Study On Implementation of KCC Scheme - WB

Title
: Study on Implementation of Kisan Credit Card Scheme
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Occasional Paper – 64
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Study on Implementation of Kisan Credit Card Scheme
____________________________________________________________
—ãã¶ãñ¶³ ½ããä¥ã
Gyanendra Mani
_________________________________________________________
‚ãããä©ãÃ‡ãŠ ãäÌãÍÊãñÓã¥ã ‚ããõÀ ‚ã¶ãìÔãâ£ãã¶ã ãäÌã¼ããØã

Department of Economic Analysis and Research
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National Bank for Agriculture and Rural Development
½ãìâºãƒÃ
Mumbai
2016
—ãã¶ãñ¶³ ½ããä¥ã Gyanendra Mani
ãäªÔã½ºãÀ 2016 December 2016
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Published by National Bank for Agriculture and Rural Development, Department of Economic
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Printed by Alco Corporation, Mumbai
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Contents
Foreword................................................................................................................ i
Acknowledgement................................................................................................. iii
Abbreviations......................................................................................................... iv
Summary and Recommendations ........................................................................ 01
1. Introduction................................................................................................ 12
2. Progress in KCC Financing.......................................................................... 22
3. Implementation of Revised KCC Scheme..................................................... 32
4. Issuance of ATM/ RuPay Debit Cards.......................................................... 52
5. Kisan Credit Card Scheme: Macro Impact.................................................. 73
Annexures............................................................................................................ 76
FOREWORD
K isan Credit Card (KCC) is one of the many innovative banking products designed
by NABARD with an objective to enable farmers to meet their credit requirements,
preferably production credit, from financial institutions in a timely and hassle-free
manner. The KCC scheme which was introduced in 1998, has gone through several
changes since then and now incorporates many new features over & above the financing
of crop production requirement, viz., consumption expenditure, maintenance of farm
assets, term loan for agriculture & allied activities, coverage of KCC holders under
Personal Accident Insurance Scheme (PAIS) and very recently the coverage of KCC
holders under Atal Pension Yojna, etc. Today KCC is considered to be one of the most
convenient banking products for the farmers.
The present study aimed at finding out as to whether the present features of Kisan
Credit Card Scheme are serving its intended purpose or not. The report has come out
with many interesting findings and concludes that the implementation of KCC scheme
has benefitted the farmers to a great extent and the farmers are able to generate profit,
albeit in varying quantities. The study has also highlighted some concerns relating to
the implementation of the scheme in light of the revised guidelines but these do not
seem to be affecting the prospects of farmers getting the KCC loans from the bank and
making the best use of it for crop cultivation. The study has also indicated that Interest
Subvention as well as incentives for prompt repayment have positive impacts on the
agricultural income of farmers covered under KCC scheme.
The slow progress on use of RuPay Cards by farmers on account of their not being
comfortable with use of ATM cards and also their apprehension/ fear of frauds and
trust issues i.e., likely misuse by their family members suggests need for enhanced
efforts on financial counselling, particularly of illiterate farmers. I hope, the banks will
now actively promote use of RuPay cards by farmers in the wake of government thrust
on digital payment.
I hope the findings of the study as well as the recommendations suggested by the
author would by very useful for the policy makers and bankers. NABARD, on its part
has already reviewed the report and is now working on various models so as to find
out if any further improvement can be made in the existing guidelines to make it more
farmer friendly.
H R Dave
Deputy Managing Director
i
ii
ACKNOWLEDGEMENT
Supporting the efforts of Government of India in helping farmers to pursue a decent
& sustainable livelihood as well as the institutions engaged in facilitating such efforts
has been one of the major objectives NABARD is mandated to address to. Review of
various policy guidelines framed and issued by it and making suitable amendments
from time to time is an ongoing process at NABARD so that the policies/guidelines
remain relevant and useful to the users.
The author is extremely grateful to Dr Harsh Kumar Bhanwala, Chairman and Shri H
R Dave & Shri R Amalorpavanathan, Deputy Managing Directors, NABARD for their
support, guidance and encouragement during the course of the study. The author is
also thankful to Shri M V Ashok, Chief General Manager, Deptt of Economic Analysis
& Research (DEAR) Shri Subrata Gupta, CGM, DFIBT and Shri B V S Prasad, General
Manager, DEAR, NABARD for their support & guidance during conduct of the study.
The author is also thankful to the CGMs & other officers of Assam, Bihar, Karnataka,
Maharashtra, Punjab and Uttar Pradesh Regional Offices of NABARD for facilitating
the study team for smooth conduct of the field visits in their respective states.
The author sincerely thanks & appreciates the hard work done by all the officers
involved in collection & compilation of field data in the sample states viz., Assam (Shri
Greville N Kharlukhi, Manager, DEAR, HO & Ms. Anannya Das, Manager, Assam RO),
Bihar (Shri Gautam K Singh, AGM, DFIBT, HO along with the undersigned), Karnataka
(Shri M Gopalkrishna Bhat & Shri J M Dhananjaya, Independent Consultants and Shri
Srinivasan Ramesh, AGM-DD, Dakshina Kannada & Shri S K Bharadwajam Manager-
DD, Bellary), Maharashtra (Shri S D Nalawade, AGM, Maharashtra RO; Shri Pankaj
Kumar Tripathi, Manager, & Smt Samidha S Shinde, Asstt Manager, DFIBT, HO);
Punjab (Shri Om Pal, Manager, Haryana RO & Shri Rasheed Lekhi, Asstt Manager,
Punjab RO) and Uttar Pradesh (Smt Suparna Tandon, DGM, RMD, HO & Ms. J R Blah,
AGM, DFIBT, HO). The author extends thanks to the District Development Managers
of NABARD of all the 12 sample districts for providing input and helping the study
team during the field visits.
The author would like to make special mention and thank the help and support
received from Shri Pushpinder Singh (Head-Financial Inclusion & New Business), Shri
V Ratnakar (Associate Vice President – Cooperative Banks) and Shri Rajeev Aggarwal
(Manager – Financial Inclusion and New Business) of National Payment Corporation of
India, Mumbai who provided good amount of data/information pertaining to issuance
of RuPay Cards.
The author also take this opportunity to thank all the officers and staff of controlling
offices, branches of commercial banks, RRBs, Cooperative Banks & PACS covered in
the study for providing necessary data/ information & help in collection of field data
from the identified farmers. The author is truly indebted to all the sample farmers who
spent their precious time and provided useful information to the study team which
helped the undersigned to come out with this meaningful report.
Gyanendra Mani
Author
iii
ABBREVIATIONS
Atal Pension Yojna............................................................................................... (APY)
Application Service Provider............................................................................... (ASP)
Bank Identification Numbers.............................................................................. (BINs)
Business Correspondent....................................................................................... (BC)
Core Banking Solution........................................................................................ (CBS)
Department of Financial Inclusion and Banking Technology........................... (DFIBT)
District Central Cooperative Bank.................................................................... (DCCB)
Farmers Training Centres................................................................................. (FTCs)
Financial Inclusion Gateway..............................................................(FIG/ FI Gateway)
Financial Inclusion Technology Fund................................................................. (FITF)
Gesellschaft für Internationale Zusammenarbeit............................................... (GIZ)
Hardware Security Module................................................................................. (HSM)
Indian Banks’ Association.................................................................................... (IBA)
Institute for Development & Research in Banking Technology......................... (IDRBT)
Issuer Identification Number............................................................................... (IINs)
Interbank Mobile Payment Service.................................................................... (IMPS)
Kisan Credit Card (KCC).................................................................................. scheme
Land Possession Certificate................................................................................. (LPC)
Mahatma Gandhi National Rural Employment Guarantee Act..................... (MNREGA)
National Financial Switch.................................................................................... (NFS)
National Payments Corporation of India.............................................................(NPCI)
Personal Accident Insurance Scheme................................................................. (PAIS)
Point of Sale........................................................................................................ (POS)
Pradhan Mantri Fasal Bima Yojana................................................................ (PMFBY)
Real Time Gross Settlement............................................................................. (RTGS)
Regional Rural Bank...........................................................................................(RRB)
State Cooperative Banks................................................................................. (St CBs)
Unique Identification Authority of India............................................................ (UIDAI)
Weather Based Crop Insurance Scheme..........................................................(WBCIS)

iv
Summary & Recommendations
Revised Kisan Credit Card Scheme
1. Government of India introduced the Kisan Credit Card scheme (KCC) scheme in
1998 as an innovative credit delivery mechanism to enable the farmers to meet
their production credit requirements in a timely and hassle-free manner. The
KCC guidelines have gone through several changes since then. The guidelines
revised in 2012 has incorporated many new features over & above the financing
of crop production requirement, viz., consumption expenditure, maintenance of
farm assets, term loan for agriculture & allied activities, coverage of KCC holders
under PAIS and recently the coverage of KCC holders under Atal Pension Yojna,
etc.
2. Govt of India suggested NABARD to conduct a study on the implementation of the

revised KCC with a view to understand
(i) Is the revised Kisan Credit Card Scheme serving its intended purpose?
(ii) Reasons for gap between number of agricultural households and number of
operative KCCs
(iii) Government had advised banks to convert all existing KCCs into ATM/
RuPay cards. Whether action plan in this regard has been chalked out at
branch level? Also, whether all new KCCs are issued in the form of RuPay/
ATM debit cards?
(iv) Efficacy of debit cards issued under KCC Scheme with regards to their
inter-operability and issues related thereto? Whether farmers are using
these cards for payment to different vendors? Back-end issues with NPCI/
other platforms?
(v) Overall impact of revised KCC scheme?
3. Keeping in view the requirement of the study, two districts from each of the
six states falling in different geographical regions of the country namely, Assam
(NE Region), Bihar (East Region), U. P. (Central Region), Punjab (North Region),
Maharashtra (Western Region) and Karnataka (southern Region) were selected
for the study. A total of 71 branches of 32 banks covering all the three agencies
i.e., Commercial Bank, RRB and DCCB were selected for the study. Finally, a
total of 980 farmers covering 714 KCC holders and 255 other non-KCC farmers
were selected for the study.
Kisan Credit Cards issued
4. The cumulative number of KCC cards issued since inception (1988-89) till
March 2015 had reached to 14.64 crore. However, this number of KCC accounts
(14.64 crore) cannot be considered as coverage of number of farmers under KCC
scheme, as many farmers have got reissued/ renewed their KCC several times.
1
The number of operative/ live KCC as on 31 March 2015 stood at 7.41 crore. This
achievement is against the total operational land holdings estimated at 13.83
crore by Agricultural Census (2010-11) or number of agricultural households
estimated at 9.02 by National Sample Survey Organization (70th Round). The
overall progress in issuance of KCC is summarized below:
Agency-wise Kisan Credit Card Issued since inception

% share in total no of cards
Cumulative Cards issued (lakhs)
issued by agency
Year
Comm Comm
Coop RRBs Total Coop RRBs Total
Banks Banks
Cumulative KCCs
507.99 238.47 717.52 1463.98 34.70 16.29 49.01 100.0
issued
Operative/live
KCCs (as % 392.27 123.43 225.25 740.94
52.94 16.66 30.40 100.0
of total KCC (77.2%) (51.8%) (26.9%) (50.6%)
issued)
Cumulative
Smart Cards (as 0.24 13.79 76.15 90.18
0.26 15.29 84.45 100.0
% of Operative (0.06%) (11.2%) (33.8%) (12.2%)
KCC)
5. The analysis of state-wise total number of operative/ live KCCs issued by all the
agencies indicates that 6 big states viz., Uttar Pradesh (15.15%), Andhra Pradesh
(11.02%), Maharashtra (10.07%), Madhya Pradesh (9.66%) and Rajasthan
(8.33%) together account for about 55% of total number of operative/ live KCCs.
Gap between number of agricultural households and number of operative KCCs
6. Branch Managers & Non-KCC farmers (255) were interviewed to ascertain the
reasons for the gap between the number of agricultural holdings and the number
of operative KCCs. Despite good efforts by banks, about 43.5% non-KCC farmers
were not willing to avail crop loan through KCC as they were either fully engaged
in other occupation, absentee landlords, etc. In other cases, banks were not
willing to extend KCC loan, primarily on account of farmer not having land title
(23%), Very small & non-viable land holding (25.5%) and rejection on some other
grounds (8%) like incomplete applications, past experience with the farmers, etc.
Profile of Sample Farmers
7. A total of 714 farmers covering 12 districts of 6 states were covered in the present
study. The farmers belonging to SC/ST community accounted for 8 percent
of the total KCC farmers selected for the study. Farmers having educational
qualification of graduation and above accounted for 13.4 percent of the total
sample. The average family size of the sample farmers was found to be 5.66 and
the average of number of family members engaged in farming came to about 1.56
members. As many as 58 families out of total 714 (8 percent) reported to be
2
going for MNREGA work. Also, as many as 52 KCC farmers reported that at least
one of their family members was a member of a SHG or JLG or Farmers Club.
8. The average size of land holding of total sample was estimated at 5.21 acres of
which about 64 percent area was irrigated. About 4.5 percent of sample farmers
had leased out some portion of their land holdings on account of their engagement
in other occupation/ service/ business or absenteeism from the location. As
many as 80 farmers (11.2% of the sample) were reported to have leased-in some
additional land either to make optimum use of resources available with them or
to meet out their consumption needs. Quite a good number of sample farmers
(25%) owned tractors. Pump set is another important farm asset which was
owned by about 51 per cent of the farmers.
9. The average income per farmer per annum across the total sample was estimated
to Rs. 213687 and was varying between Rs. 68180 (Darrang, Assam) to Rs.
585671 (Kapurthala, Punjab). Cultivation (66.7% of total income) was reported
as the major source of income of the farmers selected for the study. Income from
livestock farming accounted for 9.9 per cent of total income of the farmer. Other
sources (other than farming, livestock, wage employment, service & Business)
accounted for about 11.3 per cent of total income of the farmers. Other sources
include self-employment activities viz., remittances from foreign, Aadatia,
tailoring, etc.
Awareness of Branch Managers about the Revised KCC Scheme
10. A total of 71 bank branches covering 24 branches of 10 commercial banks, 25

