REVISED SCHEME FOR ISSUE OF KISAN CREDIT CARD (KCC)

1. Introduction
The Kisan Credit Card has emerged as an innovative credit delivery mechanism to meet the
production credit requirements of the farmers in a timely and hassle-free manner. The scheme is
under implementation in the entire country by the vast institutional credit framework involving
Commercial Banks, RRBs and Cooperatives and has received wide acceptability amongst
bankers and farmers. However, during the last 13 years of implementation, many impediments
were encountered by policy makers, implementing banks and the farmers in the implementation
of the scheme. Recommendations of various Committees appointed by GOI and studies
conducted by NABARD also corroborate this fact. It was, therefore, felt necessary to revisit the
existing KCC Scheme to make it truly simple and hassle free for both the farmers and bankers.
Accordingly, the GOI, Ministry of Finance constituted a Working Group to review the KCC
Scheme. Based on the recommendations of the Working Group which were accepted by the GoI,
the following guidelines are issued:

2. Applicability of the Scheme

3. Objectives/Purpose
Kisan Credit Card Scheme aims at providing adequate and timely credit support from the
banking system under a single window to the farmers for their cultivation & other needs as
indicated below:
a. To meet the short term credit requirements for cultivation of crops
b. Post harvest expenses
c. Produce marketing loan
d. Consumption requirements of farmer household
e. Working capital for maintenance of farm assets and activities allied to agriculture, like dairy
animals, inland fishery etc.
f. Investment credit requirement for agriculture and allied activities like pump sets, sprayers,
dairy animals etc.
Note : The aggregate of components
a. to e. above will form the short term credit limit portion and the aggregate of components under
f will form the long term credit limit portion.

4. Eligibility
i. All Farmers Individuals / Joint borrowers who are owner cultivators
ii. Tenant Farmers, Oral Lessees & Share Croppers
iii. SHGs or Joint Liability Groups of Farmers including tenant farmers, share croppers etc.

5. Fixation of credit limit/Loan amount

For farmers raising single crop in a year: Scale of finance for the crop (as decided by District
Level Technical Committee) x Extent of area cultivated + 10% of limit towards post-harvest /
household / consumption requirements + 20% of limit towards repairs and maintenance expenses
of farm assets + crop insurance, PAIS & asset insurance.
5.1.2. Limit for second & subsequent year :
First year limit for crop cultivation purpose arrived at as above plus 10% of the limit towards
cost escalation / increase in scale of finance for every successive year ( 2nd , 3rd, 4th and 5th
year) and estimated Term loan component for the tenure of Kisan Credit Card, i.e., five years.
(Illustration I)
5.1.3. For farmers raising more than one crop in a year, the limit is to be fixed as above
depending upon the crops cultivated as per proposed cropping pattern for the first year and an
additional 10% of the limit towards cost escalation / increase in sc ale of finance for every
successive year (2nd, 3rd, 4th and 5th year). It is assumed that the farmer adopts the same
cropping pattern for the remaining four years also. In case the cropping pattern adopted by the
farmer is changed in the subsequent year, the limit may be reworked.
(Illustration I)
5.1.4. Term loans for investments towards land development, minor irrigation, purchase of farm
equipments and allied agricultural activities. The banks may fix the quantum of credit for term
and working capital limit for agricultural and allied activities, etc., based on the unit cost of the
asset/s proposed to be acquired by the farmer, the allied activities already being undertaken on
the farm, the banks judgment on repayment capacity vis-a-vis total loan burden devolving on the
farmer, including existing loan obligations.
5.1.5. The long term loan limit
is based on the proposed investments during the five year period and the banks perception on the
repaying capacity of the farmer
5.1.6. Maximum Permissible Limit:
The short term loan limit arrived for the 5th year plus the estimated long term loan requirement
will be the Maximum Permissible Limit (MPL) and treated as the
Kisan Credit Card Limit.
5.1.7. Fixation of Sub-limits for other than Marginal Farmers:
i. Short term loans and term loans are governed by different interest rates. Besides, at present,
short term crop loans are covered under InterestSubvention Scheme/ Prompt Repayment
Incentive scheme. Further, repayment schedule and norms are different for short term and term
loans. Hence, in order to have operational and accounting convenience, the card limit is to be
bifurcated into separate sub limits for short term cash credit limit cum savings account and term
loans.
ii. Drawing limit
for short term cash credit should be fixed based on the cropping pattern and the amounts for crop
production, repairs and maintenance of farm assets and consumption may be allowed to be
drawn as per the convenience of the farmer. In case the revision of scale of finance for any year
by the district level committee exceeds the notional hike of 10% contemplated while fixing the
five year limit, a revised drawable limit may be fixed and the farmer be advised about the same.
In case such revisions require the card limit itself to be enhanced (4th or 5th year), the same may
be done and the farmer be so advised. For term loans, installments may be allowed to be
withdrawn based on the nature of investment and repayment schedule drawn as per the economic
life of the proposed investments. It is to be ensured that at any point of time the total liability
should be within the drawing limit of the concerned year.
iii.Wherever the card limit/liability so arrived warrants additional security, the banks may take
suitable collateral as per their policy.
5.2. For Marginal Farmers:
A flexible limit of Rs.10,000 to Rs.50,000 be provided (as Flexi KCC) based on the land holding
and crops grown including post harvest warehouse storage related credit needs and other farm
expenses, consumption needs, etc., plus small term loan investments like purchase of farm
equipments, establishing mini dairy/backyard poultry as per assessment of Branch Manager
without relating it to the value of land. The composite KCC limit is to be fixed for a period of
five years on this basis.

