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Union Finance Minister (FM) Niramala Sitharaman on Saturday announced an increase in the interest subvention scheme limit for the Kisan Credit Card (KCC) from Rs 3 lakh to Rs 5 lakh.
“Kisan Credit Card facilitates short-term loans for 7.7 crore (77 million) farmers, fishermen and dairy farmers. The loan limit under modified interest subvention scheme will be enhanced from Rs 3 lakh to Rs 5 lakh for loans taken through the KCC,” the FM said.
Ritika Nayyar, Partner, Singhania & Co. said that this initiative will play a crucial role in strengthening rural economies and eventually ensuring long-term agricultural growth
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“This move will provide financial flexibility, greater access to institutional credit, reduce dependence on informal lending, and enable farmers to invest in better inputs, modern equipment, and sustainable farming practices,” Nayyar said.
“This increase in loan limits will help our farmers overcome immediate financial needs that could arise during crop cycles,” said Ashwin Sapra, Partner (head - pahrma & healthcare), Cyril Amarchand Mangaldas
“Raising the loan limit for farmers under KCC Scheme is a positive step that will give farmers better access to formal credit and reduce their reliance on high-interest informal borrowing. However, the key challenge will be ensuring smooth and quick loan disbursal, especially for small and marginal farmers. The government must also put safeguards in place to prevent over-borrowing and ensure that increased credit translates into real benefits for farmers rather than additional debt burdens,” said Sandeep Chilana, Managing Partner, Chilana & Chilana Law Offices.
“Now the Govt needs to ensure there is access to real benefits of credit for small farmers ensuring they are empowered rather than just not being able to utilise the credit appropriately,” said Alay Razvi, Managing Partner, Accord Juris.
What is Kisan Credit Card
The KCC scheme, launched in 1998, provides short-term crop loans to farmers engaged in agriculture and allied activities at a benchmark rate of 9 per cent. The government offers an interest subvention of 2 per cent and a prompt repayment incentive of 3 per cent to farmers, thus making credit available effectively at a subsidised rate of 4 per cent per annum. As of June 30, 2023, the scheme had over 74 million active KCC accounts, with a total outstanding credit of Rs 8.9 trillion.
Farmers looking to apply for a Kisan Credit Card must meet specific eligibility criteria, including being an owner-cultivator, sharecropper, tenant farmer, or a member of a self-help group or joint liability group. They should be engaged in crop production or allied activities such as animal husbandry, as well as non-farm activities like fishing. Previously, loans exceeding Rs 1.60 lakh required a guarantee. However, the Reserve Bank of India (RBI) has recently raised the guarantee-free loan limit to Rs 2 lakh, allowing farmers to avail loans up to this amount without the need for collateral.
How to enrol in KCC
Visit the official website of your preferred bank that offers the Kisan Credit Card scheme.
Navigate to the ‘Kisan Credit Card’ section under loan or agricultural finance options.
Click on the ‘Apply Now’ button to proceed to the application form.
Fill out the application form with the required details, including personal information, farming details, and financial records.
Submit the form and note down the application reference number for future tracking.
If you meet the eligibility criteria, the bank will contact you within 3 to 4 working days for verification and further processing.
