The Kisan Credit Card (KCC) scheme is one of the most significant initiatives for Indian farmers, providing them with access to affordable loans for agricultural activities. The core objective of this scheme is to ensure that farmers have easy access to institutional credit at low-interest rates.
One of the key benefits of the KCC scheme is that farmers who repay their loans on time are granted interest subsidies, making it even more affordable. Recently, the Government of India announced an increase in the loan limit under the KCC scheme, allowing farmers to borrow up to ₹5 lakh at a lower interest rate. Previously, farmers could avail loans of up to ₹3 lakh, but now they can access loans of up to ₹5 lakh under the scheme. This increase in the loan limit will significantly benefit farmers, enabling them to access more funds for their agricultural needs at a lower cost.
The Kisan Credit Card (KCC) scheme was launched in 1998 with the aim of providing farmers with affordable and institutional credit for their agricultural needs. It focuses on short-term agricultural loans, helping farmers meet their seasonal credit requirements. The scheme has been pivotal in easing the financial challenges faced by farmers.
In 2019, the scheme was expanded to include livestock farming, dairy farming, and fish farming, enabling those involved in these sectors to also benefit from the KCC scheme.
Under the current structure, farmers can avail loans up to ₹1.60 lakh without any collateral. Additionally, the government provides a 1.5% interest subsidy to banks, and for loans related to livestock, dairy, and fish farming, there is an additional 3% quick repayment incentive.
One of the standout features of the KCC scheme is the low-interest rate on loans. Typically, agricultural loans from banks are charged an interest rate of 9%, but under the KCC scheme, the government offers a 2% interest rate subsidy, bringing the rate down to 7%. Furthermore, if the loan is repaid on time, an additional 3% interest subsidy is provided by the government, which brings the effective interest rate down to just 4%.
With the recent increase in the loan limit, farmers can now borrow up to ₹5 lakh at an interest rate of 7%, making it even more beneficial for them to access funds for their agricultural activities at an affordable rate.
1. Purpose of KCC:
The main goal of the KCC scheme is to provide farmers with easy access to institutional credit at low-interest rates. It aims to ease the financial burden on farmers and ensure they have the necessary funds to carry out their agricultural activities smoothly.
2. Loan Limit:
Farmers can now borrow between ₹5,000 and ₹5 lakh under this scheme. The maximum loan limit has been increased to ₹5 lakh, which allows farmers to access larger sums for their agricultural work.
3. Interest Subsidy:
Under the KCC scheme, farmers enjoy a reduced interest rate of 7% due to a 2% subsidy from the government. If farmers repay their loans on time, they are entitled to a 3% additional subsidy, reducing the interest rate to just 4%.
4. Prime Minister's Crop Insurance Scheme:
Loans taken under the KCC scheme are covered under the Prime Minister's Crop Insurance Scheme, which protects the crops against natural disasters and other risks.
5. Personal Accident Insurance:
Farmers availing loans under the KCC scheme also receive personal accident insurance coverage of ₹50,000, providing financial protection in case of accidents.
6. Processing Charges:
There are no processing or inspection fees for loans up to ₹3 lakh, which makes this scheme even more attractive for farmers who may otherwise be burdened with high additional costs.
7. Interest Subsidy:
The government provides interest subsidies on loans taken under the KCC scheme, which reduces the overall cost of borrowing for farmers.
Expansion of the KCC Scheme and More Opportunities for Farmers:
With the recent increase in the loan limit to ₹5 lakh, more farmers are now eligible to take advantage of the KCC scheme. Additionally, the inclusion of livestock, dairy, and fish farming in the scheme ensures that even farmers in these sectors can benefit from the affordable loans provided by the KCC scheme.
This move will open up new opportunities for farmers, enabling them to access larger amounts of credit to improve their agricultural and related activities.
