Kisan Credit Card (KCC) Scheme
1 Introduction
The Kisan Credit Card (KCC) scheme was
introduced in 1998 for issue of Kisan Credit Cards to farmers on the basis of
their holdings for uniform adoption by the banks so that farmers may use them
to readily purchase agriculture inputs such as seeds, fertilizers, pesticides
etc. and draw cash for their production needs. The scheme was further extended
for the investment credit requirement of farmers viz. allied and non-farm
activities in the year 2004. The scheme was further revisited in 2012 by a
working Group under the Chairmanship of Shri T. M. Bhasin, CMD, Indian Bank
with a view to simplify the scheme and facilitate issue of Electronic Kisan
Credit Cards. The scheme provides broad guidelines to banks for operationalizing
the KCC scheme. Implementing banks will have the discretion to adopt the same
to suit institution/location specific requirements.
2 Applicability of the Scheme
The Kisan Credit Card Scheme detailed in the
ensuing paragraphs is to be implemented by Commercial Banks, RRBs, Small
Finance Banks and Cooperatives.
3 Objective / Purpose
The Kisan Credit Card scheme aims at providing
adequate and timely credit support from the banking system under a single
window with flexible and simplified procedure to the farmers for their
cultivation and other needs as indicated below:
a.
To meet the short term credit requirements for cultivation of
crops;
b.
Post-harvest expenses;
c.
Produce marketing loan;
d.
Consumption requirements of farmer household;
e.
Working capital for maintenance of farm assets and activities
allied to agriculture;
f.
Investment credit requirement for agriculture and allied
activities.
Note: The aggregate of components ‘a’ to
‘e’ above will form the short term credit limit portion and the
aggregate of components under ‘f’ will form the long term
credit limit portion.
4 Eligibility
i.
Farmers - individual/joint borrowers who are owner cultivators;
ii.
Tenant farmers, oral lessees & share croppers;
iii.
Self Help Groups (SHGs) or Joint Liability Groups (JLGs) of farmers
including tenant farmers, share croppers etc.
5 Fixation of credit limit / Loan amount
The credit limit under the Kisan Credit Card may
be fixed as under :
5.1 All farmers other than marginal
farmers1 :
5.1.1 The short term limit to be arrived for the
first year (For cultivating 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 and/or
accident insurance including PAIS, health insurance & asset insurance.
5.1.2 Limit for second & subsequent year
First year limit for crop cultivation purpose
arrived at as above plus 10% of the limit towards cost escalation / increase in
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. (Illustration I)
5.1.3 For cultivating more than one crop in a
year
The limit is to be fixed as above depending upon
the crops cultivated as per proposed cropping pattern for the first year plus
an additional 10% of the limit towards cost escalation / increase in 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 succeeding four years.
In case the cropping pattern adopted by the farmer is changed in the subsequent
year, the limit may be reworked. (Illustration I)
5.1.4 Term loan for investment
The term loan for investment is to be made
towards land development, minor irrigation, purchase of farm equipment and
allied agricultural activities. The banks may fix the quantum of credit for
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.
The long term loan limit should be based on the
proposed investment(s) during the five year period and the bank's perception on
the repaying capacity of the farmer.
5.1.5 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 is to be treated as the Kisan Credit Card limit.
5.1.6 Fixation of Sub-limits
i.
Short term loans and term loans are governed by different interest
rates. At present, short term crop loans upto ₹ 3 lakh are covered under
Interest Subvention Scheme/Prompt Repayment Incentive scheme of the Government
of India2. Further, repayment schedule and norms are
different for short term and 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.
ii.
Drawing limit for short term cash credit should be fixed based on the
cropping pattern. The amount(s) for crop production, repair and maintenance of
farm assets and consumption may be allowed to be drawn as per the convenience
of the farmer. In case the revision of scale of finance for any year by the
district level technical committee exceeds the notional hike of 10%
contemplated while fixing the five year limit, a revised drawable limit may be
fixed in consultation with the farmer. In case such revisions require the card
limit itself to be enhanced (4th or 5th year), the same may be done and the
farmer be so advised.
iii.
For term loans, installments may be allowed to be withdrawn based
on the nature of investment and repayment schedule drawn as per the economic
life of the proposed investments. It is to be ensured that at any point of time
the total liability should be within the drawing limit of the concerned
year.
iv.
Wherever the card limit / liability so arrived warrants additional
security, the banks may take suitable collateral as per their policy.
