August 1, 2025 · 12 mins read
Santosh Kumar
Kisan credit card – KCC was launched to save the Indian farmers from the high interest rates charged by the money lenders in the unorganized sector. Farmers can avail a loan as and when they require. The interest charged is also dynamic, meaning if customers make timely payments, then they are charged a lower rate of interest.
The main objective of Kisan Credit Card Loan is to provide loans to farmers at a low rate of interest. Before this scheme, farmers relied on money lenders who charged a high rate of interest and were rigid on the due date. This posed a lot of problems to farmers especially when they suffered calamity such as hailstorm, drought, etc.
On the other hand, Kisan credit card loans charge a lower rate of interest, offer flexible repayment schedule. Moreover, crop insurance and collateral-free insurance is also provided to the user.
Details of the Kisan Credit Card Loan scheme are:
1: The Interest rate offered on the loan may go as low as 2.00%
2: Banks will not seek security on loans up to Rs. 1.60 lakh
3: Crop insurance coverage against a variety of calamities is given to the users
4: Farmer is provided insurance coverage against permanent disability, death, other risks is also provided to the farmer
5: The repayment period is decided on the basis of harvesting of crop and its marketing period
6: Maximum loan up to Rs. 3.00 lakh can be taken by the card holder
7: Farmers who deposit their money in the Kisan Credit Card account will get a high rate of interest
8: Farmers are charged a simple interest rate when they make a prompt payment
9: Compound interest is charged when cardholders fail to make timely payments
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Fixation of credit limit/Loan amount
1: The short-term limit to arrive for the first year: For farmers raising a single crop in a year: Scale of finance for the crop (as decided by District Level Technical Committee) x Extent of area cultivated + 10% of limit towards post-harvest / household/consumption requirements + 20% of limit towards repairs and maintenance expenses of farm assets + crop insurance, PAIS & asset insurance.
2: Limit for second & subsequent year First-year limit for crop cultivation purposes arrived at as above plus 10% of the limit towards cost escalation/increase in the scale of finance for every successive year ( 2nd, 3rd, 4th and 5th year) and estimated Term loan component for the tenure of Kisan Credit Card, i.e., five years.
3: For farmers raising more than one crop in a year, the limit is to be fixed as above depending upon the crops cultivated as per the proposed cropping pattern for the first year and an additional 10% of the limit towards cost escalation/increase in the scale of finance for every successive year (2nd, 3rd, 4th and 5th year). It is assumed that the farmer adopts the same cropping pattern for the remaining four years also. In case the cropping pattern adopted by the farmer is changed in the subsequent year, the limit may be reworked.
4: Term loans for investments towards land development, minor irrigation, purchase of farm equipment, and allied agricultural activities. The banks may fix the quantum of credit for the term and working capital limit for agricultural and allied activities, etc., based on the unit cost of the asset/s proposed to be acquired by the farmer, the allied activities already being undertaken on the farm, the bank's judgment on repayment capacity vis-a-vis total loan burden devolving on the farmer, including existing loan obligations.
5: The long-term loan limit is based on the proposed investments during the five-year period and the bank's perception of the repaying capacity of the farmer.
6: Maximum Permissible Limit The short-term loan limit arrived for the 5th year, plus the estimated long-term loan requirement, will be the Maximum Permissible Limit (MPL) and treated as the Kisan Credit Card Limit.
7: Fixation of Sub-limits for other than Marginal Farmers Short-term loans and term loans are governed by different interest rates. Besides, at present, short-term crop loans are covered under the Interest Subvention Scheme/ Prompt Repayment Incentive scheme. Further, repayment schedules and norms are different for short-term and long-term loans. Hence, in order to have operational and accounting convenience, the card limit is to be bifurcated into separate sub-limits for short-term cash credit limit cum savings account and term loans.
8: The drawing limit for short-term cash credit should be fixed based on the cropping pattern and the amounts for crop production, repairs, and maintenance of farm assets, and consumption may be allowed to be drawn at the convenience of the farmer. In case the revision of the scale of finance for any year by the district-level committee exceeds the notional hike of 10% contemplated while fixing the five-year limit, a revised drawable limit may be fixed and the farmer is advised about the same. In case such revisions require the card limit itself to be enhanced (4th or 5th year), the same may be done and the farmer may be so advised. For term loans, instalments may be allowed to be withdrawn based on the nature of the investment and the repayment schedule drawn as per the economic life of the proposed investments. It is to be ensured that at any point in time, the total liability should be within the drawing limit of the concerned year.
9: Wherever the card limit/liability so arrived warrants additional security, the banks may take suitable collateral as per their policy.
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The following are the types of Kisan Credit Cards that can be issued by the banks to farmers:
1: The Kisan Credit Card is a magnetic stripe card with PIN (Personal Identification Number) and an ISO IIN (International Standards Organization International Identification Number) to enable farmers to access all bank ATMs and micro ATMs
2: Where banks want to utilize the centralized UIDAI biometric authentication infrastructure, debit cards with magnetic stripes, PINs, and ISO IINs with UIDAI biometric authentication can be provided.
3: KCC debit cards with magnetic stripes and only biometric authentication can be provided, depending on the bank's customer base.
4: Banks can also issue EMV (Europay, MasterCard, and VISA), a global standard for the interoperability of integrated circuit cards and RUPAY-compliant chip cards with magnetic stripes, PINs, and ISO IINs.
