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A new shift of banking services to farmers Bookmark and Share  
  Author Name : Ritu Srivastava Posted on : August-26-2009 Total Hits: 16786
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Agriculture, the backbone of the Indian economy, plays a significant role in the overall socio-economic development of India; with nearly 67 percent of the population in the country is either directly or indirectly dependent on the agriculture for their livelihoods. Considering the fact that agriculture’s dominant role and the importance of credit as an input, a multi-agency approach has been adopted by the Reserve Bank of India (RBI) to ensure the flow of credit in this sector. Financing for agriculture sector has been a gigantic task for banks as the credit requirement varies from farmer to farmer. Providing credit at the low interest rates is essential for the development of village economy. Realizing this fact, both RBI and National Bank for Agriculture and Rural Development (NABARD) have taken several initiatives for simplification of systems and procedures and designing of innovative credit delivery products in dispensation of agricultural credit. It was one of the major challenges for Indian banks to provide timely, sufficiently and stress-free credit to farmers.

In this context, the Government of India (GoI) launched the Kissan Credit Card (KCC) scheme in 1998-1999 in consultation with the RBI and NABARD. The KCC scheme was introduced towards the access of facilitating Short Term (ST) credit for the borrowers from the financial institutions. Initially the scheme was considered as a unique delivery mechanism with an aim to provide adequate and timely supply of ST to the farmers to meet their crop requirements.The idea behind to launch the Kisan Credit Card is to provide an instrument that would allow farmers to purchase agricultural products like seeds, fertilizers and also withdraw cash for their other  production requirements.

Salient features of KCC

- Eligible farmer will be provided a Kishan Credit Card and a Pass Book or a Card-cum-Passbook.
- Revolving cash credit facility allowing any number of drawals and repayments within the limit.
- Entire production credit needs for full year plus ancillary activities related to crop production to be considered while fixing limit. In due course, allied activities and non farm short term credit needs may also be covered.
- Limit to be fixed on the basis of operational land holding, cropping pattern and scales of finance.
- Seasonal sub limits may be fixed at the discretion of banks.
- Limit of valid for 3 years subject to annual review.
- Conversion /re-schedulement of loans also permissible in case of damage to crops due to natural calamities.
- As incentive for good performance, credit limits could be enhanced to take cares of increase in costs, changing in cropping pattern etc.
- Security, margin and rate of interest as per RBI norms.
- Operations may be through issuing branch / PACS or through other designated branches at the discretion of bank.
- Withdrawals through slips /cheques accompanies by card and passbook.
- Personal Accident Insurance of Rs. 50,000 for death and permanent disability and Rs. 25,000/- for partial disability available to Kishan Credit Card holder at an annual premium of Rs. 15/- per annum.

Benefits of KCC

  • Simplifies disbursement procedures

  • Removes rigidity regarding cash and kind

  • No need to apply for a loan for every crop

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

  • Helps buy seeds, fertilizers at farmer’s convenience and choice

  • Helps buy on cash-avail discount from dealers

  • Credit facility for 3 years – no need for seasonal appraisal

  • Maximum credit limit based on agriculture income

  • Any number of withdrawals subject to credit limit

  • Repayment only after harvest

  • Rate of interest as applicable to agriculture advance

  • Security, margin and documentation norms as applicable to agricultural advance

NABARD's role

NABARD has been playing a vital and catalytic role in guiding the banks to meet the emerging challenges. NABARD formulated the KCC model scheme on 1998-1999 and implemented in all the States and Union territories. According to NABARD, around 1.94 crore KCC have been issued upto 31 October 2001 by banks throughout the country. In 2001, the government announced that every eligible farmer will receive KCC by 31 March 2004. In accordance with the announcement in the GoI budget 2001-2002, the government introduced the Personal Accident Insurance Scheme (PAIS) as a ‘add-on benefit’ to all KCC holders. Under this scheme, all card holders will be insured for Rs. 50,000 at a nominal premium of Rs. 15/- per annum as agreed to by General Insurance (Public Sector) Association. The below table shows the growth rate of Kisan Credit Card for the period 1998-2001:

Progress of Kishan Credit Card Scheme upto 31st October, 2001


No of Cards issued by

Cooperative Banks

Regional Rural Banks

Commercial Banks



























Source: NABARD

According to the Report on Trends and Progress of Banking in India 2006-07, conducted by RBI, the total number of Kisan Credit Cards issued by banks has reached 66.56 million. The number of cards issued in 2006-2007 was slightly lower at 7.47 million compared with 8 million cards issued in the 2005-2006. Of the 66.56 million cards, co-operative banks have issued about 32.71 million cards. Regional rural banks have issued about 12 million cards while commercial banks about 25.5 million cards.

Kisan Credit Cards from leading banks in India  

  • Allahabad Bank - Kisan Credit Card (KCC)

  • Andhra Bank - AB Kisan Green Card

  • Bank of Baroda – BKCC

  • Bank of India - Kisan Samadhan Card

  • Canara Bank – KCC

  • Corporation Bank – KCC

  • Dena Bank - Kisan Gold Credit Card

  • Oriental Bank of Commerce -Oriental Green Card (OGC)

  • Punjab National bank - PNB Krishi Card

  • State Bank of Hyderabad -KCC

  • State Bank of India -KCC

  • Syndicate Bank -SKCC

  • Vijaya Bank -Vijaya Kisan Card

The Kisan Credit scheme has been successfully implemented in Andhra Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Orissa, Rajasthan, Tamil Nadu and Uttar Pradesh. These States accounted for 75 per cent of the total cards issued by banks. But same time, there are some states like Goa, Himachal Pradesh, Jammu and Kashmir, Sikkim and in the North-Eastern States, where the progress is slow. Now, KCC initiative is now scaling up with a introduction of biometric-identification enabled Kisan Credit cards by IITB and IITM. The biometric KCC will enable illiterate farmers to use this scheme with the help of their thump impression. If this movement is enhancing the delivery of service, on the second hand, there is a need of awareness about their usability among farmers.



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