branches of 11 RRBs and 22 branches of 11 DCCBs/ Apex Coop banks were
covered in the present study. As far as awareness about revised guidelines on
KCC (March/ May 2012) is concerned, it was observed that all the 71 Branch
Managers were aware about 5 year validity of Kisan Credit cards and adding up
of 10% and 20% over and above the crop loan requirement while fixing the KCC
limit. Though most of the managers were clear that 10% is towards consumption
purpose, but, majority of them were not clear about the exact use of 20% of limit
which is to be extended towards repair and maintenance of farm assets, crop
insurance, PAIS and asset insurance. Some of them were of the view that unless
receipt is produced, ‘asset maintenance’ component cannot be given.
Fixation of Scale of Finance:
11. The general approach of fixation of crop-wise Scale of Finance (SOF) in five states
(Assam, Bihar, UP, Maharashtra, Karnataka) was almost the same and was
limited to accounting for the expenditure incurred on cultivation of field crops.
However, a single SOF was being prescribed for each crop for the entire state
in Punjab (not district-wise). Further, the SOF in Punjab also includes (unlike
in other 5 states) additional 10 per cent of it towards post-harvest/ household/
consumption requirement and additional 20 per cent towards repair and
maintenance of farm assets and insurance.
3
12. In majority of the districts, SOF is prescribed as a fixed amount for various
crops. In some districts (e.g. Gaya & Begusarai in Bihar, Moradabad in UP), SOF
is prescribed as a range of values instead of a fixed amount.
Application for KCC loan & Appraisal by Branch Managers
13. All the 32 banks covered in the study had their unique application cum appraisal
forms but only some of those had re-designed it keeping in view the revised KCC
guidelines (Mar/ May 2012) incorporating provisions for year-wise/ component-
wise sub-limits of the KCC limits. There were few banks (e.g. Bihar Gramin
Bank) which had also printed the ‘scale of finance’ in its KCC application form.
Fixation of Kisan Credit Card Limit

Use of Cropping Pattern & Scale of Finance
14 As observed from the application cum appraisal form of the sample farmers, in
434 cases (61% of the sample), KCC limits were fixed taking into account both
Kharif as well as Rabi crops. In rest of the cases, either only kharif crop (35% of
the sample) or only Rabi crop (4% of sample) were considered for fixing of KCC
limit. It was observed that almost similar type of cropping pattern was shown
for majority of the farmers in a particular bank branch which speaks about the
non-seriousness in filling up the appraisal form.
15. ‘Scale of Finance’ (SOF) is another important parameter for the fixation of KCC
limit. The SOF was found to have been applied in the majority of the cases of
sample farmers, however, the place for the same was found blank in the appraisal
form in a few cases irrespective of the type of the agency (commercial banks,
RRBs or cooperative banks). In fact hardly any appraisal form of any bank was
found complete in all respect.
16. Most of the branch managers opined that due to very high work load in the
branch, they hardly got any time to pay a visit to farmer’s field to verify the
cropping pattern being followed by them. Further, change in cropping pattern
was neither reported by the farmer nor ascertained by the bank in most of the
cases while considering the enhancement in the KCC limit next year onwards.
Annual Enhancement in KCC Limit
17. Of total sample of 714 farmers the KCC limit was found to have been enhanced
every year only in 79 cases (11% of sample). The irregular repayment performance
of the borrower was the major reason for not enhancing the KCC limit of the
said borrowers. Non-willingness of both the bankers as well as the famers to go
beyond the KCC limit of Rs. 1.0 lakh to avoid ‘mortgage of land’ in some cases
and not going beyond Rs. 3.0 lakh in some other cases due to non-availability
of interest subvention (available for loan up to Rs. 3.0 lakh) were other very
important reasons for non-enhancement of KCC limits.
18. The practice of adding 10% & 20% towards consumption & farm maintenance
was being followed by commercial banks and RRBs but it was an academic
4
exercise only in quite a good number of cases as actual KCC limit fixed used to
differ (normally less) from the value arrived at after taking into account the above
components.
Season-wise sub limit
19. Season-wise crop loan limit was found to be practiced by cooperative banks in
all the states selected for the study. This is normally done because of resource
crunch at the DCCB level as well as to ensure better recovery by the farmers.
Personal Accident Insurance Scheme (PAIS)
20. It was reported by the bank branches visited in Assam, Bihar, UP and Punjab
states that they had covered almost all the loanee borrowers under PAIS, but in
Maharashtra, extent of coverage under PAIS was varying from bank to bank.
Crop Insurance Scheme
21. The crop insurance scheme is being implemented in all the states covered in the
present study except Punjab. It was observed that many illiterate farmers did not
have much knowledge about the PAIS and crop insurance scheme. In fact, most
of the time bankers debit the premium amount towards PAIS and crop insurance
without the knowledge of the farmers.
Quantum of KCC loan
22. A huge difference was observed in the quantum of KCC limit sanctioned to farmers
across the sample states. The average amount of loan sanctioned per borrower
was varying from Rs 38,618 in case of Assam to Rs. 483,406 in case of Punjab.
The minimum amount of KCC loan was varying from Rs. 5,000 in Bihar to Rs.
25,000 in Karnataka and the maximum amount sanctioned was ranging between
Rs. 82,600 in Assam to Rs. 25.0 lakh in Punjab in case of sample borrowers.
Collateral Security
23. As reported by the sample farmers, no collateral security was being forced by
the banks for KCC limit up to Rs. 1.0 lakh. However, the banks were insisting
on land mortgage for KCC limits above Rs. 1.0 lakh in all the states. Banks were
mortgaging entire land which were recorded in the Land Possession Certificate
(LPC) or offered by the farmer for KCC loan and value of these lands were found
to be very high as compared to the quantum of loan.
Rate of Interest
24. The rate of interest on KCC loans charged by banks was 7% up to Rs. 3.0 lakh
but it was varying to some extent from bank to bank in case of crop loans above
Rs. 3.0 lakh. Not much difference was observed in the interest rate between KCC
loan above Rs. 3.0 lakh and other term loans for agriculture & allied activities.
5
Charges levied by Banks on KCC accounts
25. NABARD vide circular dated 13 Sept 2012 had suggested that the processing
fee may be decided by the respective bank. The most common type of charges
levied by the banks were annual charges, inspection charges, processing charges,
ledger folio charges, cash handling charges, ATM issue charges, Miscellaneous
charges, SMS charges, etc. These charges were found to be varying from bank to
bank, even branch to branch of the same bank. However, these charges are not
very high and account for less than one percent of total loan disbursed during the
year.
Number of Kisan Credit Cards with a Farmer
26. Some of the farmers had taken KCC from more than one bank, normally one
from cooperative bank and the other from either a commercial bank or a regional
rural bank. Such farmers, despite average loan sanctioned by cooperative banks
being quite less, still preferred to have KCC from cooperative bank just to get
good quality fertilizer and seed, etc.
Impact of KCC on Farm Income
27. The average farm income per farmer as well as per acre of KCC holders was
compared with that of Non-KCC farmers in order to arrive at the gain from KCC
financing. The farm income per household and per acre in case of KCC farmers
was estimated at Rs. 1,49,060 per farmer which translated into Rs. 26,809 per
acre (avg land holding 5.21 acre) on the KCC sample farms. The farm income
per household and per acre in case of non-KCC farmers was estimated at Rs.
69,850 per farmer which translated into Rs. 21,346 per acre on the KCC sample
farms (avg land holding 3.04 acre). The average gain per acre on account of
KCC loan comes to Rs. 5,463 with minimum gain of Rs. 858 in Akola district
of Maharashtra and maximum of Rs. 13,657 in Moradabad district of Uttar
Pradesh.
28. While the income net of interest burden was as high as Rs. 13188 per acre in
Moradabad district, the farmers of Akola (net income was (-) Rs. 366/ acre) and
Bellary (net income was (-) Rs. 359/ acre) were not able to liquidate interest
burden of KCC. However, with the support of 2% interest subvention to banks
and 3% incentive on prompt repayment, all the farmers including those of Akola
and Bellary were able to generate some gain over non-KCC farmers. The average
gain in net income of KCC farmers over non-KCC farmers was estimated at Rs.
2974/ acre when 2% interest subvention was taken into account and a gain of Rs.
3548/ acre when calculation was made assuming all farmers would be repaying
their dues within the stipulated time period.
29. The overall impression is that the implementation of KCC scheme has certainly
benefitted to agriculturists albeit in varying magnitude to different farmers
depending upon the availability and quality of land resources and their
capacity to manage various resources. There may be some issues relating to
6
the implementation of the scheme in line with the revised guidelines but the
deviations do not seem to be affecting the farmers getting loans from the bank
and making use of it for crop cultivation.
Issuance of RuPay/ Debit Cards by Banks to KCC Borrowers
30. To achieve the objectives of financial inclusion, NPCI has facilitated a sub
membership model for smaller cooperatives (State Cooperative, District
Cooperative, Regional Rural Banks) where they can use National Financial
Switch (NFS) infrastructure under sub membership with a direct member bank
with NPCI. As on March 2016, NPCI had 96 banks as Direct Members by paying
fess of Rs. 3.0 lakh (with 204904 ATMs on NFS), 461 banks as a sub member
bank (with a certification charge of Rs. 75000) and 56 RRBS and 7 banks with
white label ATMs.
Progress made so far in Issuance of RuPay Cards: Macro Picture
31. As per the data provided by the NPCI (March 2016), 146 BINS have gone live out
of total 172 Issuer Identification Number-IINs/ Bank Identification Number-BINs
issued to 154 banks. The transactions were yet to be started in case of 08 BINs.
The bank-wise progress indicated that 56 out of 59 BINS to 56 RRBs, 46 out of
56 BINs to 56 DCCBs, 21 out of 23 BINs to 21 Public Sector Banks, 6 out of 10
BINs to 10 Private Sector Banks, 5 out of 10 BINs to 5 Associate banks of SBI
and 4 out of 6 BINs to 6 State cooperative banks had gone live as on 15 July
2016. The progress of cooperatives banks is quite slow as only 56 banks out of
371 DCCBs & 6 out of 33 St CBs have been issued BINs because of their inherent
weaknesses relating to ICT.
32. The bank-wise analysis of KCC transactions for the period Sept 15 - Feb 2016
indicated that 23 Public Sector Banks together account for 55.4% of total RuPay
KCC transactions followed by RRBs (53 functional) which together accounted for
another about 39 per cent. Ten functional DCCB out of total 56 DCCBs which
have been issued IIN/ BIN together account for just 2.2 per cent of the total RuPay
KCC transactions.
33. An analysis of scale of uses & market share (as on 15 July 2016) of three card
payment systems indicated that National Financial Switch (NFS)/ ATMs dominated
the KCC transactions accounting for as high as 99.10 per cent followed by Point
of Sale (POS) devices at 0.85 percent and the RuPay PaySecure (E-Commerce
operations), which was launched on 21 June 2013, has a very negligible share of
0.05 per cent.
Issue Relating to Interoperability
34. The RuPay Kisan Cards are acceptable at all the 220912 ATMs of all the banks
across the country. Any ATM proposed to be installed by banks and connected
to the National Financial Switch operated by National Payments Corporation of
India accepts the RuPay Kisan Cards issued by any Bank. The KCC will function
smoothly as long as the issuing bank is certified by NPCI to use the card.
7
35. As far as interoperability of RuPay Cards/Kisan cards on Micro-ATMs are
concerned, it has gone live for 8 banks and the work is in progress in case of
other 11 banks. Except these 19 banks, all other banks are yet to approach to
NPCI for making their RuPay cards interoperable on Micro-ATMs/POS.
Extent of Coverage under RuPay Cards
36. At the All India level, the progress of issuance of RuPay Cards is quite slow as
only 12.2 per cent of live KCC accounts have been issued the RuPay cards. The
agency-wise analysis of coverage of operative KCC accounts by smarts cards is
highest in case of Commercial banks (33.8%) followed by RRBS (11.2%). This
percentage is very negligible in case of cooperative banks at 0.06 per cent of the
total Kisan cards operative with cooperative banks.
37. As reported by sample bank branches, on an average, the number of RuPay Card
received at branch from their controlling offices as per cent of number of KCC
A/c outstanding stood at 32 per cent which was ranging from 10% (UP) to 69%
(Maharashtra).
38. As far as issuance of RuPay cards to sample farmers is concerned, it was observed
that only 193 out of 714 sample farmers (27%) had got/ taken RuPay cards and
the rest 521 farmers were either not issued or had not taken the RuPay cards
from the bank.
39. Only one third of the farmers who were issued RuPay cards were using the RuPay
cards on ATMs. Further, about 57 per cent of farmers using RuPay Card used to
take the help of their family members, mostly the son or daughter, to operate on
ATM machine.
40. The reasons for gap between the number of KCC accounts with the bank branches
vis-à-vis number of KCCs issued to farmers and number of RuPay cards handed
over, as opined by the branch managers, were mainly (i) controlling offices not
making available the RuPay Cards in sufficient numbers or delay in supplying
the cards to branches (ii) bankers were averse of issuing RuPay cards to NPA and
other irregular accounts (iii) bankers were of the view that both the bankers as
well as farmers don’t see much utility of RuPay Kisan Debit Card as a banking
product because once the KCC loan is approved by the bank and credited to the
farmers account, the farmers prefer to withdraw the entire amount from the bank
in just one or two withdrawals (iv) given the choice, the bankers willingly don’t
extend KCC loans to unviable holding, but the pressure from the government
makes them cover the agricultural farmers under KCC loan (v) the illiterate
farmers don’t feel comfortable in doing transactions at ATM machines and they
were also afraid of misuse of their cards even by their family members (vi) as of
now, neither ATMs nor POS machine are available in sufficient number and also,
vendors are finding it difficult to supply the cards in time and they normally take
6 to 8 months to supply the chip based cards. (vii) absentee landlords/ farmers
not residing in the villages were not very keen in getting RuPay Card issued (viii)
the bank/ branches not having ATMs of their own bank were of the view that
8
extending RuPay cards to every farmers would add an extra expenditure to them
if the farmers go beyond the minimum number of free transactions (five) allowed
on ATMs of other banks.
Macro Estimates of benefits from KCC financing
41. The total crop loan issued through KCC during the 2014-15 was Rs. 6,35,412
crore which translated into a crop loan of Rs. 85,757 per live KCC account. The
average crop loan disbursed per account came to Rs. 31,923. The agricultural
cropped area covered by KCC (arrived at by multiplying 7.41 crore operative KCC
accounts with the average size of holding 1.15 ha) has been estimated at 85.208
mill ha (241.99 mill acre). The net farm income net of interest (9% per annum
on Rs. 6,35,412 crore) has been estimated at Rs. 62,670 crore which clearly
indicates that availability of credit from institutional sources through KCC mode
has made significant contribution to the farm income of the farmers.
42. Gross increase in net farm income per annum (net of interest burden) of all the
KCC holders in the country due to interest Subvention (i.e. KCC loan at 7% per
annum) to eligible farmers had been estimated at Rs 71,968 crore. And if all the
farmers repay their loan in time, the gross increase in net farm income (net of
interest burden) will go up to Rs 85,858 crore.
Recommendations
1. Present CBS system of most of the banks don’t have provision to bifurcate the
Kisan card limit into separate sub limits of crop loan component, consumption
credit and asset maintenance component. Although, making suitable amendments
in CBS system of banks to facilitate fixation of sub-limits under KCC is a good
option, it is felt that creating multiple accounts for small amounts will not only
increase the number of accounts to unmanageable level but it will also put
pressure on human resources and CBS. It is recommended that the Government
should consider the entire amount of KCC limit (including consumption & assent
maintenance) for interest subvention and incentive for prompt repayment within
the prescribed limits.
2. Most of the banks have not revised their ‘application cum appraisal form’ of KCC
loan in line with the provisions under revised KCC guidelines, 2012. The banks
may consider revising their KCC ‘application cum appraisal form’ to suit with the
requirements of the revised KCC Scheme.
3. The fixation of KCC limit should be viewed seriously by the bankers and it should
be arrived at by taking into account the cropping pattern and the scale of finance
for the latest year. The role of ‘Scale of Finance’ is sometimes undermined,
particularly in case of cooperative banks when the KCC limits arrived at by using
the scale of finance & cropping pattern are capped by certain amounts.
4. Since the accurate information on coverage of actual number of farmers, as well