The National Payments Corporation of India (NPCI) will design the card of the KCC to be
adopted by all the banks with their branding.
All new KCC must be issued as per the revised guidelines of the KCC Scheme .Further, at the
time of renewal of existing KCC; farmers must be issued smart card cum debit card.
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Illustration I
A. Small Farmer raising Multiple Crops in a year
1. Assumptions:
A. Land holding: 2 acres
B. Cropping Pattern: Paddy - 1 acre (Scale of finance plus crop insurance per acre: Rs.11000)
Sugarcane - 1 acre (Scale of finance plus crop insurance per acre: Rs.22,000)
C. Investment/Allied Activities:
(i)Establishment of 1+1 Dairy Unit in 1st Year (Unit Cost: Rs.20,000 per animal)
(ii)Replacement of Pump set in
3rd year (Unit Cost: Rs.30,000)
2.
(i) Crop loan Component
Cost of cultivation of 1 acre
of Paddy and 1acre of Sugarcane
(11,000+22,000)
:
Rs.33,000
Add: 10% towards post harvest/household expense/consumption
: Rs. 3,300
Add: 20% towards farm maintenance
: Rs. 6,600
Total Crop Loan limit for 1st year
: Rs. 42,900
Loan Limit for 2nd year
Add: 10% of the limit towards cost escalation/increase in scale of finance
(10% of 42900 i.e 4300)
: Rs. 4,300
:
Rs. 47,200
Loan Limit for 3rd year
Add: 10% of the limit towards cost escalation/increase in scale of finance
(10% of 47,200 i.e., 4,700)
: Rs. 4,700
: Rs. 51,900
Loan Limit for 4th year
Add: 10% of the limit towards cost escalation/increase in scale of finance
(10% of 51,900 i.e 5,200)
: Rs. 5,200
:
Rs.57,100
Loan Limit for 5th year
Add: 10% of the limit towards cost escalation/increase in scale of finance
(10% of 57100 i.e 5700)
: Rs. 5,700
:Rs. 62,800
Say:
Rs.63,000
....(A)
(ii)
Term loan component:
1st Year: Cost of 1+1 Dairy Unit
: Rs.40,000
3rd Year: Replacement of Pumpset :
Rs. 30,000
Total term loan amount
:
Rs.70,000
.......(B)
Maximum Permissible Limit /Kisan Credit Card Limit (A) +(B)
:Rs.1,33,000
Rs.1.33
lakh
Note:
Drawing Limit will be reduced every year based on repayment schedule of the term loan(s)
availed and withdrawals will be allowed up to the drawing limit.
B: Other Farmer raising Multiple Crops in a year
1.
Assumptions:
2. Land Holding: 10 acres
3. Cropping Pattern:
Paddy- 5 acres (Scale of finance plus crop insurance per acre Rs.11,000)
Followed by Groundnut - 5 acres (Scale of fi
nance plus crop insurance per acre Rs.10,000)
Sugarcane - 5 acres (Scale of finance plus crop insurance
per acre Rs.22,000)
4. Investment/Allied Activities :
(i)
Establishment 2+2 Dairy Unit in 1
st
Year ( Unit cost : Rs.1,00,000)
(ii)
Purchase of Tractor in 1
st
Year( Unit Cost : Rs.6,00,000)
Assessment of Card Limit
2.
(i)
Crop loan Component
Cost of cultivation of 5 acres
of Paddy, 5 Acres of Groundnut and
5 acres of Sugarcane
:
Rs.2,15,000
Add: 10% towards post harvest/household expense/consumption
: Rs. 21,500
Add: 20% towards farm maintenance
: Rs. 43,000
Total Crop Loan limit for 1
st
year
:Rs.2,79,500
Loan Limit for 2
nd
year
Add: 10% of the limit towards cost escalation/increase in scale of finance
(10% of 2,79,500 i.e., 27,950)
: Rs.27,950
:Rs.3,07,450
Loan Limit for 3
rd
year
Add: 10% of the limit towards cost escalation/increase in scale of finance
(10% of 3,07,450 i.e., 30,750)
: Rs.30,750
:
Rs.3,38,200
Loan Limit for 4
th
year
Add: 10% of the limit towards cost escalation/increase in scale of finance
(10% of 338200 i.e., 33,800)
: Rs.33,800
:Rs.3,72,000
Loan Limit for 5
th
year
Add: 10% of the limit towards cost escalation/increase in scale of finance
(10% of 3,72,000 i.e., 37,200)
:
