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Kisan Credit Cards

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Module: 3 - Kisan Credit Cards(KCC)


  2. Kisan Credit Cards Scheme (Contd.) Coverage of Crop Loans disbursed under KCC under the Reshtriya Krishi Bima Yojna (RKBY)

Other Modules under Project Banking Theory & Practice

  1. Module: 1 - Rural Development & Rural Banking

  2. Module: 2- Rural Credit Agencies

  3. Module: 4- MicroFinance


Hon'ble Union Finance Minister announced in his budget speech for 1998-99 that NABARD would formulate a Model scheme for issue of Kisan Credit Cards to farmers, on the basis of their land holdings, for uniform adoption by banks, so that the farmers may use them to readily purchase agricultural inputs such as seeds, fertilisers, pesticides, etc. and also draw cash for their production needs'.

NABARD formulated a Model Kisan Credit Card Scheme in consultation with major banks. Model Scheme circulated by RBI to commercial banks and by NABARD to Cooperative banks and RRBs in August 1998, with instructions to introduce the same in their respective area of operation.


As a pioneering credit delivery innovation, Kisan Credit Card Scheme aims at provision of adequate and timely support from the banking system to the farmers for their cultivation needs including purchase of inputs in a flexible and cost effective manner.

Contents of Credit Card

  • Beneficiaries covered under the Scheme are issued with a credit card and a pass book or a credit card cum pass book incorporating the name, address, particulars of land holding, borrowing limit, validity period, a passport size photograph of holder etc., which may serve both as an identity card and facilitate recording of transactions on an ongoing basis.

  • Borrower is required to produce the card cum pass book whenever he/she operates the account.

Salient features of the Kisan Credit Card (KCC) Scheme

  • Eligible farmers to be provided with a Kisan Credit Card and a pass book or card-cum-pass book.

  • Revolving cash credit facility involving any number of drawals and repayments within the limit.

  • Limit to be fixed on the basis of operational land holding, cropping pattern and scale of finance. Entire production credit needs for full year plus ancillary activities related to crop production to be considered while fixing limit.

  • Sub-limits may be fixed at the discretion of banks.

  • Card valid for 3 years subject to annual review. As incentive for good performance, credit limits could be enhanced to take care of increase in costs, change in cropping pattern, etc.

  • Each drawal to be repaid within a maximum period of 12 months. Conversion/reschedulement of loans also permissible in case of damage to crops due to natural calamities.

  • Security, margin, rate of interest, etc. as per RBI norms.

  • Operations may be through issuing branch (and also PACS in the case of Cooperative Banks) through other designated branches at the discretion of bank.

  • Withdrawals through slips/cheques accompanied by card and passbook.

Advantages of the Kisan Credit Card Scheme

Advantages to farmers

  • Access to adequate and timely credit to farmers

  • Full year's credit requirement of the borrower taken care of.

  • Minimum paper work and simplification of documentation for drawal of funds from the bank.

  • Flexibility to draw cash and buy inputs.

  • Assured availability of credit at any time enabling reduced interest burden for the farmer.

  • Sanction of the facility for 3 years subject to annual review and satisfactory operations and provision for enhancement.

  • Flexibility of drawals from a branch other than the issuing branch at the discretion of the bank.

Benefits of the Scheme to the Banks

  • Reduction in work load for branch staff by avoidance of repeat appraisal and processing of loan papers under Kisan Credit Card Scheme.

  • Minimum paper work and simplification of documentation for drawal of funds from the bank.

  • Improvement in recycling of funds and better recovery of loans. Reduction in transaction cost to the banks.

  • Better Banker - Client relationships.

Refinance Support for ST(SAO) Loans disbursed under KCC Scheme
- Operational guidelines

SCBs/DCCBs and RRBs were advised operational guidelines governing provision of refinance for their ST(SAO) disbursements under the KCC Scheme vide Circular letter No. NB.PCD(OPR)/662/A137(Spl.)/99-2000 dt.26.05.99 and Circular letter No. NB.PCD(OPR)/662-A/A137(Spl.)/99-2000 dt. 26.05.99 respectively. The same are summarised below:

instructions on computation of Demand, Collection and Balance (DCB) position, maintenance of Non-overdue Cover (NODC), financing of small/marginal farmers, etc, conveyed in circular letter No.NB.PCD(OPR)/5980/A.135/90-91 dated 17 December 1990 addressed to RCS and in circular letter No.NB.PCD(OPR)/1271/ 334/95-96 dated 02 November 1995 addressed to RRBs will also be, mutatis mutandis, applicable for advances made under the KCC Scheme by SCBs/DCCBs and RRBs respectively. although under the KCC Scheme, production credit for SAO, advances for allied activities, non-farm activities and consumption purposes can be covered, only the production credit for SAO is eligible for refinance from NABARD under the ST(SAO) credit limits.

banks required to maintain separate details of sanctions and accounts for operations on credit limits for SAO purposes under the KCC Scheme to facilitate submission of drawal applications for obtaining refinance from NABARD in respect of eligible loans and reporting such loans in the monthly NODC statements for ST(SAO) loans and advances.

short-term loans outstanding for financing ancillary activities relating to crop production such as maintenance of agricultural machinery/implements, electricity charges, etc. under the KCC Scheme also eligible for refinance from NABARD under ST(SAO) credit limits.

Applicable to Cooperatives only

Seasonality discipline:

In view of flexibility and discretion provided to the farmers in both drawals and repayments, it has been decided not to insist, for the present, on compliance with the seasonality discipline in respect of KCC accounts for the purpose of allowing drawals on the ST(SAO) credit limits.

Financing of Small Farmers(SF)/Marginal Farmers(MF):

For compliance on financing of SF/MF, maximum outstanding under production credit for SAO reached in KCC accounts of such farmers during the year(April-March) would be reckoned as loans issued to SF/MF. Thus, for compliance in regard to coverage of SF/MF, the aggregate of maximum outstanding in KCC accounts of SF/MF as well as normal cash credit accounts together with the aggregate of crop loans issued to SF/MF under the normal loaning system, worked out as percentage to the maximum outstanding reached under all KCC (including normal Cash Credit) accounts and the total ST(SAO) loans issued during the year (April-March) will be reckoned.

Applicable to Both Cooperatives and RRBs

Computation of Demand, Collection and Balance (DCB) position: Maximum outstandings under ST(SAO) loans in KCC accounts reached during the year (July-June) be treated as demand, and outstandings in unrenewed KCC accounts may be reckoned as overdues. Percentage of overdues to demand calculated accordingly.

Maintenance of Non Overdue Cover(NODC):

Outstanding in KCC accounts against PACS/Branches for financing SAO excluding amount outstanding under unrenewed KCC accounts will be reckoned as NODC for purpose of borrowings from NABARD. Thus, for purpose of working out the aggregate NODC for borrowings from NABARD for SAO, non-overdue short-term agricultural loans outstanding under normal loan accounts plus non-overdue outstanding under normal cash credit accounts and those under KCC Scheme will constitute NODC.
[Source: NABARD]

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