In order to obtain loans and finance, rural clients, including farmers, must physically go to a bank branch with documents proving their ownership of the land. The turnaround time (TAT), which varies from two to four weeks from loan application to disbursement, was also quite long.
Who is eligible
According to the RBI Main Circular on the Kisan Credit Card Scheme, the following are the entities eligible for KCC:
I. Farmers – individual/joint borrowers who are owner-operators;
ii. Farmers, oral tenants and sharecroppers;
iii. Self-Help Groups (SHGs) or Joint Responsibility Groups (JLGs) of farmers, including sharecroppers, sharecroppers, etc.
Kisan Credit Card Features
Here are the main features listed on the SBI Bank website.
Type of establishment: Revolving cash credit account. The credit balance of the account, if any, will earn interest at the Caisse d’Epargne rate.
Amount of the loan: Funding based on needs taking into account crop model, area and scale of funding (SOF).
Moratorium: N / A
Repayment: The repayment period according to the cultivation period (short/long) and the commercialization period of the cultivation.
Primary: Mortgage of cultivated crops / assets to be created on bank financing.
Collateral: Equitable mortgage / registered mortgage on land / building as the case may be of the value of the loan at 100%. However, the guarantee is waived for KCC limit up to Rs. 1.60 lakhand up to Rs.3.00 lakhs, in case of linked arrangement.
Interest Subsidy: 3% per annum interest subsidy for fast borrowers up to Rs. 3.00 lakhs.
Mandate: 5 years, with an annual increase in the limit of 10% each year, subject to annual review.
Rupay debit cards for all eligible KCC borrowers.
a. Eligible crops can be covered by PRADHAN MANTRI FASAL BIMA YOJNA (PMFBY) upon payment of a premium.
b. The borrower should also opt for personal accident insurance, health insurance (if applicable).
Benefits of Applying for a Kisan Credit Card
According to the HDFC Bank website, these are the advantages
· Passbook issued for the withdrawal of cash from the bank.
· Check book issued with credit limit of Rs 25,000.
· The farmer can purchase seeds, fertilizers, agricultural equipment with the loan amount.
· Low bank interest rates, around 9% on average.
Maximum credit limit of Rs 3 lakh.
· Higher credit limit for farmers with good credit ratings.
· Subsidies on interest rates to farmers with good credit ratings.
How to Apply for a Kisan Credit Card
Interested persons should visit the bank and complete the required application along with other details. According to the HDFC bank, “Before the sanction, the bank will check the credit rating of the applicant. The Bank will also check the land properties, crop pattern, income, etc., of the applicant.”
Kisan credit card scanning
A pilot project for end-to-end digitization of Kisan Credit Card (KCC) loans is being implemented under this initiative by the Reserve Bank Innovation Hub (RBIH), in partnership with the RBI.
According to the Reserve Bank of India‘s press release, “The pilot would involve automating various processes within banks and integrating their systems with service providers. The proposed digitization of KCC’s lending process will make it more efficient, reduce costs for borrowers and significantly reduce the TAT. »
With Union Bank of India and Federal Bank, respectively, as partner banks and with the active collaboration of state governments, the pilot project will be launched in September 2022 in selected districts of Madhya Pradesh and Tamil Nadu. The digitization of KCC loans will eventually be expanded to other districts in these two states based on lessons learned from the pilot project.