Kisan Credit Card Loan: A Major Step Towards Agricultural Growth

Kisan Credit Card Loan is a scheme provided by the Government of India to allows easy and accessible cash loan facility to the farmers across the nation. All the crop loans are usually disbursed via the Kisan Credit Card Loan scheme by all the banks. This scheme is functional throughout the nation and is implemented by all the commercial banks, RRBs and cooperative banks.

The Kisan credit card scheme can be availed by small farmers, marginal farmers, share croppers, oral lessees and tenant farmers. Read on to know more about this product!

Kisan Loan Scheme: Salient Features

Here are a few salient features of the Kisan Loan Scheme to help you know more about it. Take a look!

• Under this scheme, the eligible farmers are provided by the Kisan Credit Card along with a pass book or a card-cum-pass book.
• This scheme provides the farmers with the facility of revolving cash credit facility including multiple drawals and repayments but within the allowed limit.
• The credit limit for each individual is decided on the basis of scale of finance, operational land holding and cropping pattern.
• During the fixation of this limit, the entire production credit needs for the entire year along with ancillary activities related to crop production is considered.
• The sub limits of the scheme are decided by the bank to cover the short term, medium term and term credit facilities.
• Any Kisan Credit Card that is valid for about 5 years is subject to annual review. As a benefit of good performance and financially responsible behaviour, the credit limits would be increased to cover increase in production costs, change in the farming pattern and other such needs.
• Every drawal is to be paid within the maximum time limit of 12 months.
• The scheme provides with an advantage of reschedulement or conversion of loans in case of a bad crop caused due to natural calamities.
• The rate of interest, margins and security is decided as per the norms of RBI.

Kisan Credit Card Loan Advantage:

The following are the advantages of the Kisan Credit Card Loan:

• Simple disbursement procedures.
• Takes care of rigidity pertaining to cash and kind.
• No need to apply for a different loan for every crop.
• Assured credit availability at any time.
• Lower interest rate.
• Allows the farmer to spend the money as per his/her convenience at choice.
• Allows the farmer to buy on cash-avail discount from the dealers.
• Allows the credit facility up to 3 years.
• Allows maximum credit facility on the basis of agriculture income.
• Limitless withdrawals on the basis of the credit limit.
• Repayment of loans only after the harvest is done.
• Ensures availability of adequate and timely credit to farmers.
• Ensures flexibility to draw cash and procure inputs.

Kisan Credit Card Documents Required:

The following documents are required for availing the Kisan Credit Card:

• A duly filled and completed application form
• Proof of Identity (Voter ID/ PAN Card/ Driver’s License/ Aadhar Card/ Passport)
• Proof of Address (Voter ID/ PAN Card/ Driver’s License/ Aadhar Card/ Passport)

Kisan Credit Card Loan Eligibility

The following eligibility criteria is followed for availing the Kisan Credit Card Loan:

• All farmers are eligible for this facility including the individuals as well as the joint borrowers who are owner cultivators.
• Tenant farmers are also eligible for this facility along with the oral lessees and share croppers.
• SHGs and Joint Liability Groups of Farmers can also avail this facility.

Kisan Credit Card Loan Credit Limit

The Kisan Credit Card Loan Credit Limit is fixed as per the time limit for which it is taken.

• The credit limit for short term credit is fixed for the first year on the basis of:
• The cultivation of crops according to the scale of finance and suggested cropping pattern.
• Requirements for the crops after harvest and for household and consumption
• Expenses for maintenance of insurance of crops, farm assets and PAIS (Personal Accident Insurance Scheme)
• The short term credit limit will be increased by 10% with every successive year.
• Crops for which the credit is sought should be covered under the Crop Insurance Scheme- NAIS (National Agricultural Insurance Scheme)
• The requirement for collateral security is waived off for credit limit up to  ₹ 1 Lakh and up to  ₹ 3 Lakhs with a tie-up arrangement for recovery.
• No processing fee is charged for the loan amount up to  ₹ 3 Lakhs.
• Kisan Credit Card account functions as a revolving account. Hence, any balance in the account would fetch interest rates as per the savings bank rate.

Kisan Credit Card Interest Rate

• Rate of interest and requirement of collateral for crop loans:

The crop loans up to the amount of ₹ 3 Lakhs is disbursed at the interest rate of 7% per annum. An interest subvention of 3% per annum to the farmers who are prompt at repayment is provided by the Government of India. This lowers the interest rate for them to 4% per annum. As per the norms of RBI, no collateral security id required for the crop loan up to the amount of ₹ 1 Lakh. For the loan amount above ₹ 1 Lakh, the kind and amount of collateral security required is decided by individual banks in accordance with the norms of RBI. The crop loans amounting more than ₹ 3 Lakhs are disbursed at the interest rate that is defined by the RBI and other conditions that are approved by the RBI Board.

• Rate of interest for post-harvest storage loans:

The post-harvest storage loan is granted to the farmers at commercial rates. The government provides the facility of interest subvention for the post-harvest storage loans to the farmers to discourage the practice of distress sale and encourage the practice of storage of crops and warehousing.

Kisan Credit Card Interest Rate Calculator

Credit card interest rate calculator is a highly useful tool as it would ease the process of interest rate calculation thereby giving out the amount of monthly EMIs that the loan applicant will have to repay towards the loan amount. All that the loan applicant needs to do is feed-in the loan amount desired by the applicant, rate of interest decided by the bank and the loan tenure that the applicant prefers. By calculating on the basis of these figures, the tool will churn out the monthly installments that are payable by the loan applicant for the entire loan tenure. The benefit of this tool is that, the applicant can go on changing the figures and deriving the values till the time he/she is satisfied with the result and is ready to take the plunge.