Understanding the Kisan Credit Card Scheme: A Financial Lifeline for Farmers

The Kisan Credit Card (KCC) scheme offers affordable loans to farmers, enabling them to meet agricultural and personal needs. Launched in 1998, it has grown significantly, with over 7.75 crore active accounts. The scheme provides loans at a low interest rate of 4%, with collateral-free options for amounts up to ₹2 lakh. Farmers can apply online or offline, and the card functions like a debit card for easy transactions. This initiative not only simplifies farming but also promotes self-reliance among small and marginal farmers. Explore how the KCC can benefit you.
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Understanding the Kisan Credit Card Scheme: A Financial Lifeline for Farmers

Overview of the Kisan Credit Card Scheme

The Kisan Credit Card (KCC) initiative provides affordable loans to millions of farmers across the country. Its primary goal is to offer timely and easily accessible loans for agricultural activities and related expenses. Under this scheme, farmers can secure loans for various purposes, including short-term farming needs, post-harvest expenses, household necessities, livestock management, and field repairs.


Benefits of the Kisan Credit Card

The government supports this scheme with a 2% interest subsidy and a 3% bonus for timely repayments, allowing farmers to access loans at an annual interest rate of just 4%. This makes it one of the most affordable agricultural loan options available in the country. Let's explore what the KCC card entails, how it operates, and how farmers can benefit from it.


What is the Kisan Credit Card Scheme?

Launched in 1998, the Kisan Credit Card scheme aims to provide timely loans to farmers for agricultural and other essential needs. It enables farmers to purchase seeds, fertilizers, and farming equipment without resorting to high-interest loans. The card functions similarly to a debit card, allowing farmers to withdraw cash from ATMs.


Current Statistics

According to government data, there are currently over 7.75 crore active KCC accounts in India. The number of borrowers under this scheme has surged in recent years. For instance, the total loans disbursed in 2014 amounted to ₹4.26 lakh crore, which is projected to rise to ₹10.05 lakh crore by December 2024. This indicates a growing trust and necessity for KCC among farmers.


Loan Limits under KCC

The loan amount a farmer can receive under the KCC scheme depends on several factors, including the scale of finance for crops, land area, farming costs, insurance expenses, and maintenance of farm machinery. The initial loan limit is set based on these factors, with a natural increase of up to 10% each year for the next five years.


In the 2025 budget, the Finance Minister increased the maximum loan limit under the KCC scheme from ₹3 lakh to ₹5 lakh. Loans up to ₹2 lakh are completely collateral-free, meaning no assets need to be pledged. However, for amounts exceeding ₹2 lakh, banks may require collateral or other forms of security based on their policies.


Why are Loan Limits Divided?

The division of loan limits into two parts is due to the differing interest rates, repayment terms, and subsidies for short-term loans (for crops) and term loans (for assets like tractors and irrigation). This structure not only facilitates farmers but also simplifies accounting for banks.


How Does the KCC Card Work?

The KCC card acts as a multipurpose digital debit card issued by banks to farmers. It allows them to withdraw cash or make purchases through ATMs, banking correspondents, mobile apps, or point-of-sale machines at seed and fertilizer vendors. The card can also be linked to Aadhaar or biometric identification for enhanced security and ease of use.


Where Can Transactions Be Made?

Farmers can use this card for transactions at ATMs, banking correspondents, mobile banking, and Aadhaar-based transactions. This feature saves farmers time spent waiting in bank queues and enables them to purchase necessary supplies directly from their fields.


Who Can Apply for KCC?

1. Land-owning farmers (individual or joint names) 2. Sharecroppers, tenant farmers, and oral leaseholders 3. Farmer groups such as Self-Help Groups (SHGs) or Joint Liability Groups (JLGs)


Online Application Process for KCC

1. Visit the website of the bank from which you wish to obtain the KCC. 2. Select the Kisan Credit Card option. 3. Click on 'Apply'. 4. Fill in the required information and submit. You will receive an application number, and the bank will contact you within 3-4 days.


For offline applications, farmers need to visit their nearest bank branch to fill out the form. Bank officials will then conduct necessary checks and approve the KCC card based on eligibility.


Required Documents for KCC Application

1. Completed application form 2. Identity and residence proof (such as Aadhaar, driving license) 3. Passport-sized photograph 4. Proof of land ownership 5. Details of crop patterns 6. If the loan exceeds ₹1.60 lakh, documents related to collateral or guarantees.


Conclusion

The Kisan Credit Card scheme serves as a powerful tool for providing financial support to farmers across all aspects of agriculture. With low interest rates, a straightforward process, and digital connectivity with banks, this initiative not only simplifies farming for small and marginal farmers but also aids them in becoming self-reliant.


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