5.2 For Marginal Farmers
A flexible limit of ₹ 10,000 to ₹ 50,000 may be
provided (as Flexi KCC) based on the land holding and crops grown including
post-harvest warehouse storage related credit needs and other farm expenses,
consumption needs, etc., plus small term loan investment(s) like purchase of
farm equipment(s), establishing mini dairy/backyard poultry as per assessment
of the Branch Manager without relating it to the value of land. The composite
KCC limit is to be fixed for a period of five years on this basis.
Wherever higher limit is required due to change in
cropping pattern and / or scale of finance, the limit may be arrived at as per
the estimation indicated at para 4.1 (Illustration II)
6 Disbursement
6.1 The short term component of the KCC limit is
in the nature of revolving cash credit facility. There should be no restriction
in number of debits and credits. The drawing limit for the current season/year
could be allowed to be drawn using any of the following delivery channels.
i.
operation through branch;
ii.
operation using cheque facility;
iii.
withdrawal through ATM /debit cards
iv.
operation through Business Correspondents and ‘banking
outlet/part-time banking outlet’3
v.
operation through PoS available in Sugar Mills/Contract farming
companies, etc., especially for tie-up advances;
vi.
operations through PoS available with input dealers;
vii.
Mobile based transfer transactions at agricultural input dealers
and mandies.
Note : (v),(vi) & (vii) to be introduced as
early as possible so as to reduce transaction costs of both the bank as well as
the farmer.
6.2 The long term loan for investment purposes
may be drawn as per installment fixed.
7 Issue of Electronic Kisan Credit Cards
All new KCC must be issued as smart card cum
debit card as laid down in Part II of the Annex. Further, at the time of
renewal of existing KCC; farmers must be issued smart card cum debit card.
The short term credit limit and the term loan
limit are two distinct components of the aggregate KCC limit bearing different
rates of interest and repayment periods. Until a composite card could be issued
with appropriate software to separately account transactions in the sub limits,
two separate electronic cards may be issued for all new/renewed cards.
8 Validity/Renewal
i.
Banks may determine the validity period of KCC and its periodic
review.
ii.
The review may result in continuation of the facility, enhancement
of limit or cancellation of the limit/withdrawal of the facility depending upon
increase in cropping area/pattern and performance of the borrower.
iii.
When the bank has granted extension and/or re-schedule the period
of repayment on account of natural calamities affecting the farmer, the period
for reckoning the status of operations as satisfactory or otherwise would get
extended together with the extended amount of limit. When the proposed
extension is beyond one crop season, the aggregate of debits for which
extension is granted is to be transferred to a separate term loan account with
stipulation for repayment in installments.
9 Rate of Interest (ROI) :
The rate of interest will be as stipulated in
DBR Master Directions on Interest Rate on Advances.
10 Repayment Period :
10.1 The repayment period may be fixed by banks
as per the anticipated harvesting and marketing period for the crops for which
the loan has been granted.
10.2 The term loan component will be normally
repayable within a period of 5 years depending on the type of
activity/investment as per the existing guidelines applicable for investment
credit.
10.3 Financing banks may, at their discretion,
provide longer repayment period for term loan depending on the type of investment.
11 Margin
To be decided by banks.
12 Security
12.1 Security will be applicable as per RBI
guidelines prescribed from time to time.
12.2 Security requirement may be as under :
i.
Hypothecation of crops: For KCC limit upto ₹ 1.00 lakh banks are
to waive margin/security requirements.
ii.
With tie-up for recovery: Banks may consider sanctioning loans on
hypothecation of crops up to card limit of ₹ 3.00 lakh without insisting on
collateral security.
iii.
Collateral security: Collateral security may be obtained at the
discretion of Bank for loan limits above ₹ 1.00 lakh in case of non-tie-up and
above ₹ 3.00 lakh in case of tie-up advances.
iv.
In states where banks have the facility of on-line creation of
charge on the land records, the same shall be ensured.
13. Other features
Uniformity to be adopted in respect of
following:
13.1 The applicable interest subvention
/incentive for prompt repayment4 as advised by Government of India and/or
State Governments. The bankers will give adequate publicity of the facility so
that maximum farmers may benefit from the scheme.
13.2 Besides the mandatory crop insurance, the
KCC holder should have the option to avail the benefit of any type of asset
insurance, accident insurance (including PAIS), health insurance (wherever
product is available) and have premium paid through his/her KCC account.
Premium has to be borne by the farmer/bank according to the terms of the
scheme. Farmer beneficiaries should be made aware of the insurance cover
available and their consent (except in case of crop insurance, it being
mandatory) is to be obtained, at the application stage itself.
