Kisan Credit Card (KCC) scheme was launched in 1998 to support farmers in buying seeds, pesticides, agricultural machines, etc. The scheme was further tweaked in 2004 to align with the investment credit requirement of farmers such as allied and non-farm activities.
The basic idea of the scheme is to support farmers in raising their agricultural produce. Not many would know a credit card specifically designed for farmers. But it’s a reality and all those farmers willing to avail easy finance can opt for Kisan Credit Card and raise their crops efficiently.
What’s The Basic Purpose of Kisan Credit Card?
The credit card is incepted to achieve the following objectives.
- Short-term credit for crop cultivation
- Provide funds for post-harvest expenses
- Meet consumption needs of farmer households
- Offer loan for marketing
- Offer working capital to help farmers maintain their farm assets and allied agricultural activities
- Provide investment credit to support agricultural and allied activities
Eligibility Criteria for Kisan Credit Card
The card can be offered to the following set of people.
- Farmers cultivating crops on their own land
- Tenant farmers producing crops on other’s land
- Self Help Groups or Joint Liability Groups of farmers
These are the fundamentals pertaining to Kisan Credit Card. Now, take a close look at the banks who provide this card.
The country’s largest lender State Bank of India (SBI) offers Kisan Credit Card with the following features & benefits.
- Free ATM-cum debit card for all Kisan Credit Card scheme borrowers
- Interest subsidy is offered at 2% per annum on a loan of up to ₹3 Lakhs
- Additional subsidy to be provided on prompt payments
Rate of Interest on SBI Kisan Card
A simple interest rate of 7% per annum is charged on SBI Kisan Card for the first year or the due date of repayment, whichever comes earlier. The interest will be charged at the card rate in the event of no repayment within the due dates. Repayment post the due date will incur interest on a half-yearly compounding basis.
Quantum of Finance
The loan eligibility for the first year would be decided on the basis of cultivation cost, post-harvest spends as well as costs of farm maintenance. For the next 5 years, the loan would be disbursed in accordance with the scale of finance.
What’s Going to be the Repayment Period?
The fixing of the repayment period might be made according to the anticipated harvesting and marketing period of the crops for which the farmers have got the loan.
Shall the Farmers Have to Submit Collateral Security?
There’s no need to submit a collateral for a credit limit of up to ₹1 lakh. The collateral for a limit beyond the said amount would be decided accordingly.
Bank of India
Bank of India (BOI) is another lender that offers KCC to the farmers in producing their crops. It decides short-term credit based on the crops, the area over which the crops would be cultivated and the scale of finance.
On the other hand, short-term credit for consumption or domestic needs is provided to up to 25% of farmer’s gross income (estimated). The maximum credit provided for the purpose is ₹50,000. The amount of finance against produce marketing or storage receipts would be a maximum of 50% of the price of the crops during loan sanction or while the produce is getting stored.
What Sort of Collateral Does BOI Ask for KCC?
BOI asks for a collateral of D.P. note hypothecation of standing crops for a limit of up to ₹50,000. Above ₹50,000, D.P. note hypothecation of standing crops mortgage of land or any other collateral security may be required.