Rs.37,200
:
Rs.4,09,200
Say Rs.4,09,000
... (A)
(ii)
Term loan component:
1
st
Year: Cost of 2+2 Dairy Unit
: Rs. 1,00000
: Purchase of Tractor
: Rs .6,00,000
Total term loan amount
: Rs.7,00,000...
....(B)
Note :
Drawing Limit will be reduced every year based on repayment schedule of the term loan(s)
availed and withdrawals will be allowed up to the drawing limit.
Illustration II
Assessment of KCC LIMIT
1: Marginal Farmer raising Single Crop in a year
1. Assumptions:
1. Land holding: 1 acre
2. Crops grown: Paddy (Scale of finance plus crop insurance per acre: Rs.11,000)
3. There is no change in Cropping Pattern for 5 years
4.
Allied Activities to be financed One Non Desc
riptMilch Animal ( Unit Cost Rs: 15,000)
2.
Assessment of Card Limit:
(i) Crop loan Component
(Cost of cultivation for 1 acre of Paddy)
:
Rs.11,000
Add: 10% towards post harvest/house
hold expense/consumption
: Rs. 1,100
Add: 20% towards farm maintenance
: Rs. 2,200
Total Crop Loan limit for 1st year
: Rs.14,300......A1
(ii) Term Loan Component
Cost of One Milch Animal
: Rs.15,000...... B
1st Year Composite KCC Limit : (A1) + (B)
: Rs.29,300
2nd Year :
Crop loan component:
A1 plus 10% of crop loan limit (A1) towards cost escalation/
increase in scale of finance [14,300+(10% of 14300= 1430)]
: Rs.15,730
......
A2
Maximum Permissible Limit /Kisan Credit Card Limit (A) +(B) :
Rs.11,09,000
2nd Year Composite KCC Limit : A2+B ( 15730+15000)
: Rs.30,730
3rd Year :
Crop loan component:
A2 plus 10% of crop loan limit (A2) towards cost escalation/
increase in scale of finance [15,730+(10% of 15730= 1570)]
: Rs.17,300
.....
A3
3rd Year Composite KCC Limit : A3
+B ( 17,300+15,000)
: Rs.32,300
4th Year :
Crop loan component:
A3 plus 10% of crop loan limit (A3) towards cost escalation/
increase in scale of finance [17,300+(10% of 17300= 1730)]
: Rs.19,030
.....
A4
4th Year Composite KCC Limit : A4
+B ( 19,030+15,000)
: Rs.34,030
5th Year :
Crop loan component:
A4 plus 10% of crop loan limit (A4) towards cost escalation/
increase in scale of finance [19,030+(10% of
19,030= 1,900)]
:
Rs.20,930
.....
A5
5th Year Composite KCC Limit : A5+B ( 20,930+15,000)
: Rs.35,930
Say Rs.36,000
Maximum Permissible Limit / Composite KCC Li
mit
: Rs.36000
NOTE: All the above costs estimated are illust
rative in nature. The recommended scale of
finance / unit costs may be taken into
account while finalising the credit limit.
Part II Delivery Channels - Technical features
1. Issue of cards
The beneficiaries under the scheme
will be issued with a Smart card/ Debit card (Biometric smart card
compatible for use in the ATMs/Hand held Swipe Machines and capable of storing adequate
information on farmers identity, assets, land holdings and credit profile etc).All KCC holders
should be
provided with any one or a combinati
on of the following types of cards:
2.
Type of Card:
A magnetic stripe card with PIN
(Personal Identification Number)
with an ISO IIN (International
Standards Organization International Identification Number) to enable access to all banks ATMs
and micro ATMs
In cases where the Banks woul
d want to utilize the centralized biometric authentication
infrastructure of the UIDAI (A
adhaar authentication), Debit cards with magnetic stripe and PIN
with ISO IIN with biometric authentic
ation of UIDAI can be provided.
Debit Cards with magnetic stripe and only biometric authentication can also be provided
depending on customer base of the bank. Till such
time, UIDAI becomes widespread, if the banks
want to get started without inter-operability
using their existing centralized bio metric