13.3 A one-time documentation5 at the first time of availment of KCC loan
and thereafter simple declaration (about crops grown/proposed) by farmer from
the second year onwards.
14 Classification of account as NPA :
14.1 The extant prudential norms on income
recognition, asset-classification and provisioning6 will apply for loans granted under the KCC
Scheme.
14.2 Charging of interest is to be done
uniformly as is applicable to agricultural advances.
15 Processing fee, inspection charges and other
charges may be decided by banks.
16 Other conditions while implementing the
revised guidelines of KCC Scheme :
16.1 In case the farmer applies for loan against
the warehouse receipt of his produce, the banks would consider such requests as
per the established procedure and guidelines. However, when such loans are
sanctioned, these should be linked with the crop loan account, if any, and the
crop loan outstanding in the account could be settled at the stage of disbursal
of the pledge loan, if the farmer so desires.
16.2 The National Payments Corporation of India
(NPCI) will design the KCC card to be adopted by all the banks with their
branding.
Delivery Channels - Technical features
1 Issue of cards
The beneficiaries under the scheme will be
issued with a Smart card / Debit card (Biometric smart card compatible for use
in the ATMs / Hand held Swipe Machines and capable of storing adequate information
on farmers identity, assets, land holdings and credit profile etc). All KCC
holders should be provided with any one or a combination of the following types
of cards :
2 Type of Card :
A magnetic stripe card with PIN (Personal
Identification Number) with an ISO IIN (International Standards Organization
International Identification Number) to enable access to all banks ATMs and
micro ATMs
In cases where the Banks would want to utilize
the centralized biometric authentication infrastructure of the UIDAI (Aadhaar
authentication), debit cards with magnetic stripe and PIN with ISO IIN with
biometric authentication of UIDAI can be provided.
Debit Cards with magnetic stripe and only
biometric authentication can also be provided depending on customer base of the
bank. Till such time, UIDAI becomes widespread, if the banks want to get
started without inter-operability using their existing centralized bio metric
infrastructure, banks may do so.
Banks may choose to issue EMV (Europay,
MasterCard and VISA, a global standard for interoperation of integrated circuit
cards) and RUPAY compliant chip cards with magnetic stripe and pin with ISO
IIN.
Further, the biometric authentication and smart
cards may follow the common open standards prescribed by IDRBT and IBA. This
will enable them to transact seamlessly with input dealers as also enable them
to have the sales proceeds credited to their accounts when they sell their
output at mandies, procurement centers, etc.
3 Delivery Channels :
The following delivery channels shall be put in
place to start with so that the Kisan Credit Card is used by the farmers to
effectively transact their operations in their KCC account.
1. Withdrawal through ATMs / Micro ATM
2. Withdrawal through BCs using smart cards.
3. PoS machine through input dealers
4. Mobile Banking with IMPS capabilities / IVR
5. Aadhaar enabled Cards.
4. Mobile Banking / Other Channels :
Provide Mobile banking functionality for KCC
Cards / Accounts as well along with Interbank Mobile Payment Service (IMPS of
NPCI) capability to allow customers to use this inter-operable IMPS for funds
transfer between banks and also to do merchant payment transactions as
additional capability for purchases of agricultural inputs.
This mobile banking should ideally be on
Unstructured Supplementary Data (USSD) platform for wider and safer acceptance.
However, the banks can also offer this on other fully encrypted modes
(application based or SMS based) to make use of the recent relaxation on
transaction limits. Banks can also offer unencrypted mobile banking subject to
RBI regulations on transaction limits.
It is necessary that Mobile based transaction
platforms enabling transactions in the KCC use easy to use SMS based solution
with authentication thru' MPIN. Such solutions also need to be enabled on IVR
in local language to ensure transparency and security. Such mobile based
payment systems should be encouraged by all the banks by creating awareness and
by doing proper customer education.
With the existing infrastructure available with
banks, all KCC holders should be provided with any one or a combination of the
following types of cards :
* Debit cards (magnetic stripe card with PIN)
enabling farmers to operate the limit through all banks ATMs / Micro ATMs
* Debit Cards with magnetic stripe and biometric
authentication.
* Smart cards for doing transactions through PoS
machines held by Business Correspondents, input dealers, traders and Mandies.
* EMV compliant chip cards with magnetic stripe
and pin with ISO IIN.
In addition, the banks having a call centre /
Inter active Voice Response (IVR), may provide SMS based mobile banking with a
call back facility from bank for mobile PIN (MPIN) verification through IVR,
thus making a secured SMS based mobile banking facility available to card holders.