as, area covered under KCC is very difficult to estimate, it is suggested that the
9
bankers should also capture information on total land with the farmer, irrigated
land, land offered for KCC loan, land offered for land mortgage, etc., in their
CBS.
5. Digitization of land records must be completed at the earliest possible time.
6. The farmers’ reluctance to avail higher amount of KCC limits (above Rs. 1.0 lakh)
is also on account of bank’s insistence of land mortgage of entire land offered for
KCC loan. Banks should mortgage only required quantity of land, sufficient to
cover the bank loan.
7. Farmers were found less enthusiastic about the crop insurance scheme due to
delay in settlement/ no compensation of claims by the insurance companies.
Further, since crop insurance is available only for notified crops, bankers also
prefer to show only notified crops in the appraisal form while calculating the
KCC limit. But farmers do not get claim when they grow different crops and
loss is occurred during that year. It is suggested that bankers may be little extra
careful while considering the crops being suggested by the farmers for fixation of
the KCC limit, particularly in areas which are prone to natural calamities.
8. The present campaign of covering 3 crore farmers under RuPay cards by 31

March 2017 has been taken in a positive spirit by all the banks. All the commercial
banks and RRBs are already issuing RuPay cards to farmers. Due to proactive
support by NABARD and NPCI, the number of cooperative banks issuing RuPay is
also expected to go up to 150 by March 2017. However, creating card acceptance
infrastructure in rural areas in the required quantity is still a challenge which
needs to be addressed to at the earliest possible time in order to increase the
transactions through RuPay cards.
9. As of now, the National Financial Switch (NFS)/ ATMs dominates the KCC
transactions accounting for as high as 98.14 per cent with a negligible share of
Point of Sale (POS) devices and RuPay Pay Secure (E-Commerce operations).
Interoperability of Micro-ATMs and POS devices are major hurdles in up scaling
the use of the devices. This is one area where both the bankers as well as NPCI
have to work in close coordination with each other as only 8 banks have gone live
till date.
10. The availability of RuPay card at the branch level has been found to be one of
the major reasons for slow progress in issuance of RuPay cards by the branch
manager. The controlling offices of various banks need to expedite their efforts
in supplying the cards in sufficient quantity at the branches in a planned manner
keeping in view of government’s thrust on cashless transactions.
11. Some hesitation on the part of the farmers to avail RuPay cards on account of
their fear of misuse of their RuPay cards could be addressed by adopting one of
the following strategies:
10
(i) Banks need to adopt financial counselling of their KCC clients to build up
their confidence to use the newer technologies like use of RuPay cards, etc.,
and also as how to avoid misuse/ frauds of RuPay cards.
(ii) Deploying more number of BCs and providing them with POS devices/
Micro-ATMs so that they can interact with the clients of the banks on a
regular basis.
(iii) Expediting installation of more number of ATMs in the rural areas so that
farmers are encouraged to use the ATMs on their own.
12. Both the interest subvention scheme and rebate for prompt repayment have
helped the farmers to increase their net farm income from farming operations.
These measures have not only been found to be beneficial for the farmers in
general but have been found to be necessary in areas of ecological distress
like drought prone and other natural calamities affected areas. Therefore, the
financing under KCC should be upscaled and interest subvention as well as
the rebate for prompt repayment may continue with a view to keep the interest
burden on farmers low and their total paid-outs remain manageable, particularly
during poor crop season.
13. The implementation of KCC scheme has benefitted the farmers to a great extent
and the farmers are able to generate profit, although in varying amounts. However,
to reap the maximum benefits from KCC financing, the following strategies may
be adopted:
(i) The banks may consider establishing ‘Farmers Training Centres’ in line
with ‘Punjab National Bank Farmers Training Centres (PNB FTCs) which is
running 10 FTCs across the country. Such centres will not only help banks
to guide the farmers about the advanced agricultural practices but will also
provide a platform to banks to achieve the objective of financial inclusion in
a more effective way.
(ii) There exist yield gaps at three levels (a) between genetic potential of the
crop variety and that obtained at research farms (b) between research
farm and on the farm of progressive farmers and (iii) between progressive
farmers’ field and average farmer’s field. Agricultural universities/ KVKs
have to intensify their efforts to reduce the gap in yield between progressive
farmers’ field and average farmer’s field so that the increase in farm income
of average farmers can be easily achieved by facilitation of KCC financing.
(iii) Banks may consider promoting and extending financial support to Joint
Liability Groups of tenants and share-croppers so that their farm credit
needs are met adequately.
11
CHAPTER 1
Introduction
Kisan Credit Card Scheme: Introduction
1.1 Shri Yashwant Sinha, the then Union Minister of Finance, in his 1998-99 Budget
Speech on 01 June 1998 introduced the ‘Kisan Credit Card’ (KCC) Scheme as
“NABARD is being asked to formulate a model scheme for issue of Kisan Credit
Cards to farmers on the basis of their holdings for uniform adoption by the
banks so that the farmers may use them to readily purchase agricultural inputs
such as seeds, fertilizers, pesticides etc. and draw cash for their production
needs.” Accordingly, on the recommendations of R V Gupta Committee, NABARD
formulated a Model Kisan Credit Card Scheme in consultation with major banks
in the country. The ‘Model Scheme’ was circulated by RBI to commercial banks
vide reference No.RPCD.PLFS.BC.NO 20/05.05.09/98-99 dated August 5, 1998
and by NABARD to Cooperative Banks and Regional Rural Banks vide reference
No. NB.PCD (OPR)/794/A-137(Spl.)/98-99 dated 14 August 1998 (Circular No.
15/98-99), with instructions to introduce the same in their respective area of
operation. The KCC guidelines have gone through several changes since then.
The important developments in KCC implementation are given below.
Table 1.1: Important developments in KCC Scheme implementation
Circular Date Particulars
14 Aug 1998 Introduction of KCC Scheme and circulation of Model KCC scheme to banks
14 Jun 2001 Personal Accident Insurance Scheme (PAIS) for KCC holders introduced
(i) Scheme to cover term loan for agriculture & allied activities under KCC
09 Aug 2004 introduced
(ii) Validity of Kisan Credit Card increased from 3 years to 5 years
01 Jun 2006 In response to Union Finance Minister’s budget announcement (2006-07),

interest on short term credit to farmer was fixed at 7% up to KCC upper limit
of Rs. 3.0 lakh on principal amount.
31 Oct 2006 KCC scheme for the borrowers of Long Term Cooperative Credit Structure
i.e., State Coop Agri & Rural Dev Banks introduced
29 Mar 2012 Kisan Credit Card – a comprehensively revised KCC scheme incorporating
many new components (composite loan, 10% & 20% provisions for con-
sumption & asset maintenance, year-wise drawing power for five years, etc.)
was launched
09 Nov 2012 Scheme for issue of KCC in the form of interoperable RuPay Cards
15 Nov 2012 In a meeting of Union Finance Minister with Banker, it was decided to con-
vert all old KCCs into ATM-cum-Debit/RuPay Cards
01 Aug 2014 Support for ICT solutions through POS/ micro-ATMs and RuPay Kisan Cards
under KCC scheme
08 Jul 2015 Coverage of KCC holders under Atal Pension Yojna (APY)
12
Table 1.2: Important features of 3 major KCC Guidelines
Circulars on KCC implementation
Particulars Cir. No. NB.214/ Circular No 71/PCD 04/2011-12 dtd

Cir. No. 15/98-99
PCD.30/2004 dtd 29.03.2012 & No. 97/PCD 10/2012
dtd. 14.08.1998
09.08.2004 dated 20 April 2012
1 Applicability Commercial Banks, No change No change

of Scheme RRBs & DCCBs/
PACS
2 Objective/ Cultivation needs incl Term Loan (i) Short term credit for cultivation
purpose of purchase of inputs component has of crops
loan been added to (ii) Post harvest expenses
KCC
(iii) Produce Marketing loan
(iv) Consumption requirements of
farmer
(v) Working capital for maintenance
of farm assets and activities allied
to agriculture
(vi) Investment credit requirement for
agriculture and allied activities
3 Eligibility S.T. Production Term Loan + (i) All Farmers– individuals /

credit of Rs. 5000/- & S.T. Production Joint borrowers who are owner
above to all farmers credit of Rs. cultivators
5000/- & above (ii) Tenant Farmers, Oral Lessees &
Share Croppers
(iii) SHGs or Joint Liability Groups
of Farmers incl. tenant farmers,
share croppers etc.
4 Fixation of (i) As revolving cash (i) Short Term A. All farmers (other than marginal
Credit Limit credit taking credit/ crop farmers:
production credit loan keeping (a) Sort term limit for I year: For
requirement for in view land farmers raising crop: Scale of
full one year holding, finance for the crop x Extent of
(ii) Any number cropping area cultivated + 10% of limit
of drawal & pattern & towards post-harvest / household
repayments scale of / consumption requirements +
finance 20% of limit towards repairs and
(iii) Operational land
holding (incl (ii) working maintenance expenses of farm
leased-in land capital credit assets + crop insurance, PAIS &
& excl leased- for activities asset insurance.
out), cropping allied to (b) S.T. limit for I year:
pattern & scale agriculture
10% increase in ST limit towards
of finance to in term of
cost escalation / increase in scale
be taken into revolving
of finance for every successive
account. cash credit
year (2nd, 3rd, 4th and 5th year)
(iii) Term loan and Term loan component for the
tenure of Kisan Credit Card, i.e.,
5 years
13

