Kisan Credit Card: Limit, Repayment & Challenges

Introduction

The Kisan Credit Card (KCC) scheme was introduced in 1998 to provide farmers with a standardized card that they can use to easily purchase agricultural inputs and obtain cash for their production needs. In 2004, the scheme was expanded to include investment credit for allied and non-farm activities. In 2012, a working group led by Shri T. M. Bhasin, CMD, Indian Bank, reviewed the scheme to simplify it and enable the issuance of Electronic Kisan Credit Cards. The scheme offers general guidelines to banks for implementing the KCC scheme, allowing them to customize it as per their specific requirements and location.

What is Kisan Credit Card (KCC)

The Kisan Credit Card (KCC) is a specialized credit scheme initiated by the Government of India to ensure farmers have convenient and timely access to affordable credit. Various banks and financial institutions, including Commercial Banks, RRBs, Small Finance Banks, and Cooperatives, issue the Kisan Credit Card to farmers. It functions as a credit card, providing farmers with short-term credit for agricultural purposes and meeting their other farming-related expenses. The KCC simplifies the loan application process and offers flexible and convenient credit accessibility.

Objectives of Kisan Credit Card

The primary objective of the Kisan Credit Card scheme is to offer farmers sufficient and prompt credit support through a simplified and convenient process. The scheme aims to provide comprehensive financial assistance to farmers, covering their cultivation and other essential requirements as indicated below: 

a. To meet the short-term credit requirements for the cultivation of crops; 

b. Post-harvest expenses; 

c. Produce marketing loan; 

d. Consumption requirements of farmer household; 

e. Working capital for maintenance of farm assets and activities allied to agriculture;    

f.   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. The aggregate of components under ‘f’ will form the long-term credit limit portion.

 Eligibility 

1. Farmers – individual/joint borrowers who are owner cultivators; 
2. Tenant farmers, oral lessees & share croppers; 
3. Self Help Groups (SHGs) or Joint Liability Groups (JLGs) of farmers including tenant farmers, share croppers etc.  

What is the credit limit under KCC?

The credit limit under the Kisan Credit Card may be fixed as under :

All farmers other than marginal farmers, If a farmer cultivates a single crop each year, the loan amount for the first year is determined by multiplying the scale of finance for that specific crop (as determined by the District Level Technical Committee) by the cultivated area. Additionally, 10% of the limit is added for post-harvest consumption requirements, and 20% of the limit is included for repairs and maintenance expenses of farm assets. The loan also covers crop insurance and asset insurance. For instance, if a farmer is growing wheat with a scale of finance of INR 10,000 per acre, the loan for the first year would be (10,000) multiplied by the number of acres plus 1,000 for post-harvest consumption requirements and 2,000 for repairs and maintenance expenses.

Moreover, If the farmer continues to cultivate the same crop in the second year and subsequent years up to the fifth year, the loan amount will be the first-year amount plus 10% of the scale of finance for each successive year. It is assumed that the farmer adopts the same cropping pattern for the succeeding four years. In case the cropping pattern adopted by the farmer is changed in the subsequent year, the limit may be reworked

If the farmer cultivates multiple crops in a year, the loan amount is determined by the aforementioned criteria.

The maximum loan limit is INR 3 lakhs.

Term loan for investment

The term loan for investment supports activities like land development, minor irrigation, purchase of farm equipment, and other related agricultural endeavors. The specific amount of credit for term and working capital limits for agricultural and allied activities is determined by banks. They consider factors such as the cost of the assets the farmer intends to acquire, the existing allied activities on the farm, and the bank’s assessment of the farmer’s ability to repay the loan in relation to their overall loan burden, including existing obligations. The long-term loan limit is based on the proposed investments over a five-year period and the bank’s evaluation of the farmer’s repayment capacity.

Financing banks may, at their discretion, provide longer repayment periods for term loans depending on the type of investment.

Options available to farmers in case of non-repayment of loans

In case of non-payment of a Kisan Credit Card (KCC) loan, farmers have a few options to consider. The available options may vary depending on the policies of the lending institution, government initiatives, and local regulations. Here are some general options that can be explored:

Loan Restructuring or Rescheduling:

Farmers can approach the lending institution to discuss the possibility of loan restructuring or rescheduling. This involves renegotiating the loan terms, extending the repayment period, or modifying the installment amounts to make it more manageable for the farmer to repay the loan.

