The Kisan Credit Card scheme intends to offer farmers flexible and efficient financial support from the banking system through a single window for their farming demands and other needs as listed below:
-
To meet the short-term credit needs for agricultural production, post-harvest costs, a loan for product marketing, and household consumption needs for farmers;
-
working capital for farm asset maintenance and allied agricultural activities;
-
Requirement for investment loans in agriculture and related sectors.
Eligibility of KCC:
Farmers- Joint/ Individual borrowers who are owner cultivators, tenant farmers, oral lessees, and sharecroppers are all eligible for the Kisan Credit Card scheme.
Self- help Groups (SHGs) or Joint Liability Groups (JLGs) of farmers including tenant farmers, sharecroppers, etc.
Disbursement: The credit card under the Kisan Credit Card may be fixed as under:
The short-term component of the UGC limit is the nature of a revolving cash credit facility without any restriction on the number of debits/ credits.
The drawing limit can be drawn using any of the following delivery channels:
-
Operations through branch
-
Operations using a cheque facility
-
Withdrawal through ATM/ Debit cards
-
Operations through Business correspondents and other banking outlets.
-
Operations through PoS are available in sugar mills/ contract farming companies etc., especially for tie-up advances.
-
Operations through PoS available with input dealers
-
Mobile-based transfer transactions at agricultural input dealers and mandies.
If the loan is for the purchase of a tractor, pump set, animals, etc., the long-term investment loan may be disbursed in a single installment.
Depending on how the project is going, a loan for any development activity could be disbursed in installments (e.g., land development, digging of an open well, etc).
Validity/Renewal:
Banks may set the repayment time based on when the crops for which the loan has been given are expected to be harvested and sold.
Normally, a card should be valid for 5 years with an annual review.
However, if the lease term for the land is less than five years, the card's validity might only be good for that time period, and the eligible loan amount will need to be calculated for the shorter term.
Depending on the borrower's performance, the review may result in a continuation of the facility, an increase in the limit, or a cancellation of the limit and withdrawal of the facility.
In the event of a natural disaster, an extension or rescheduling according to rules may be given.
Depending on the type of activity or investment, the term loan component will typically be repaid within a 5-year period in accordance with the current rules for investment credit.
Depending on the economic life of the asset and the type of investment, the bank can decide to set a repayment period of more than 5 years.
Repayment Period:
According to the expected harvesting and marketing season for the crops for which the loan is issued, the repayment period may be set.
According to the current rules that apply to investment credit, the term loan component will typically be repaid within a five-year period, depending on the type of activity or investment.
Depending on the type of investment, the financing branch may, at its discretion, offer a longer repayment time for a term loan.
Documentation Required:
Documentations required at the fresh sanction/ enhancement include:
-
DP Note
-
Hypothecation agreement- SD-07
-
Dead of Guarantee- SD-08
-
Declaration/ Undertaking for Agriculture Advance- AD- 01
-
Interest rate agreement- SD-24
-
Mortgage deed- SD-12 (for SM) OR AD-13 (for EM)
- Letter of Continuity- AD 09 (M)
-
Letter of General Lien and set off- AD 02 (A)
-
Letter of undertaking from borrower/guarantor for disclosure to CIBIl
-
Any other document stipulated in sanction advice.
Rate of Interest – To know the latest interest rate, click on this link.
To learn more about the scheme, please visit the official website.