Cir. No. 15/98-99
PCD.30/2004 dtd 29.03.2012 & No. 97/PCD 10/2012
dtd. 14.08.1998
09.08.2004 dated 20 April 2012
(iv) Bank’s discretion (c) Maximum Permissible Limit/

to fix appropriate KCC limit: ST loan limit arrived
seasonal sub- for the 5th year + estimated long
limit within term loan requirement
overall limit (d) Card limit to be bifurcated into
separate sub limits for ST credit
limit cum savings account and
term loans.
(e) Annual drawing power to be
fixed for ST limit. For term loans,
instalments may be allowed to be
withdrawn based on the nature
of investment and repayment
schedule to be drawn as per the
economic life.
B. 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 cropping pattern incl.
post-harvest warehouse storage
related credit needs and other
farm expenses, consumption
needs, etc., plus small term
loan investments like purchase
of farm equipment, establishing
mini dairy/ backyard poultry,
etc., without relating it to the
value of land. Composite KCC
limit is to be fixed for a period of
five years.
5 Validity/ (i) Credit Card -3 (i) Credit Card i. The Kisan Credit Card should
Renewal of years validity be valid for 5 years subject to an
KCC (ii) Aggregate credit increased to annual review.
in the account 5 years ii. The review may result in
during 12 (ii) No other continuation of the facility,
months should change enhancement or cancellation
at least be in case of of the limit / withdrawal of the
equal to max crop loan facility, depending upon increase
outstanding in component in cropping area / pattern and
account performance of the borrower.
iii. In case of reschedulement of
loan, outstanding amount may be
transferred to term loan account
and repayment period may be
re-fixed.
14

Cir. No. 15/98-99
PCD.30/2004 dtd 29.03.2012 & No. 97/PCD 10/2012
dtd. 14.08.1998
09.08.2004 dated 20 April 2012
(iii) In case of
reschedulement
of loan,
outstanding
amount may
be transferred
to term loan
account and
repayment
period may be
refixed.
(iv) Credit limits
may be enhanced
to take care of
increase in cost
of inputs in case
of good accounts
6 Rate of Same as applicable Same as 7% interest on short term credit with

Interest to crop loan applicable to an upper limit of Rs. 3.0 lakh on
crop loan & term principal amount
loans
7 Repayment No drawal in A/c (i) Short Term (i) Short Term credit/crop loans as
Period should remain credit/crop well as working capital for agric
outstanding for >12 loans as well & allied activities to be provided
months as working as revolving cash credit limit,
capital for repayable within 12 months
agric & (ii) Term Loan component will
allied to be be repayable within 5 years,
provided as depending upon the type of
revolving activity.
cash credit
(iii) In case of ST loan, no withdrawal
limit,
in the account should remain
repayable
outstanding for more than 12
within 12
months.
months
(iv) Financing banks at their
(ii) Term Loan
discretion, may provide longer
component
repayment period (5 years) for
will be
term loan depending on the type
repayable
of investment.
within
5 years,
depending
upon the
type of
activity.
15

Cir. No. 15/98-99
PCD.30/2004 dtd 29.03.2012 & No. 97/PCD 10/2012
dtd. 14.08.1998
09.08.2004 dated 20 April 2012
RBI vide circular RBI/2012-13/162

dated 07 Aug 2012 modified the
instruction under para 10 of May
11, 2012 circular and indicated
that “the repayment period may be
fixed by banks as per the anticipated
harvesting and marketing period for
the crops for which a loan has been
granted” (earlier “each withdrawal be
allowed to be liquidated in 12 months
without the need to bring the debit
balance to zero at any point of time”.)
8 Margin In conformity with No Change For crop loans, no separate margin

instructions issued need be insisted upon as the Margin
by RBI/ NABARD is in-built while fixing the Scales of
Finance. For term loan component,
it will be in conformity with the
guidelines of RBI from time to time.
9 Security In conformity with No Change (i) Hypothecation of crops up to

instructions issued card limit of Rs. 1.00 lakh. With
by RBI/ NABARD tie-up for recovery, banks may
consider sanctioning loans on
hypothecation of crops upto card
limit of Rs.3.00 lakh without
insisting on collateral security.
iii. Collateral security at the
discretion of Bank for loan limits
above Rs.1.00 lakh in case of
non-tie-up and above Rs.3.00
lakh in case of tie-up advances.
iv. In States where banks have the
facility of on-line creation of
charge on the land records, the
same shall be ensured.
10 Maintenance (i) Withdrawal No Change i. One time documentation at

& operation slips/ cheques the time of first availment and
in the accompanied by thereafter simple declaration
account the card & pass (about crops raised) by farmer
book from the second year onwards.
(ii) In case of Coop, ii No Processing fee up to a card
KCC account will limit of Rs.3.00 lakh.
be maintained iii. Farmers to be provided with
at the PACS KCC Short Term sub-limit cum
concerned & SB account so as to allow credit
card will be balance in KCC-cum-SB accounts
issued by the to fetch interest at savings bank
16

Cir. No. 15/98-99
PCD.30/2004 dtd 29.03.2012 & No. 97/PCD 10/2012
dtd. 14.08.1998
09.08.2004 dated 20 April 2012
DCCB branch/ rate. Separate folio for the long

PACS. Cash term sub-limit.
withdrawal
at DCCB/
PACS only. All
transactions
at DCCB to
be reported to
PACS concerned
as ledger is
maintained at
PACS.
11 Coverage PAIS for KCC holders No Change The KCC holder should have the
under was introduced vide option to take benefit of Crop
Personal circular No. NB.PCD Insurance, Assets Insurance,
Accident (KCC)/H.182/ KCC.11 Personal Accident Insurance Scheme
Insurance (A)/2001-02 dated (PAIS), and Health Insurance
Scheme 14 June 2001 for (wherever product is available and
(PAIS) for uniform adoption by have premium paid through his KCC
KCC holders cooperatives & RRBs. account). Farmer beneficiaries should
Master Policy was be made aware of the insurance cover
valid for 3 years with available and their consent is to be
annual renewal. obtained, at the application stage
itself.
1.2 It may be seen from Table 1.1 & 1.2 that over the period, the guidelines on KCC
scheme have been modified to facilitate the farmers to fulfil their production
needs in a hassle-free and cost effective manner. Many add-on features were
incorporated in the original KCC guidelines (1998) during 2004 and 2012 to take
care of other needs of the farmers, viz., consumption expenditure, maintenance of
farm assets, term loan for agriculture & allied activities, coverage of KCC holders
under PAIS and recently the coverage of KCC holders under Atal Pension Yojna
(in 2015), etc. However, the interest subvention is limited to ‘crop production’ of
the KCC limit and bankers are required to make two separate accounts.
1.3 The circular on revised KCC scheme issued by NABARD (No 71 dated 29 March
2012) and also by RBI (RBI/2011-12/553; RPCD.FSD.BC.No.77/05.05.09/2011-12
dated 11 May 2012) to scheduled commercial banks (excluding RRBs) have
clearly spelt out that the short term loans and term loans are governed by different
interest rates. Besides, at present, short term crop loan is covered under Interest
Subvention Scheme/ Prompt Repayment Incentive scheme. Further, repayment
schedule and other 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 loan.
17
1.4 The RBI circular (No. 553 dated 11.05.2012) has added an additional feature
by highlighting the other conditions suggested by Government of India while
implementing the revised guidelines of KCC Scheme –“In case the farmer applies
for loan against the warehouse receipt of his produce; the banks would consider
such requests as per the established procedure and guidelines. However, when
such loans are sanctioned, these should be linked with the crop loan account, if
any, and the crop loan outstanding in the account could be settled at the stage of
disbursal of the pledge loan, if the farmer desires”.
1.5. Further, in contrast to NABARD circular (point no 13 (iv) of No. 71 dated 29

March 12) to RRBs and cooperative banks which says that ‘no processing fee
should be charged up to Rs. 3.0 lakh’, the RBI circular no 553 dated 11 May
2012 says that ‘processing fee may be decided by banks’. Later, NABARD too
modified the instruction on this issue vide circular No. NB 228/PCD-25/2012
dated 13 Sept 2012 and suggested that the processing fee may be decided by the
respective bank.
1.6. These circulars also spelt out about the nature of delivery channels which are to
be in place to start with so that the Kisan Credit Card is used by the farmers to
effectively transact their operations in their KCC account. They can be:
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.
For other details, the circulars by NABARD (No. 71 dated 29 March 2012) and
RBI (No. 553 dated 11 May 2012) can be referred to.
The Present Study on Kisan Credit Card Scheme
1.7. Department of Financial Services, Ministry of Finance, Govt of India vide letter
No. F.No. FI-7/1/2016-AC dated 19 Feb 2016 requested NABARD to conduct a
comprehensive study on implementation of revised KCC scheme.
The specific terms of reference for the proposed study are as under:
(i) Is the revised Kisan Credit Card Scheme serving its intended purpose?
(ii) Reasons for gap between number of agricultural households and number of
operative KCCs
(iii) Government has advised banks to convert all existing KCCs into ATM/
RuPay cards. Whether action plan in this regard has been chalked out at
branch level? Also, whether all new KCCs are issued in the form of RuPay/
ATM debit cards?
18
(iv) Efficacy of debit cards issued under KCC Scheme with regards to their
inter-operability and issues related thereto? Whether farmers are using
these cards for payment to different vendors? Back-end issues with NPCI/
other platforms?
(v) Overall impact of revised KCC scheme?
Selection of State/ District for the Study
1.8 Keeping in view the requirement of the study, the number of KCC issued, progress
in issuance of ATM/RuPay cards, etc., one state each from all the six geographical
regions of the country were identified in consultation with Department of Refinance
(DOR) and Department of Financial Inclusion and Banking Technology (DFIBT).
A minimum of two districts from each of the identified states were also selected
in consultation with DFIBT, again keeping in view the geographical diversity as
well as the progress in issuance of ATM/RuPay, etc. A minimum of two branches
from each of three agencies i.e., Commercial Bank, RRB and DCCB were selected
in consultation with the LDM, DDM and the controlling offices of the banks of the
identified district. The state-wise/ District-wise/agency-wise branches selected for
the study is given in Table 1.3.
Table 1.3: Banks/ Bank Branches Selected for the Study
Comm Banks/ Cooperative

Sl States Districts RRBs/ Branches
Branches Bank/ Branches
Jorhat SBI RRL, Jorhat Assam Gramin Vikas Assam Coop Apex
& Union Bank Bank –Charaibahi & Bank -Jorhat
Assam Baligaon AGVB -Jorhat
1
(NE Region) Darrang SBI Mangaldai, AGVB, Mangaldai Assam Coop Apex
PNB, Mangaldai & Sipajhar College Bank -Mangaldai
Chawk
Gaya Punjab National Madhya Bihar Magadh DCCB:

Bank: Itwa & Gramin Bank: Sherghati & Head
Bihar Tikari Bodhgaya & Diwan Office
2 (East Begusarai UCO Bank: Bihar Gramin Begusarai DCCB:
Region) Sadanandpur Bank:Samsa, Manjhaul & Head
& PNB Bank: Phulwaria & Charia Office
Rahatpur Badiarpur
Varanasi / Union Bank KGS Gramin Bijnaur DCCB:

Bijnaur : Harhua & Bank: Karanadadi Raipur Saadat &
Baragaon Mohan Sarai & Haldaur
U. P. Shahanshahpur
3 (Central
Region) Moradabad Syndicate Bank: Prathma Bank: Moradabad
Sirswan Gaur & Dilari & Lodhipur DCCB: Surjan
Kanth Rajpoot Nagar &
Thakurdwara
19
Comm Banks/ Cooperative
Sl States Districts RRBs/ Branches
Branches Bank/ Branches
Kapurthala Punjab National Punjab Gramin Kaputhala DCCB:
Bank: PNB Tibba Bank: Khiranwali & Ibrahimwal &
Punjab & Sultanpur lodhi Sultanpur lodhi Nadala
4 (North
Region) Bathinda State Bank of Sutlej Gramin Bathinda DCCB:
Patiala: Bhucho Bank: Kararwala & Malooka & Jalal
Kalan & Jalal Jethuke
Akola Bank of VKGB: Kahneri Akola DCCB:
Maharashtra: Saraf & Rajanda Boargaon &
Boargaon Manju Kapad Bazar
Maharashtra Central Babk:
5 (Western Gandhigram
Region)
Sindhudurg Bank of India: VKGB: Pawashi & Sindhudurg
Pat & Oras Osargaon DCCB: Malvan &
Hindale
Dakshin Syndicate Bank: KVGB: Puttur & SCDCCB: Kabaka
Karnataka Kannada Venur & Kakkinje Uppinamgady & Puttur
6 (Southern Bellary Syndicate Bank: Pragathi KGB: Bellary DCCB:
Region) Itagi branch & Kottur & Kogli Handihal &
Gudekote Kudthini PACS
State-wise/ District-wise Sample Size
1.9 It was planned that from each of the selected branches, 10 farmers having
availed crop loan through KCC would be selected and interviewed to understand
the level of implementation of the revised KCC Scheme. In addition, 4-5 other
farmers residing in the same area who had not been covered under KCC Scheme
would also be interviewed to understand the reasons for their exclusion from
KCC Scheme. Finally, a total of 969 farmers covering 714 KCC holders and 255
other non-KCC farmers were interviewed for the present study. The district-wise/
agency-wise sample size is given in Table 1.4.
Table 1.4: Sample Size
KCC holders
Control
Sl States Districts Comm Coopera- Sample
RRBs/ Total KCC
Banks/ tive Bank/ (Non-KCC)
Branches holders
Branches Branches
Jorhat 20 20 14 54 20
1 Assam
Darrang 20 20 10 50 25
Gaya 17 20 20 57 17
2 Bihar
Begusarai 21 26 16 63 22
Varanasi / 60 23
20 21 19
3 U. P. Bijnaur
Moradabad 22 22 20 64 30
20
KCC holders
Control
Sl States Districts Comm Coopera- Sample
RRBs/ Total KCC
Banks/ tive Bank/ (Non-KCC)
Branches holders
Branches Branches
Kapurthala 20 20 20 60 23
4 Punjab
Bathinda 20 20 20 60 17
Akola 20 20 20 60 13
Maharash-
5 Sindhu- 59 10
tra 19 20 20
durg
Dakshin
20 20 20 60 30
6 Karnataka Kannada
Bellary 20 22 25 67 25
Total 239 251 224 714 255
Primary and Secondary Data Collection
1.10 In addition to basic information pertaining to bank branch business, secondary

data on loan extended by banks to farmers through KCCs in terms of quantum of
loan sanctioned, mode of disbursement, frequency of loan withdrawal, recovery
performance, etc. were collected pertaining to the selected farmers.
1.11 During the course of study, responses/opinions of Lead District Managers,

District Development Managers of NABARD, officials of controlling offices and
the branch managers of the selected banks/ branches were also collected in order
to understand the implementation of KCC scheme in the selected districts.
1.12 Primary data was collected with the help of a structured schedule. The information
from selected farmers were collected keeping the various features of the revised
KCC guidelines issued by NABARD (No. 71 dated 29 Mar 2012) and RBI (No. 553
dated 11 May 2012) in view. The reference year of study was 2015-16.
21
CHAPTER 2
Progress in KCC Financing
2.1 The banking reforms during 1990s and the first major debt waiver (the Agricultural
Rural Debt Relief Scheme, 1990) were considered to be major factors leading to
decline in flow of credit to agriculture sector in 1990s. Therefore, the Reserve
Bank of India appointed one man committee of Shri R V Gupta in December
1997 with a mandate to suggest measures for the removal of constraints faced
by commercial banks in increasing flow of credit to agriculture sector. The
committee found that apart from the negative mind set, there were a number
of procedural hassles and conceptual issues which caused decline in flow of
agricultural credit. The present chapter is devoted to analyze the progress in
implementation of Kisan Credit Card Scheme since its inception, i.e., 1998-99.
Progress under Kisan Credit Cards issued
2.2 The agency-wise number of KCC cards issued since inception of the scheme is
given in Table 2.1 and Chart 2.1 below.
Table 2.1: Agency-wise Kisan Credit Cards Issued during the year
(In Lakh)
KCC Cards issued (lakhs) % share in total no of cards issued
Year Comm Comm
Coop RRBs Total Coop RRBs
Banks Banks
1998-99 01.56 0.06 6.22 7.84 19.90 0.77 79.34
1999-00 35.95 1.73 13.66 51.34 70.02 3.37 26.61
2000-01 56.14 6.48 23.90 86.52 64.89 7.49 27.62
2001-02 54.36 8.34 30.71 93.41 58.20 8.93 32.88
2002-03 45.79 9.64 27.00 82.43 55.55 11.69 32.76
2003-04 48.78 12.74 30.94 92.46 52.76 13.78 33.46
2004-05 35.56 17.29 43.95 96.8 36.74 17.86 45.40
2005-06 25.98 12.49 41.65 80.12 32.43 15.59 51.98
2006-07 22.97 14.06 48.08 85.11 26.99 16.52 56.49
2007-08 20.91 17.73 46.06 84.7 24.69 20.93 54.38
2008-09 13.44 14.14 58.30 85.88 15.65 16.46 67.89
2009-10 17.50 19.50 53.10 90.1 19.42 21.64 58.93
2010-11 28.10 17.70 55.80 101.6 27.66 17.42 54.92
2011-12 29.95 19.96 68.04 117.54 25.18 16.93 57.89
2012-13 26.79 20.30 82.43 129.52 20.68 15.67 63.65
2013-14 26.89 21.35 NA
2014-15 17.32 24.96 NA
Cumulative
since 507.99 238.47 717.52* 1463.98 34.70 16.29 49.01
inception
Source: (i) EPWRF (2014). Agric Credit in India: Trends, Regional Spreads & Database issues, NABARD
Occasional Paper No 59 for data from 1998-99 to 2011-12.
(ii) *(cumulative Comm Bank) State-wise Progress of Kisan credit Cards issued by commercial
banks in India (as on 31.03.2015): www.indiastat.com (accessed on 07 Apr 2016).
22
Chart 2.1: Agency-wise Kisan Credit Cards Issued during the year
Number of KCC Issued (Lakh)
Coop RRBs Comm Banks
90
80
70
KCC in Lakh
60
50
40
30
20
10
0
2012-13
2013-14
2014-15
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2004-05
2005-06
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2.3 Agency-wise distribution of total cards issued since inception till date suggests
that about 49 per cent of cumulative KCCs have been issued by commercial banks
followed by about 35 per cent by cooperative banks and 16 percent by Regional
Rural Banks. In fact, the share of cooperative bank in total KCC issued has come
down from as high as 70% in 1999-2000 to 20.7% during 2012-13 and that of
commercial bank has gone up from 26.6% to 63.7% during the same period.
The high share of Cooperative Banks (52.9%) as compared to RRBs (16.7%)
and Commercial Banks (30.4%) in total number of operative/ live KCC (as on 31
March 2015) indicates that despite the fact that the number of cards issued by
cooperative bank is continuously declining, the farmers prefer to keep the KCC
with cooperative banks alive, may be due to the advantages like availability of
good quality fertilizers, seed, etc.
2.4 The number of operative / live KCC at 7.41 crore as on 31 March 2015 as per
cent of cumulative number of KCC issued since inception comes to 50.6% (of
14.64 crore). The cumulative KCC figure of 14.64 crore cannot be taken as total
number of farmers covered under KCC Scheme as it includes number of farmers
who have got reissued/ renewed their Kisan cards several times. The figure of
operative/ live KCC at 7.41 crore (Table 2.2) may be considered little close to the
actual number of farmers covered under the KCC Scheme, in the absence of any
other reliable data on the same.
2.5 The analysis of state-wise total number of operative/ live KCC issued by all the
agencies indicates that 6 big states viz., Uttar Pradesh (15.15%), Andhra Pradesh
(11.02%), Maharashtra (10.07%), Madhya Pradesh (9.66%) and Rajasthan
(8.33%) together account for about 55% of total number of operative/ live KCC
cards.
23
Table 2.2: State-wise and Agency-wise Operative / Live KCCs - Issued
Progress as on 31 March 2015 (Cumulative)
Cooperative Banks Regional Rural Banks Commercial Banks Total
Sr. Out of Out of Out of Out of Smart
State / UT No of No of No of No of
No. which no. which no. which no. which no. Card as
Operative Operative Operative Operative
of smart of smart of smart of smart % of live
KCC KCC KCC KCC
cards cards cards cards KCC
1 Andhra Pradesh 28,95,397 0 15,82,084 181337 36,89,954 6,91,506 81,67,435 8,72,843 10.69
2 Assam 27,263 0 4,56,677 0 5,90,325 1,50,854 10,74,265 1,50,854 14.04
3 Arunachal Pradesh # 450 0 3,294 0 10,448 834 14,192 834 5.88
4 Bihar 6,81,619 0 15,48,625 178503 14,23,068 3,94,240 36,53,312 5,72,743 15.68
5 Gujarat 14,83,841 0 2,50,508 77827 9,94,490 5,89,572 27,28,839 6,67,399 24.46
6 Goa $ 1,117 0 0 0 4,275 2,669 5,392 2,669 49.50
7 Haryana 13,20,725 0 2,08,679 23529 5,71,778 2,73,209 21,01,182 2,96,738 14.12
8 Himachal Pradesh 94,718 2,028 1,31,769 7151 1,89,050 82,721 4,15,537 91,900 22.12
24
9 Jammu & Kashmir 33,690 50 16,343 0 2,14,872 2,77,459 2,64,905 2,77,509 104.76
10 Karnataka 23,75,383 9,890 8,40,059 156364 9,12,001 4,55,683 41,27,443 6,21,937 15.07
11 Kerala 7,87,724 0 1,59,671 110209 3,01,964 1,00,530 12,49,359 2,10,739 16.87
12 Madhya Pradesh 51,66,011 0 5,04,079 142418 14,88,478 5,38,017 71,58,568 6,80,435 9.51
13 Maharashtra 48,69,885 11,706 3,53,084 81104 22,38,521 6,61,163 74,61,490 7,53,973 10.10
14 Meghalaya # 25,798 285 16,865 16592 59,138 7,801 1,01,801 24,678 24.24
15 Mizoram # 790 0 18,069 0 14,627 1,680 33,486 1,680 5.02
16 Manipur # 484 0 5,588 0 19,887 4,643 25,959 4,643 17.89
17 Nagaland # 2,364 0 1,096 12 32,029 6,872 35,489 6,884 19.40
18 Odisha 44,40,063 0 5,73,556 6215 7,03,661 1,27,034 57,17,280 1,33,249 2.33
19 Punjab 9,96,147 0 1,16,613 28702 7,47,791 4,33,582 18,60,551 4,62,284 24.85
20 Rajasthan 39,26,861 0 5,28,884 2736 17,16,205 4,94,662 61,71,950 4,97,398 8.06
21 Sikkim #$ 7,617 0 0 0 4,101 1,500 11,718 1,500 12.80
22 Tamil Nadu 14,30,790 0 4,98,399 10011 5,84,878 2,83,576 25,14,067 2,93,587 11.68
Table 2.2: State-wise and Agency-wise Operative / Live KCCs - Issued
Progress as on 31 March 2015 (Cumulative)
Cooperative Banks Regional Rural Banks Commercial Banks Total
Sr. Out of Out of Out of Out of Smart
State / UT No of No of No of No of
No. which no. which no. which no. which no. Card as
Operative Operative Operative Operative
of smart of smart of smart of smart % of live
KCC KCC KCC KCC
cards cards cards cards KCC
23 Tripura # 1,13,154 0 1,13,313 0 79,381 16,918 3,05,848 16,918 5.53
24 Uttar Pradesh 42,98,533 0 30,90,630 221135 38,32,845 12,43,868 1,12,22,008 14,65,003 13.05
25 West Bengal 18,94,295 0 5,67,591 15540 10,32,630 4,22,126 34,94,516 4,37,666 12.52
26 A & N Islands #$ 6,033 0 0 0 838 84 6,871 84 1.22
27 Chandigarh $ 0 0 0 0 1,501 975 1,501 975 64.96
28 Daman & Diu #$ 0 0 0 0 49 114 49 114 232.65
29 New Delhi #$ 311 0 0 0 4,034 2,579 4,345 2,579 59.36
30 D & N Haveli @$ 0 0 0 0 608 508 608 508 83.55
25
31 Lakshadweep @$ 0 0 0 0 706 58 706 58 8.22
32 Puducherry # 5,867 0 1,158 0 18,497 7,952 25,522 7,952 31.16
33 Jharkhand ^ 37,369 0 4,49,061 94575 6,21,491 1,64,676 11,07,921 2,59,251 23.40
34 Chhattisgarh 19,35,533 0 2,57,904 0 1,98,319 87,564 23,91,756 87,564 3.66
35 Uttarakhand 3,67,072 0 49,027 24817 2,22,120 87,727 6,38,219 1,12,544 17.63
TOTAL 3,92,26,904 23,959 1,23,42,626 1378777 2,25,24,560 76,14,956 7,40,94,090 90,17,692 12.17
Operative Cards as %
77.22 51.76 26.91& 50.61
of total card issued
Smart Cards as % of
0.06 11.17 33.81 12.17
Operative cards
Source: RBI
Note: # SCB functions as CFA
@ No Cooperative Banks in these UTs
$ No RRB in these States/UTs
^ Out of the total smart cards issued by RRBs in Jharkhand, Jharkhand Gramin Bank had issued 159 cards operated by hand held devices
& Figure pertains to March 2013
2.6 As for the amount of credit flow under KCC is concerned (Table 2.3), it appears
that despite a growing share of crop loan (vis-à-vis agricultural term loan) in total
agricultural credit, the share of credit flow under KCC in total agricultural credit
flow has tended to continuously fall until 2009-10. It had declined from 41.68%
in 2001-02 to 15% in 2009-10 but only fractionally edged up to approx. 18% in
2011-12.
Table 2.3: Total Flow of Credit to Agriculture and KCC share during the year
(Amt in Rs. Crore)
Flow of Credit to Agriculture Credit Flow under KCC KCC as
Other % of to-
Year Comm Comm
Coop RRBs Agen- Total Coop RRBs Total tal Agri
Banks Banks Credit
cies
2000-01 20712 4220 27807 82 52821 9412 1400 5615 16427 31.10
2001-02 23524 4854 33587 80 62045 15952 2382 7524 25858 41.68
2002-03 23636 6070 39774 80 69560 15841 2955 7481 26277 37.78
2003-04 26875 7581 52441 84 86981 9855 2599 9331 21785 25.05
2004-05 31231 12404 81481 193 125309 15597 3833 14756 34186 27.28
2005-06 39404 15223 125477 382 180486 20339 8583 18780 47702 26.43
2006-07 42480 20435 166485 - 229400 13141 7373 19786 40300 17.57
2007-08 48258 25312 181088 - 254658 19991 8743 19900 48634 19.10
2008-09 45966 26765 228951 226 301908 13172 7632 25865 46669 15.46
2009-10 63497 35217 285800 - 384514 7606 10132 39940 57678 15.00
2010-11 78007 44293 345877 114 468291 10719 11468 50438 72625 15.51
2011-12 87963 54450 368616 - 511029 10640 11520 69510 91670 17.94
2012-13 111203 63681 432491 - 607375 11174 12836 NA - -
2013-14 119964 82652 509005 - 711621 10825 20689 NA - -
2014-15 138469 102483 599691 - 840643 7322 24248 NA - -
Source: (i) EPWRF (2014). Agric Credit in India: Trends, Regional Spreads & Database issues, NABARD
Occasional Paper No 59 for data from 1998-99 to 2011-12.
Coverage of Farmers by Kisan Credit Cards