infrastructure, banks may do so.
Banks may choose to issue EMV (Europay, Mast
erCard and VISA, a global standard for inter-
operation of integrated circuit cards) compliant
chip cards with magnetic stripe and pin with ISO
IIN.
Further, the biometric authentic
ation and smart cards may follow the common open standards
prescribed by IDRBT and IBA. This will enable them to
transact seamlessly with input dealers as
also enable them to have the sales proceeds credited to their accounts when they sell their output
atmandies, procurement
centers, etc.
All the cooperative banks shall migrate to CBS pl
atform at the earliest so as to implement the
technological innovations in KCC as indicated ab
ove. Wherever CBS in the bank has not been in
place , a pass book or a credit card cum pass book
incorporating the name,
address, particulars of
land holding, borrowing limit, validity period etc. may be issued fir the time being which will
serve both
as an identity card as well as facilitate recordi
ng of the transact
ions on an ongoing basis. The card,
among others, would provide for a photograph of the holder.
3. Delivery Channels:
The following delivery channels shall be put in place to start with so that the Kisan Credit Card
is
used by the farmers to effectively transac
t their operations in their KCC account.
1. Withdrawal through ATMs / Micro ATM
2. Withdrawal through BCs using smart cards.
3. PoS machine through input dealers
4. Mobile Banking with IMPS capabilities/ IVR
5. Aadhaar enabled Cards.
4. Mobile Banking/Other Channels:
Provide Mobile banking functionality for KCC Cards/Accounts as well along with Interbank
Mobile
Payment Service (IMPS of NPCI) capability to allo
w customers to use this inter-operable IMPS for
funds transfer between banks and also to do me
rchant payment transactions as additional
capability for purchases
of agricultural inputs.
This mobile banking should ideally be on Unstru
ctured Supplementary Data (USSD) platform for
wider and safer acceptance. However, the banks c
an also offer this on other fully encrypted
modes (application based or SMS based) to make use of the recent relaxation on transaction
limits. Banks can also offer unencrypted mobile banking subject to RBI regulations on
transaction
limits.
It is necessary that Mobile based transaction pl
atforms enabling transactions in the KCC use easy
to use SMS based solution with authentication thru MPIN. Such solutions also need to be
enabled on IVR in local language to ensure transparency and security. Such mobile based
payment systems should be encour
aged by all the banks by creat
ing awareness and by doing
proper customer education.
A flow chart for such mobile based transacti
on system for KCC limits is enclosed for ready
reference.
With the existing infrastructure available with
banks, all KCC holders should be provided with any
one or a combination of the following types of cards:
9
Debit cards (magnetic stripe card with PIN)
enabling farmers to operate the limit through
all banks ATMs/Micro ATMs
9
Debit Cards with magnetic stripe and biometric authentication.
9
Smart cards for doing transactions through PoS machines held by Business
Correspondents, input dealers, traders and Mandies.
9
EMV compliant chip cards with magnetic stripe and pin with ISO IIN.
In addition, the banks having a call centre/Inter active Voice Response (IVR), may provide SMS
based mobile banking with a call back facility from bank for mobile PIN (MPIN) verification
through
IVR, thus making a secured SM
S based mobile banking facility available to card holders.