Negotiating with the Lending Institution:

Farmers can communicate with the lending institution and explain their financial difficulties. They can provide relevant information, such as changes in crop yield, natural disasters, or any other unforeseen circumstances that may have affected their ability to repay the loan. This communication can help in negotiating a revised repayment plan or settlement arrangement.

Government Support Schemes:

Depending on the state in which a person resides and specific government policies, there are various support schemes or initiatives aimed at assisting farmers facing financial distress. These include debt relief programs, loan restructuring schemes, or subsidies to help ease the burden of loan repayment. Moreover, Farmers can explore the availability of such schemes through government agricultural departments or agencies.

Seeking Legal Advice:

If faced with legal action from the lending institution, farmers may consider seeking legal advice to understand their rights and obligations with the help of Personalloansettlement.com because they are a team of legal professionals with expertise in agricultural or debt-related matters that can provide guidance on the best course of action and potential options to navigate the situation.

How personal loan settlement will help you

Preventing and Stopping Harassment

PersonalLoanSettlement.com’s dedicated advocates work tirelessly to halt the harassment faced by farmers during the settlement process. They ensure that recovery agents employed by banks do not resort to unethical practices, providing relief to their clients.

Assessing the Financial Situation

Recognizing that farmers may not be able to pay the settlement amount upfront, PersonalLoanSettlement.com offers customized plans tailored to each client’s financial situation. Also, Their advocates assess the financial status and create feasible payment structures for settlement.

Intimation Letters to Banks

PersonalLoanSettlement.com guides clients in effectively communicating their intention to settle with the banks in advance. Furthermore, This proactive step strengthens the negotiation process and showcases the seriousness of the client’s intentions.

Settlement Request Framing

With the expertise of their experienced advocates, PersonalLoanSettlement.com assists farmers in formally framing their settlement requests. Moreover, They strive to ensure that settlement offers are maximally in favor of their clients.

Complaints against Banks in Case of Illegal Recovery:

In instances where banks employ illegal practices to recover their money, PersonalLoanSettlement.com’s advocates not only take appropriate and strict actions against these agents but also initiate the filing of complaints, FIRs, and online grievances to safeguard their clients’ rights.

Negotiation and Mediation

Negotiation and mediation play crucial roles in the settlement procedure. Hence, The skilled advocates at PersonalLoanSettlement.com excel in these aspects, leveraging their expertise to achieve the best possible outcomes for their clients.

Obtaining No Objection Certificates from Banks:

Last but not least as part of their services, PersonalLoanSettlement.com assists clients in obtaining no-objection certificates from banks upon successful loan settlement, ensuring a smooth conclusion to the process.

Conclusion

Since its initiation, 14.64 lakhs KCC have been issued, with a total crop loan amount of INR 6,35,412 crore. However, there has been a concerning 40% increase in farmer suicides, with 12,412 reported last year due to debt-related issues or crop failures. These statistics indicate that although welfare schemes for farmers exist, the benefits are not effectively reaching the intended beneficiaries. Furthermore, even if these schemes manage to reach the farmers, there have been instances where banks and their recovery agents resort to illegal methods to recover the loan amounts, exacerbating the farmers’ already precarious situations.  

To conclude, it can be said that the government has implemented the KCC scheme to provide effective assistance to farmers. While the KCC has been beneficial, there have been instances of illegal recoveries by banks following loan disbursements. However, farmers need not worry as they can seek legal advice to handle such situations and protect their rights. It is advisable for farmers to consult with legal professionals who can guide them in dealing with any unlawful actions taken by recovery agents or banks. By seeking legal assistance, farmers can ensure they navigate these challenges effectively and safeguard their interests. Furthermore, efforts should be made to educate farmers on how to use debit cards. It is crucial to recognize the immense potential of agriculture in India and take the necessary steps to address these issues effectively.

Also Read: Loan Settlement Process in India, Click Here!