What is the actual number of KCC issued?
2.7 As already indicated, the figure of operative/ live KCC at 7.41 crore (Table 2.2/
2.4) may be considered a little close to the actual number of farmers covered
under the KCC Scheme in the absence of any other reliable data on the same. But,
it is very difficult to estimate the actual number of agricultural/ rural households
covered by the KCC Scheme because of the following factors:
(i) Banks provide data on number of KCC issued during a particular year
but they cannot segregate those accounts into number of farmers got KCC
issued for the first time in their life, the number of farmers got issued fresh
KCC from this bank but they had availed KCC earlier from some other bank
prior to this, the number of existing KCC farmers who just got renewed
their KCC accounts, etc.
26
(ii) Non-availability of data on number of KCC accounts which were written
off by a bank and were not renewed again. It is difficult to estimate as how
many of such farmers managed to get KCC from some other banks.
(iii) There may be some farmers who had earlier got issued KCC from a some
bank and did not renew after expiry of the card as they might not be
interested to continue with the KCC loan.
(iv) Some farmers might have got issued KCC from more than one bank,
preferably one KCC from cooperative bank and another from either RRB or
commercial bank and therefore, actual number of farmers covered under
KCC would come down by the number of multiple KCC.
(v) If the land title has not been transferred in the name of sons, the sons may
get Land Possession Certificate (LPC) issued in their respective names and
can approach different banks to get KCC loan. There is nothing wrong in it
if all sons get KCC loan assessed based on their share in the total land in
the family. But even then, this would create discrepancy in terms of number
of KCC issued against an operational holding.
Gap between number of agricultural households and number of operative KCC
2.8 The KCC in operation/live as percentage of total number of rural households/

land owners as given in Agricultural Census as well as estimated by NSSO is
given in Table 2.4.
Table 2.4: Share of operative/ live KCC as % of total Households/ Agric Households
Particulars Total No Total No of Est. No Est. No of Agril. HH self-

operative Operational of Agril. Households employed in
KCC Land Households@ reporting cultivation agriculture#
Holding* of crops @
7.41 crore 13.83 crore 9.02 crore 7.80 crore 6.70 crore
Share of
operative KCC 53.58% 82.15% 95.00% 110.60%
in no of HH
Source: * Agricultural Census, 2010-11
# NSS KI (70/18.1): Key Indicators of Land and Livestock Holdings in India, December 2014
@ NSS KI (70/33): Key Indicators of Situation of Agricultural Households in India, December
2014
2.9 The KCC in operation/live at 7.41 crore as on 31 March 2015 against 13.83
crore operational land holdings (Agricultural Census 2010-11) clearly show that
a large number of farmers are yet to be covered under KCC scheme.
2.10 However, the KCC in operation at 7.41 crore against the estimated number of
agricultural households of 9.02 crore (Key Indicators of Situation of Agricultural
Households in India, NSSO 70th round) gives a better picture of coverage of
farmers under KCC Scheme. Further, NSSO report (para 3.3.2.1, p.16) indicates
that about 93 percent of agricultural households in the country possessed some
27
type of land other than ‘homestead land only’ and little less than 7 percent
possessed only homestead land. Further, NSSO report has also estimated
the number of Agricultural Households reporting cultivation of crops at 7.80
crore which means these many agricultural households need KCC loan for crop
cultivation. In other words, 95% of the deserving agricultural households have
already been issued KCC.
2.11 In this connection, it would be interesting to mention here that the possession of
land was an essential condition for defining a person as farmer (farmer household)
in 59th round of NSSO Survey. However, an agricultural household as defined
in NSS 70th round (Key Indicators of Situation of Agricultural Households in
India), he may or may not possess agricultural land. In 70th round, households
with at least one member self-employed in agriculture either in principal status
or subsidiary status and having total value of produce more than Rs. 3000 during
last 365 days were only considered as agricultural household.
Reasons for gap between number of agricultural holding and number of operative KCC
Reasons for gap: Banker’s perspective
2.12 Interaction with bankers during the field visit in the selected states suggests the
following reasons for the gap between the number of agricultural holding and
number of operative KCC:
(i) Despite efforts by banks, there were some farmers who were not willing
to avail crop loan through KCC. These farmers either had some source
of income other than the farm income (e.g. service, business, etc.) or they
were absentee lords.
(ii) Bankers were found not very keen to finance the farmers who had very
small piece of land and depended much on wage labour and didn’t have
any other source of income. Since most of the small farms were not viable
and such farmer also didn’t have any other important source of income,
bankers avoided extending KCC to such farmers.
(iii) There were cases where the land was still in the name of father and the sons
had divided the land and were operating on it separately. Although farmers
were producing the Land Possession Certificates (LPC) as well as the ‘Family
Tree’ certified by the Gram Panchayat/ Revenue Dept., sometimes these
certificates were found fake or reported to had been used simultaneously in
two banks to get KCC account opened in more than one banks.
(iv) Sometimes, some small farmers were not able to produce LPC or any other
type of document certifying the possession of land by them. Under such
circumstances, it became difficult for the banks to extend loan to such
farmers.
(v) Land records/revenue records were not available online, which created
problem for banks to verify these records and also there was no facility for
on-line creation of charge on the land records.
28
(vi) The notion among the farmers was that the debt relief may be announced
today or tomorrow. This was resulting in default in repayments. Bankers
were of the view that there were no clear cut guidelines on financing to
farmers whose accounts became NPA and were settled under OTS Scheme.
They felt that the position had deteriorated a little bit as some of the farmers
had been reported to have gone to money lenders for their crop cultivation
needs also.
(vii) Farmers having good financial liquidity were not interested in availing KCC
loan.
(viii) Some bankers opined that many farmers were not fully aware about the
Scheme and its features and also the pitfalls were not known to them.
Reasons for gap: Farmers’ perspective
2.13 As many as 255 farmers who had not availed KCC loan from any bank were
interviewed to understand the reasons for their exclusion from KCC coverage.
The general profile of non-KCC farmers and the reasons for not availing the KCC
loan are given in Table 2.5 & 2.6 respectively.
2.14 The analysis of profile of the control sample farmers indicated that 17.25 per
cent of the farmers not covered under KCC belonged to SC/ST category and
this suggests that the banks did not discriminate farmers on social grounds
while deciding upon extending the KCC loan. It can also be said that exclusion of
farmers from KCC coverage was not specific to any particular community.
2.15 It may be observed from table 2.5 that average land holding across total sample
was 3.04 acre varying from 0.76 acre in Varanasi district of UP to 8.59 acre in
Bathinda district in Punjab. As many as 39 farmers out of 255 non-KCC farmers
were found to be owning tractors also.
2.16 Quite a good number of non-KCC farmers (127 out of 255) also owned some type
of livestock covering cow, buffalo, goat, etc., although in many cases, the income
from it was not sufficient to take care of credit requirement for crop production
of the farmers.
2.17 About 10 per cent of the non-KCC farmers (25) had availed term loan from banks
for the purposes like two wheeler, tempo, pump-set, etc. It suggests that they were
well aware about the advantages of banking with formal financial institutions,
but somehow were averse of availing KCC or were not getting it for some reasons.
2.18 It is interesting to note that 111 out of 255 (43.5%) non-KCC farmers showed
their unwillingness to avail KCC loan. Major reasons for their unwillingness
included, the family head was not staying in the village (20 farmers), some were
fully engaged with other family business & had full time job (29 farmers), some
were able to manage crop cultivation without loan and were of the view that why
to create debt burden, etc.
29
2.19 The analysis of number of KCC issued/ outstanding vis-à-vis number of agricultural
households indicates that the KCC Scheme has made a good progress as far as
coverage of farmers is concerned, although it is difficult to estimate the actual gap
between the number of households and the number of KCC issued on account of
reliable data on both the parameters. Further, quite a good proportion of non-
KCC farmers were not very keen to avail KCC on account of various factors viz.,
their engagement in other income generating activities, their staying away from
the native village, etc.
Table 2.5: General Profile of Non-KCC Farmers
No of
No of
Fami-
Aver- Fami-
No of Fam- lies
age Aver- lies
Sam- SC/ ST fami- ily go for have
size of age have
States Districts ple Farm- lies MNRE- income
land Family income
Size ers own GA/ Wage from
holding Size from
tractor work Service
(Ac) live-
/ busi-
stock
ness
Jorhat 20 1 1.06 0 3.9 9 15 4

1 Assam
Darrang 25 5 2.44 4 4.9 10 13 5
Gaya 17 6 1.67 0 5.2 4 7 2

2 Bihar
Begusarai 22 5 3.23 2 5.7 2 15 4
Varanasi /
23 2 0.76 0 8.1 2 12 9
3 U. P. Bijnaur
Moradabad 30 5 1.28 8 6.7 4 21 11
Kapurthala 23 5 5.41 11 5.9 1 15 7

4 Punjab
Bathinda 17 6 8.59 4 5.8 1 6 8
Maha- Akola 13 1 6.68 6 6.9 0 2 2

5
rashtra Sindhudurg 10 1 2.22 0 5.3 1 0 2
Dakshin
Karna- 30 2 2.31 2 4.9 3 6 10
6 Kannada
taka
Bellary 25 5 3.70 2 5.1 2 15 3
Total sample/ Aver-

255 44 3.04 39 5.69 39 127 67
age
As % of total sample 17.25 - 15.29 15.29 49.80 6.20

Note: ‘Bank officials demanded undue favour’ was also given as one of choices to the farmers. But none
of the farmers had told as the reason for their exclusion from KCC loan.
30
Table 2.6: Reasons for not availing KCC loan by Control Farmers
Reasons for Not availing KCC loan
Bank Not interested in KCC

