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
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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%.
Remember
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.
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.
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