Sunday, 25 August 2019

Kisan Credit Card (KCC) , Banking Fundamentals to Know for students.

Banking Fundamentals for students
Kisan Credit Card
The Kisan Credit Card (KCC) scheme is a credit scheme introduced in August 1998 by Indian banks. This model scheme was prepared by the National Bank for Agriculture and Rural Development (NABARD) on the recommendations of R.V.GUPTA committee to provide term loans and agricultural needs. The interest rates on Kisan Credit Cards vary from bank to bank and also on borrowing limits. Generally, 7% per annum interest rate is charged for KCC borrowing limit up to Rs. 3 Lakh. However, the central government provides interest subvention to the financing institutions. National Crop Insurance scheme is offered to the Kisan credit cardholders, which provides coverage for crop loans given under the KCC scheme for certain crops. Protection is provided against loss of crops due to pest attacks, natural calamities, etc.

Who is eligible to get the benefits of the Kisan Credit Card (KCC) Scheme;
1. Small farmers
2. The Marginal farmers                                                                            
3. Sharecroppers
4. Lessee and tenant farmers
5. The Self Help Groups (SHGs) or Joint Liability Groups (JLGs)

Objectives of the Kisan Credit Card (KCC) Scheme;
Before the launch of the Kisan Credit Card Scheme; a large number of farmers used to depend on informal sources of credit like money lenders and relatives to purchase fertilizer, seeds, pesticides and other cultivation types of equipment. 

Main objectives of this scheme are;
1. To provide institutional credit to the farmers at the cheap rate of interest
2. To provide credit at the time of requirement
3. To support Post-harvest expenses
4. Working capital for maintenance of farm assets and activities allied to agriculture
5. Investment credit requirement for agriculture and allied activities (land development, pump sets, plantation, drip irrigation, etc.)
6. Consumption requirements of farmers

Who implemented this scheme?
The KCC scheme is being implemented by all Co-operative banks, Regional Rural Banks and public sector banks throughout the country. NABARD monitors the scheme in terms of the Cooperative Banks & RRBs and RBI in respect of Commercial Banks.
A new feature is started in the KCC scheme by the RBI and NABARD which provides ATM card to farmers which can be used at all ATMs and point of sale terminals.

What is the rate of interest under this scheme?
The farmers get the short term crop loans up to Rs. 3 lakh at a reduced 
rate of interest at 7%. If the farmers deposit the loan amount on the due date; they get another 3% rebate on the interest rate. So the effective rate of interest would be only 4%.
As per the rules of the priority sector lending, the RBI has directed to all the commercial banks to provide 18% of the Adjusted Net Bank Credit to the agriculture sector. Similarly, in the case of Regional Rural Banks (RRBs); 18% of their total outstanding advances are required to be towards agriculture and a sub-target of 8% has been set for lending to small and marginal farmers.

Documents required to get KCC
1. Duly filled in the application form
2. Identity proof- Voter ID card/PAN card/Passport/ Aadhaar card,/Driving License etc.
3. Address proof: Voter ID card/Passport/Aadhaar card/Driving license etc.
4. No dues certificate from the neighboring area’s branches of the banks.
So this was the complete information about the Kisan Credit Card scheme of the government of India. This information is very crucial for different competitive exams to be held in India.
5. Demand Promissory Note, The loan agreement, Crop Insurance. Submission of land records. It could be hypothecation of standing crops and/ or mortgage/ charge of land

The scheme currently offers the following features :
1. Credit to meet the financial requirements of agricultural and other allied activities.
2. Ancillary credit for crop production and other contingencies.
3. Insurance coverage for Kisan Credit Card holders. National Crop Insurance scheme is offered to the Kisan credit cardholders, which provides coverage for crop loans given under the KCC scheme for certain crops.
4. Protection is provided against loss of crops due to pest attacks, natural calamities, etc.
5. In some cases, collateral security is to be provided. If the loan amount is above Rs.1,00,000/-, then the cardholder has to pledge his land as mortgage and hypothecation the crops raised on it.
6. Farmers who are eligible for the Kisan Credit Card is offered a passbook or a card-cum-pass book.
7. If a farmer is eligible for a production credit of Rs. 5000 or more, then he/she is eligible for a Kisan Credit Card. As per the concerned bank’s discretion, sub-limits may be fixed.
8. The facility of revolving credit is available for any amount of withdrawals and repayment made within the credit limit. The credit limit is fixed based on the individual’s landholdings, the scale of finance, annual production credit needs, etc.
9. Based on the annual review, the credit card can be valid for up to 3 years.  Repayment for the amount borrowed can be made within a period of up to 12 months.
10. Credit limits will be increased to take care of change in cropping pattern, increase in costs, etc. as an incentive for good record on credit card usage.
11. Conversion/rescheduling of loans also permissible in case of damage to crops due to natural calamities.

 Benefits of Kisan Credit Card :  
1.Flexible repayment options.
2.Hassle-free disbursement procedure.
3.Single credit facility/ term loan for all agricultural requirements.

4. Dependable and easily available credit which enables a decrease in the farmer’s interest burden.
5. Assists in availing cash discounts from merchants/ dealers.
6. Credit is available for a period of up to 3 years, without any seasonal appraisals.
7. Income from agricultural sources determines the maximum credit limit.
8. There is no restriction on the cash withdrawals that can be made by the Kisan Credit Cardholder, as long as it is within the credit limit set by the bank.
9. Repayment can be made once the harvest season is over.
10. Lower interest rates.
11. Margin, security and documentation terms and conditions are similar to that applicable to agricultural advance.
12. Credit is made available for annual agricultural requirements and expenses.
13. Minimal documentation and maximum flexibility offered for withdrawal of the required funds from the Bank.
14. Funds can be withdrawn from any of the Bank’s branches, as per the sole discretion of the Bank.
15. Assists in the purchase of fertilizers, seeds, etc.Top of Form

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