Wheth-
Whether re- loan
Con- Farmer er
Term Very jected
trol does Fully mem-
Sl States Districts loan small appli-
Sam- not have engaged Misc. ber of
from land cation Ab-
ple land with other SHG/
Banks holding on sen-
title Service/ rea- JLG
some tee
Busi- sons
plea ness
Jorhat 20 0 4 3 1 3 3 6 4
1 Assam
Darrang 25 0 5 2 2 6 3 7 5
Gaya 17 0 7 7 1 1 0 1 1
2 Bihar
Begusarai 22 0 13 4 0 1 2 2 3
Varanasi /
23 0 4 6 1 2 3 8 0
3 U. P. Bijnaur
Moradabad 30 11 8 7 1 2 5 17 6
Kapurthala 23 3 1 6 4 1 3 5 0
4 Punjab
Bathinda 17 1 4 5 0 0 2 6 0
Akola 13 2 2 2 2 0 2 4 0
Maha-
5 Sindhu-
rashtra 10 1 3 4 2 0 1 0 0
durg
Dakshin
Karna- 30 5 5 11 4 2 1 7 0
6 Kannada
taka
Bellary 25 2 3 8 2 2 4 6 0
Total 255 25 59 65 20 20 29 62 255
As % of total sample 9.80 23.14 25.49 7.84 7.81 11.37 24.31 100.0
31
CHAPTER 3
Implementation of Revised KCC Scheme
A. SOCIO-ECONOMIC PROFILE OF FARMERS
3.1 Some important socio-economic features of farm business of the sample farmers
(714) are discussed in this chapter. The features covered in this chapter pertains
to occupational pattern, literacy level, size of holding, size of family and farm
family labour available therein, cropping pattern, cropping intensity, average
yield rates & prices of different crops, average per acre gross value of production,
cost of cultivation and average per acre net return, etc. All these data relate to the
reference year of the study i.e. 2015-16.
3.2 The general profile of KCC farmers is presented in Table - 3.1.
Table- 3.1: General profile of KCC farmers
Avg Avg no No of
SC/ HHs as
Sam- Avg Grad- No of of fam- families
ST member
Sl States Districts ple Age uate & family ily mem work
farm- of SHG/
HHs -yrs. Above mem- work as for MN-
er/HHs JLG
bers farm lbr REGA
Jorhat 54 16 36 3 4.0 1.22 4 8

1 Assam
Darrang 50 0 41 1 4.7 1.38 15 6
Gaya 57 8 45 11 6.9 2.6 2 1
2 Bihar
Begusarai 63 3 47 18 6.4 2.2 2 9#
Var/ Bij 60 0 52 13 6.6 1.08 0 10
3 U. P.
Moradabad 64 6 45 4 6.4 1.14 2 7
Kapurthala 60 2 55 10 5.5 1.85 2 0
4 Punjab
Bathinda 60 0 53 4 6.3 1.63 0 0
Akola 60 15 45 16 5.5 1.57 18 10
5 Maha
Sindhudurg 59 1 46 2 5.3 1.29 0 1
Dakshin
60 0 52 9 4.9 1.60 7 0
6 Kar Kannada
Bellary 67 7 53 5 5.1 1.22 6 0
Total sample 714 58 - 96 - - 58 52
% of total sample 8.12 48 13.44 5.66 1.56 8.13 7.28
Note: # includes 6 Farmers Club members
1.3 It can be seen from Table 3.1 that farmers belonging to SC/ST community
accounted for 8 percent of the total KCC farmers selected for the study. Farmers
having education of graduation and above accounted for 13.4 percent of the total
sample. The average family size of the sample farmers was 5.66 and the average
number of family members engaged in farming came to about 1.56 members.
As many as 58 families out of total 714 (8 percent) reported to be going for
MNREGA works. Also, 52 KCC farmers reported that at least one of their family
members was a member of a SHG or JLG or Farmers Club.
32
Land Ownership by Sample Farmers
1.4 The land ownership pattern of KCC farmers is presented in Table - 3.2 below.
Table- 3.2: Ownership of Agricultural Land
Avg land Farmers Farmers leased Farmers owning

Sam- holding-Ac leased out in farm asset
Sl States Districts ple Irri- Avg Avg
size Total gated No area- No area- Tractor
Pump
hold set
land Ac Ac
Jorhat 54 2.82 0.96 0 0.00 0 0.00 2 19
1 Assam
Darrang 50 2.32 1.28 0 0.00 1 2.25 5 7
Gaya 57 3.91 3.04 3 0.67 8 1.36 7 17
2 Bihar
Begusarai 63 5.14 4.15 9 1.23 9 2.2 10 46
Var/ Bij 60 3.53 3.04 1 3.00 4 1.25 15 38
3 U. P.
Moradabad 64 3.28 2.3 2 1.71 3 1.53 27 50
Kapurthala 60 10.42 9.23 6 9.75 27 12.5 49 57
4 Punjab
Bathinda 60 8.78 8.25 7 8.36 26 12.98 30 39
Akola 60 6.05 0.5 2 9.00 0 0.00 11 10
5 Maha
Sindhudurg 59 4.90 1.32 0 0 1 1.0 1 3
Dakshin
60 4.37 1.58 0 0.00 1 1.72 5 52
6 Kar Kannada
Bellary 67 6.27 4.11 2 4.37 0 0.00 15 28
Total sample/Average 32 80 177 366
714 5.21 3.37 3.26 3.07
(% of total sample) (4.5%) (11.2%) (24.8%) (51.3%)
3.5 The average size of holding across the sample came to 5.21 acres of which about
64 percent was irrigated. About 4.5 percent of sample farmers had leased out
some portion or their entire holding on account of their engagement in other
occupation service/ business or their absenteeism from the location. As many as
80 farmers (11.2% of the sample) were reported to have leased-in some additional
land either to make optimum use of resources available with him or to meet out
their consumption needs. Quite a good number of sample farmers (25%) owned
tractors. Pump set is another important farm asset which was owned by about
51 per cent of the sample farmers.
Sources of Income: Sample Farmers
3.6 The average income per farmer per annum (Table 3.3) across the total sample
came to Rs. 213687 and was varying between Rs. 68180 (Darrang, Assam) to Rs.
585671 (Kapurthala, Punjab). Cultivation (66.7% of total income) was reported
as the major source of income of farmers selected for the study. Income from
livestock farming accounted for 9.9 per cent of total income of the farmers. Other
sources (other than farming, livestock, wage employment, service & Business)
accounted for about 11.3 per cent of family income of the farmers. Other sources
included self-employment activities viz., remittances from foreign, Aadatia,
tailoring, etc.
33
Table- 3.3: Sources of Income of Sample KCC Farmers
Avg In- Share of various sources in total income (%)

Sam-
come per MN- Oth
Sl States Districts ple
House- Culti- Live- RE- Wage Sal- Busi- Other
size vation stock ary ness Sources
hold GA Income
Jorhat 54 80412 70.1 16.8 1.3 0.3 0.0 6.3 5.2
1 Assam
Darrang 50 68180 58.8 9.6 1.2 0.5 7.5 13.9 8.5
Gaya 57 148304 62.8 7.5 0.2 2.3 2.1 12.1 13.0
2 Bihar
Begusarai 63 193161 64.6 11.0 0.1 1.2 3.4 5.5 14.2
Var/ Bij 60 152056 68.2 5.4 0 2.6 2.2 4.1 17.5
3 U. P.
Moradabad 64 201995 68.2 15.4 0 2.4 2 3.6 8.4
Kapurthala 60 585671 71.4 12.5 0.2 0.2 3.0 3.2 9.5
4 Punjab
Bathinda 60 456388 79.8 11.8 0.0 0.0 3.7 0.4 4.3
Akola 60 138666 66.6 5.1 3.9 5.9 8.7 1.7 8.1
5 Maha
Sindhudurg 59 150750 69.0 9.4 0 6.9 3.3 5.2 6.2
Dakshin
60 169628 67.5 5.9 2.0 1.9 6.5 2.4 13.8
6 Kar Kannada
Bellary 67 181627 63.3 8.9 0.7 0.3 5.7 5.6 15.5
Total sample
714 213687 69.8 9.9 0.8 2.0 4.0 5.2 8.2
(% of total sample)
B. IMPLEMENTATION ASPECTS OF KISAN CREDIT CARD (KCC) SCHEME

3.7 In the present section, an attempt is made to assess whether the revised Kisan
Credit Card Scheme is serving its intended purpose or not. Although the progress
in issuance of Kisan Cards has already been discussed in chapter-2 highlighting
the year-wise growth as well as agency-wise & state-wise distribution of KCC
issued. The overall impression is that a good progress has been made by the
banks in the issuance of Kisan cards to the needy farmers. However, some gap
between number of agricultural households and number of farmers covered
under KCC still exists on account of the reasons as explained in para 2.12 to
para 2.19 of chapter-2.
3.8 The revised guidelines on implementation of KCC Scheme was circulated to

RRBs and Cooperative Banks by NABARD vide Circular No 71/PCD 04/2011-
12 dated 29.03.2012 and to commercial banks by RBI vide circular number
RBI/2011-12/553; RPCD.FSD.BC.No.77/05.05.09/2011-12 dated 11 May 2012.
The field observations on implementation of various provisions of the revised
KCC circular are presented in the following sections.
Awareness of Branch Managers about the Revised KCC Scheme
3.9 A total of 71 bank branches covering 24 branches of 10 commercial banks, 25

branches of 11 RRBs and 22 branches of 11 DCCBs/ Apex Coop banks were
covered in the present study. All the Branch Managers were interviewed to get
their feedback on implementation of the KCC scheme.
34
Table- 3.4: Coverage of Bank Branches
Particulars/ Parameter Assam Bihar UP Punjab Maha Kar Overall

CBs 4 (3) 4 (2) 4 (2) 4 (2) 4 (3) 4 (1) 24 (10)
No of Branch- RRBs 4 (1) 5 (2) 4 (2) 4 (2) 4 (2) 4 (2) 25 (11)
es (Banks)
covered Coop 2 (1) 4 (2) 4 (2) 4 (2) 4 (2) 4 (2) 22 (11)
Total 10 (5) 13 (6) 12 (6) 12 (6) 12 (7) 12 (5) 71 (32)
3.10 As far as awareness about revised guidelines on KCC (March/ May 2012) is
concerned, the following observations are made in this regard:
(i) All the 71 Branch Managers were aware that validity of KCC is for five years.
(ii) All the Branch Managers were aware that they had to add 10% and 20% in
the KCC limit over and above the crop loan requirement. It was also clear
to them that 10% was towards consumption purpose. However, quite a
good number of Branch Managers were not clear about the exact use of
20% of limit which had to be extended towards repair and maintenance of
farm assets, crop insurance, PAIS and asset insurance. A few of them were
found arguing that unless receipt of work done in case of repair was shown
to the Branch Manager, amount would not be paid to the farmers. Branch
managers were also of the view that most of the small farmers did not own
assets like tractor and pump sets which require regular maintenance and
therefore extending loan to them towards farm maintenance was of no use
and it would not be used for the intended purpose.
(iii) All the Branch Managers were aware that they had to increase the KCC limit
every year by 10 per cent. Although revised guideline had clearly indicated
that this 10% increase in KCC limit every year was towards cost escalation/
scale of finance, however, majority of them were not clear whether this 10
per cent increase was to be effected even if there was no upward revision in
the scale of finance next year.
(iv) Majority of Branch Managers (>70%) were also not aware that the KCC limit
fixed for a farmer was on the assumption that the farmer would not change
his cropping pattern. In case farmer had changed his cropping pattern, his
KCC limit had to be re-worked out. In fact, not even a single instance of
enhancement of KCC limit on account of change in cropping pattern was
observed in the selected branches during the course of the study.
Fixation of Scale of Finance:
3.11 The general approach of fixing the crop-wise Scale of Finance (SOF) in five
(Assam, Bihar, UP, Maharashtra, Karnataka) states was found to be the same
and was limited to expenditure on cultivation of crops only. Further, SOF in these
five states were being prepared for all the districts by District Level Technical
Committee (DLTC) convened by District Central Cooperative Bank of the district
once in a year.
35
3.12 In Punjab, a single SOF was being prepared for each crop for the entire state and
notification was issued by the Registrar, Cooperative Societies (RCS). Further, the
SOF included expenditure on the cultivation of crops (Cash & Kind separately),
additional 10 per cent of it towards post-harvest/ household/ consumption
requirement and additional 20 per cent towards repair and maintenance of farm
assets and insurance.
3.13 In majority of the districts, SOF was given as a fixed amount for various crops.
In some districts (e.g. Gaya & Begusarai in Bihar, Moradabad in UP), SOF was
prescribed as a range instead of a fixed amount.
Application for KCC loan & Appraisal by Branch Managers
3.14 A total of 32 banks (Comm -10, RRBs -11 & Coop -11) were covered in the present
study. All the banks have developed a unique ‘application cum appraisal form’
for appraisal of KCC loan application keeping in view the specific requirement
of the banks. Although some of the features viz., family and land detail of
the farmer, were common in the formats of all the banks, most of the other
features viz., appraisal format, credit scoring sheets, calculation of farm income
& expenditure, guarantor’s consent form, mortgage format, sanction note, etc.,
were varying to a great extent from bank to bank.
3.15 Some banks had already re-designed their application cum appraisal format
keeping in view the revised KCC guidelines (March/ May 2012) clearly indicating
year-wise/ component-wise sub-limits of the KCC limits. However, majority of
banks were yet to include calculation sheet for arriving at the KCC limit and
year-wise/ component-wise sub-limits. There were few banks (e.g. Bihar Gramin
Bank) which had also printed the ‘scale of finance’ in its KCC application form.
Fixation of Kisan Credit Card Limit

