the Way Forward
Despite its successes, the KCC Scheme faces certain challenges:
- Non-Performing Assets (NPAs): The scheme has witnessed a rise in NPAs, with the amount standing at ₹96,918 crore in the July-September 2025 quarter. Addressing this issue requires stringent monitoring and effective recovery mechanisms.
- Awareness and Accessibility: Ensuring that all eligible farmers are aware of and have access to the scheme remains a challenge, particularly in remote and underserved regions.
To overcome these challenges, the government is focusing on:
- Digital Integration: Leveraging digital platforms like the Kisan Rin Portal to streamline the application and disbursement processes.
- Capacity Building: Conducting awareness campaigns and training programs to educate farmers about the benefits and usage of KCCs.
- Policy Reforms: Implementing policy measures to strengthen credit appraisal and monitoring systems, thereby reducing the incidence of NPAs.
Conclusion
The Kisan Credit Card Scheme stands as a testament to the government’s commitment to empowering farmers and enhancing agricultural productivity. By providing timely and affordable credit, the scheme has played a pivotal role in transforming the agricultural landscape of India. Continued focus on addressing challenges and implementing reforms will further strengthen the scheme’s impact, ensuring the financial well-being of farmers and the overall growth of the agricultural sector.
For more detailed information and updates, visit the official Kisan Rin Portal: fasalrin.gov.in
