Kisan Credit Card Scheme

Context: The Indian Banking Association (IBA) has issued advisory guidelines requesting banks to waive off the processing, documentation, inspection, ledger folio charges and all other service charges for crop loans up to Rs 3 Lakhs or for the Kisan Credit Card Scheme. The move aims to provide direct benefit to farmers and ease the pressure on them.

Campaign:

The Department of Agriculture, Cooperation and Farmers Welfare has announced the launch of campaign with immediate effect to saturate farmers for financial inclusion under Kisan Credit Cards (KCC).

This campaign will be launched through the Financial Institutions including Commercial Banks, Cooperative Banks and Regional Rural Banks in collaboration with the State Governments. The Department of Financial Services has already issued directives to these financial institutions under their purview. There are around 6.95 crore active KCCs.

Kisan Credit Card Scheme:

• The Kisan Credit Card (KCC) scheme was announced in the Budget speech of 1998-99 to fulfil the financial requirements of the farmers at various stages of farming through institutional credit.
• The model scheme was prepared by the National Bank for Agriculture and Rural Development (NABARD) on the recommendation of V Gupta committee.
• The KCC scheme is being implemented by the all Co-operative banks, Regional Rural Banks and Public Sector Banks throughout the country.
• Scheme covers risk of KCC holders against death or permanent disability resulting from accidents.

Objectives:

1. To provide adequate and timely credit support from the banking system to the farmers at the cheap rate of interest.
2. To provide credit at the time of requirement.
3. To support post-harvest expenses.
4. To provide Working capital for maintenance of farm assets and activities allied to agriculture.
5. Investment credit requirement for agriculture and allied activities (land development, pump sets, plantation, drip irrigation etc.)
6. Consumption requirements of farmers.

Other Salient features of the Scheme:

• Revolving cash credit facility involving any number of drawals and repayments within the limit.
• Limit to be fixed on the basis of operational land holding, cropping pattern and scale of finance.
• Entire production credit needs for full year plus ancillary activities related to crop production to be considered while fixing limit.
• Card valid for 5 years subject to annual review. As incentive for good performance, credit limits could be enhanced to take care of increase in costs, change in cropping pattern, etc.
• Conversion/reschedulement of loans also permissible in case of damage to crops due to natural calamities.
• Operations may be through issuing branch (and also PACS in the case of Cooperative Banks) through other designated branches at the discretion of bank.
• Crop loans disbursed under KCC Scheme for notified crops are covered under Crop Insurance Scheme, to protect the interest of the farmer against loss of crop yield caused by natural calamities, pest attacks etc.

Sources: the hindu.