5: Biometric authentication and smart cards follow the common open standards prescribed by IBA and IDRBT. This will enable farmers to transact seamlessly with input dealers and credit their sales proceeds to their accounts when they sell output at procurement centres, mandies, etc.
6: New KCCs must be issued as a smart card cum debit card. Even at the time of renewal of existing KCCs, a smart card cum debit card must be issued to the farmers.
7: Two separate electronic cards can be issued for all new or renewed cards, until a composite card can be issued under an appropriate software to separately account transactions of the short-term credit limit and the term loan limit under the KCC scheme.
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The interest rates of KCC loans are as follows:
1: Interest rates for up to Rs 3 lakhs - 7% p.a., subject to the government providing interest subvention*
2: Above Rs 3 lakhs- as applicable from time to time
3: 3% p.a. interest subvention is provided under the Prompt Repayment Incentive (PRI) up to Rs . 3 lakh. However, submission of Aadhaar details to the bank is mandatory to avail interest subvention.
*Note: The interest rates may vary from bank to bank. Though most banks provide an interest rate of 7%, it may increase to 13%.
The Kisan Credit Card limit is based on land holdings, crops and purpose. The limits are calculated as follows:
Scale of finance for the crop decided by the District Level Technical Committee x Extent of area cultivated + 10% of limit towards household, post-harvest or consumption requirements + 20% of limit towards maintenance and repairs expenses of farm assets + crop insurance and accident insurance, including health insurance, Personal Accident Insurance Scheme (PAIS) and asset insurance.
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First year limit for crop cultivation purposes + 10% of the limit towards cost escalation or increase in the scale of finance for every successive year, i.e., 2nd, 3rd, 4th, and 5th year, and estimated term loan component for the tenure of Kisan Credit Card, i.e., 5 years.
The limit will be fixed as above, depending upon the cultivated crops as per the proposed cropping pattern for the first year + an additional 10% of the limit towards cost escalation or increase in the scale of finance for every successive year, i.e., 2nd, 3rd, 4th and 5th year. However, if the cropping pattern adopted by a farmer is changed in the subsequent years, the limit will be reworked.
The term loan for investment should be made towards the purchase of farm equipment, minor irrigation, land development, and allied agricultural activities.
The banks will fix the quantum of term credit and working capital limit for agricultural and allied activities based on the unit cost of the asset proposed to be bought by the farmer, the allied activities already in progress on the farm, the bank's judgment for repayment capacity, and total loan burden on the farmer, including existing loan obligations.
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The Maximum Permissible Limit (MPL) is the short-term loan limit arrived at for the 5th year + the estimated term loan requirement. This will be treated as the Kisan Credit Card limit.
Kisan credit card loan is provided to anyone who is engaged in agriculture, allied activities, or other non-farming activities. The following are the detailed criteria to be eligible for the Kisan Credit Card loan:
1: Minimum Age – 18 years
2: Maximum Age – 75 years
3: In case a borrower is a senior citizen (age more than 60 years), a co-borrower is mandatory,
4: where the co-borrower should be a legal heir.
5: All farmers – individuals/joint cultivators, owners
6: Tenant farmers, oral lessees, and sharecroppers, etc.
7: SHGs or joint liability groups, including tenant farmers
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The application process varies based on the bank. Here is the general process to apply for a Kisan Credit Card loan online:
1: Visit the bank website or the bank's mobile banking app where you want to apply for the Kisan Credit Card loan.
2: Navigate to the ‘Agri Loans’ section and choose ‘Kisan Credit Card’.
3: Click on the ‘Apply’ option or ‘Download Application Form’.
4: Fill out the online/downloaded application form with the required details and click ‘Submit’ or submit it to the bank.
5: You will receive an application reference number.
The bank will check the eligibility requirements and contact you within 3-4 working days to proceed with the process.
Follow the process below to apply for the Kisan Credit Card scheme offline:
1: Visit the bank branch where you want to apply for the KCC scheme.
2: Obtain the application form from the bank representatives.
3: Fill out the application form, attach the required documents, and submit it to the bank branch.
4: The bank representatives will verify the form and process the loan amount.
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The following delivery channels are available for the farmers to use the Kisan Credit Card and transact their operations in their KCC account:
1: Withdrawal through ATMs or Micro ATM
2: Withdrawal through Business Correspondents (BCs) using smart cards
3: PoS machine through input dealers
4: Mobile Banking with IMPS capabilities or IVR
5: Aadhaar-enabled cards
The Kisan Credit Card scheme immensely benefits farmers by providing loans and credit whenever they require it to undertake agricultural and allied activities. Its scope has also been extended to provide credit for investment purposes by a farmer to cultivate crops, thereby helping farmers obtain a quick amount for their farming activities.
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You can visit the bank's branch and apply for the loan directly using your Kisan Credit Card.
The interest rate is decided by the Bank and it depends on a number of factors such as past credit history of the farmer, area under farming, crop under cultivation, etc. However, RBI keeps a check on the maximum interest rate offered by the bank.
Yes, farmers also get insurance on Kisan credit card loans for personal accidents and assets and the National Crop Insurance Scheme covers the crops eligible for KCC.
1: Expenses related to crop production
2: Funds for day-to-day activities (Working Capital)
3: Expenses towards the maintenance of farming assets and other allied activities such as dairy animals, etc.
4: Marketing related expenses
Yes, if you are a farmer or are associated with allied activities related to farming or non-farming activities, you can apply for a Kisan Credit Card.
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