Use of Cropping Pattern & Scale of Finance
3.16 ‘Cropping Pattern’ is one of the important determinants for arriving at the KCC
limit of the farmer. As observed from the application cum appraisal form of
the sample farmers, in 434 cases (61% of the sample), KCC limits were fixed
taking into account both Kharif as well as Rabi crops. In rest of the cases, either
only kharif crop (35% of the sample) or only Rabi crop (4% of sample) were
considered for fixing of KCC limit. It was observed that almost similar type of
cropping pattern was shown for majority of the farmers in a particular bank
branch which speaks about the non-seriousness in filling up the appraisal form.
3.17 Further, the fixation of KCC limit assumes that the cropping pattern adopted
by the farmer during the first year would remain unchanged during the next
four years. Although KCC guideline allows for change in KCC limit on account
of change in cropping pattern, it was observed that no change in KCC limit
was effected on account of change in cropping pattern of anyone of the sample
farmers.
36
3.18 ‘Scale of Finance’ (SOF) is another important parameter for the fixation of KCC
limit. The SOF was found to have been applied in the majority of the cases of
sample farmers, however, the space for the same was found blank in the appraisal
form in a few cases irrespective of the type of the agency (commercial banks,
RRBs or cooperative banks). In fact hardly any appraisal form of any bank was
found complete in all respect. Many farmers interviewed were not aware of the
benefits of KCC, such as composite loan facility, annual enhancement, etc., and
therefore, farmers were having liberty of fixing the KCC limit as per their choice.
Table- 3.5: Cropping pattern as observed in the application cum appraisal form
Particulars/
Sl Assam Bihar UP Punjab Maha Kar Overall
Parameter
No of Sample
104 120 124 120 119 127 714
Farmers
No of Kh+Rb 434
34 120 124 120 36 0
farmers crops (60.8%)
whose Only Kh 252
1 Cropping 42 0 0 0 83 127
crops (35.3%)
pattern in
appraisal Only Rb 28 0 0 0 0 0
28
form shows crops (3.9%)
Kh Kh- Kh-
Kh Paddy/
Paddy/ Paddy/ coconut/
Kh- Sugarcane/
tur/ veg fodder/ mango/
Kh+Rb Paddy/ mentha &
& Rb- veg & bamboo/ -
crops sali & Rb-Wheat/
Wheat/ Rb- veg & Rb-
Rb-Veg sugarcane/
gram/ wheat/ Chili /water
Major potato/ veg
pea/ veg potato melon
crops
2 Chili/
shown in
Paddy/ onion/
appraisal Only Kh Soybean /
Sali - - - arecanut
form crops cotton
paddy / coconut/
pepper
Potato/
Only Rb tomato/
- - - - -
crops other
veg
3.19 In Uttar Pradesh, although DCCBs were preparing the KCC loan limit for five
years including crop loan, consumption and maintenance components; the actual
disbursement was restricted to multiple times of the share capital deposits of
respective PACS with the DCCB (maximum Rs. 1.0 lakh). Further, 75% of the
KCC sanctioned were being disbursed as cash component as the remaining 25%
as kind component and the farmers were issued two separate cheque books
for withdrawing the cash and kind components, separately. The cheque for
kind component was required to be deposited with the PACS in lieu of seeds
or fertilizers purchased. This practice was defended by the DCCB officials who
informed that unless this was ensured the PACS would lose crucial business
as around 2.5% of the fertilizer sales proceeds was being credited to the salary
37
account of PACS Secretaries and conveyance expenses of PACS, in the ratio of
85:15. Further, the Government of UP had issued instructions that all KCC loans
for sugarcane cultivation would be disbursed only from Cane Societies and not
through DCCBs/PACS. Since number of Cane Societies in certain areas were at
distant places, the farmers had to travel a long distance to avail crop loan for
sugarcane cultivation. These instructions also facilitated multiple financing of
crop loan on the same piece of land.
Verification of Cropping Pattern by Branch Managers
3.20. The Branch Managers (BMs) of financing banks are supposed to visit the farmers’
field to ascertain/verify the cropping pattern being followed by them in order to
arrive at a reasonable KCC limit. Most of the branch managers opined that due
to very high work load in the branches, they hardly get any time to pay a visit to
farmers’ field to verify the cropping pattern being followed by them. Since they
(BMs) had fairly good idea about their area of operation, they normally come to
know the genuineness of the claim of the farmers. BMs also try to cross verify
the information from other farmers/ account holders of the same village. Some
Branch Mangers told that they did not make special effort to visit the farmers’
field, but whenever they got a chance to visit a village they discussed with the
villagers and tried to ascertain the required information. Further, change in
cropping pattern was neither reported by the farmer nor ascertained by the bank
branches while considering the enhancement in the KCC limit from next year
onwards.
Annual Enhancement in KCC Limit
3.21 The revised guidelines on KCC indicates that there has to be annual enhancement
of KCC limit by 10 percent to take care of cost escalation/ increase in scale of
finance. An attempt was made to see whether the guideline was actually followed
at the ground level or not.
Table- 3.6: Pattern in Annual Enhancement of KCC limits of Sample Borrowers
No of Sample Farmers 104 120 124 120 119 127 714
No of cases where renewal of KCC

was done one or two years before 267
76* 49 67 24 41 10
or KCC was sanctioned for the first (37%)
time to the farmer by this branch
Number 99* 88 76 94 89 75 521

No enhancement
of annual (76) (49) (67) (24) (41) (10) (73%)
enhance-
ments in 114
Only once 0 26 31 20 11 26
KCC limit (15%)
during last
three years Every-year 5 6 17 6 19 26 79 (11%)
Note: (i) In Assam, bank statement of 76 sample farmers was made available for only one year
38
3.22 In as many as 267 (37% of sample), the KCC limit was either renewed during
the last two years (so record was not available for earlier years) or the KCC loan
was sanctioned to the farmer for the first time by this bank branch. In all these
cases, no enhancement in KCC limit was observed even though the KCC was
sanctioned two years back. The analysis of bank statement of all the sample
farmers (714) indicated that the KCC limit was found to have been enhanced
every year only in 79 cases (11% sample) and the limit was enhanced only once
in another 114 cases (15% of the sample). In all other 521 cases (73% of sample),
no enhancement in credit limit was effected during the last three years.
3.23 The reasons for no enhancement of KCC limit of sample farmers as reported by
the Branch Managers as well as ascertained from the sample farmers and also
visible from the operations of their KCC loan accounts, the irregular repayment
performance of the borrower was the major reason for not enhancing the KCC
limit of the said borrowers. Non-willingness of both the bankers as well as the
farmers to go beyond the KCC limit of Rs. 1.0 lakh if it was close to this amount
as both the parties preferred to avoid ‘mortgage of land’ which is applicable for
loan above Rs. 1.0 lakh. Similarly, if loan amount contemplated was close to Rs.
3.0 lakh, both the farmers as well as bankers preferred to restrict it at Rs. 3.0
lakh since interest subvention is available for loan up to Rs. 3.0 lakh.
Provision of 10% of crop loan limit towards post-harvest / household /

consumption requirements + 20% of limit towards repairs and maintenance
expenses of farm assets + crop insurance, PAIS & asset insurance.
3.24 The revised guidelines on KCC has suggested to include the above two components
in the maximum permissible KCC limit. The practice was observed to be followed
by commercial banks and RRBs, to some extent but as an academic exercise
only, since in majority of the cases, the exercise of fixation of KCC limit was done
just to satisfy the norms laid down in the guidelines. For example, a comparison
of KCC limit arrived at by following the usual approach as mentioned in the
guidelines (the desired limit) and the actual KCC limit fixed in case of sample
farmers in Punjab indicated that there were only 5 out of 120 cases where both
the figures were almost same (difference of within Rs. 5000). In other 76 cases,
the actual KCC limit fixed was less than the desired limit and in the rest 39 cases,
the actual limit fixed was higher than desired KCC limit. In other states too, the
observations were on the similar lines. The reasons for the same as gathered
from bankers and the borrowers are as under:
(i) In quite a good number of cases, there was already a consensus between the
Branch Manager and the farmer on the amount of KCC limit to be fixed for
the said farmer and normally the same amount was being specified by the
farmer on the KCC application form. Sometimes the farmers themselves
did not want a higher limit than the amount specified by him and in other
cases, it was the branch managers who informally conveyed to the borrower
about their unwillingness to fix the KCC limit beyond a certain amount.
The same was observed from the application cum appraisal forms where it
39
was clearly visible that the quantum of land offered for KCC, the cropping
pattern indicated therein, and the scale of finance for the crops specified
were written in a very causal manner or some of the items were not even
recorded/ missing in the appraisal form.
(ii) As already indicated in para 3.22, sometimes the exercise of calculating the
KCC limits turns out to be futile when a cap of Rs. 1.0 lakh is put to avoid
land mortgage or a cap of Rs. 3.0 lakh is imposed by the farmers themselves
due to non-availability of interest subvention beyond this amount. Another
issue with the land mortgage was that banks were mortgaging the entire
land offered by the farmer for KCC loan irrespective of the value of the
mortgaged land. Banks should take into the account the value of land vis-à-
vis the quantum of security/ collateral required to secure the loan (over and
above Rs. 1.0 lakh). Therefore, some farmers were hesitant to avail KCC
loan beyond Rs. 1.0 lakh.
(iii) Since the components of consumption & asset maintenance were not
eligible for interest subvention and were fetching higher rate of interest
as compared to crop loan component, these components were required
to be shown by the banks either in a separate account or as a sub-limit of
KCC limit. However, the same was not being practiced by the bankers. The
bankers opined that since the CBS platform used by various banks (banks
visited by the study team) did not have the option of sub-limit within the
overall KCC limit, it was not possible for them to keep separate records
online for crop loan component and consumption cum asset maintenance
component. Therefore, the KCC limit sanctioned to the farmers was either
exclusive crop loan limits (if other two components were not considered/
sanctioned) or a cumulative of crop loan plus consumption plus asset
maintenance and the entire amount was shown as ‘crop loan component’.
(iv) Non-satisfactory recovery of loans was also observed to be one of the major
reasons for not sanctioning KCC beyond a limit. In UP, State Government
had issued a notification that if land was required to be sold by the banks
for recovery of dues, the farmer should be left with a minimum land parcel
of 3.15 acre. However, since majority of farmers in the state were marginal
and small farmers, banks could not get the required permission from the
Tehsildar to sell the land of the farmers to recover their dues.
Season-wise sub limit
3.25 Season-wise crop loan limit was being fixed by the cooperative banks (Table
3.6) in all the states selected for the study. This was normally done because of
resource crunch at the DCCB level as also to ensure better recovery of dues from
the farmers. Although some commercial banks & RRBs in UP and Assam had
also indicated the season-wise crop loan limits in the KCC loan application cum
appraisal forms, the same was not being practiced in operations. In fact, the
DCCBs in Bihar were not allowing farmers to withdraw entire limit at a time.
40
Personal Accident Insurance Scheme (PAIS)
3.26 It was reported by the bank branches visited in Assam, Bihar, UP and Punjab
states that they had covered almost all the loanee borrowers under PAIS, but
sometimes they forgot to debit the premium in case of non-regular borrowers
who didn’t visit banks for long. In Maharashtra, farmers were being covered
under PAIS by Vidharbha Konkan Gramin Bank (VKGB) and Bank of India
but the Central Bank of India (CBI) the DCCBs were not covering their farmers
under the PAIS. In case of Karnataka also, all the banks were implementing PAIS
Scheme except the DCCBs. Although Branch Managers of DCCB in Karnataka
state told the study team that it was being implemented by them but the study
team could not ascertained the same from the loan ledgers of the farmers as
whether premium towards PAIS was debited or not. In fact, the practice of
debiting the premium towards PAIS varies from bank to bank and most of time
from branch manager to branch manager also. Although, instructions/ circulars
were there from the controlling offices, all the Branch Managers didn’t act in a
similar fashion due to their ignorance or some other reason.
Table 3.7: Observations on Seasonality, PAIS and Crop Insurance
Particulars/
Sl Assam Bihar UP Punjab Maha Kar
Parameter
ACAB in both DCCBs,
Season-wise distt; SBI Only Syndicate Bank, Only
1 Only DCCBs Only DCCBs
KCC limit Darrang & UBI DCCBs Union Bank DCCBs
Jorhat &KGSGB
In Except
Coverage
majority In majority of All Central Not in
2 of farmers All farmers
of the the cases farmers Bank & DCCBs
under PAIS
cases DCCBs
Coverage All farmers CI in a few No CI in D.
Except PNB, All
of farmers except a cases by Kannada
Mangldoi farmers No crop
3 under Crop Prathama & VKGB & CBI distt & most
& ACAB in except insurance
Insurance Syndicate bank but not by of the banks
Darrang Br few
(CI) scheme in Moradabad BOI in Akola in Bellary
Crop Insurance Scheme
3.27 The crop insurance scheme is being implemented in all the states covered in the
present study except Punjab. Since Crop Insurance is a matter of solicitation,
therefore, bankers cannot insist too much to farmers to avail the crop loan.
However, it was observed that many illiterate farmers didn’t have knowledge about
the PAIS and crop insurance scheme. In fact, most of the time, the bankers debit
the premium amount towards PAIS and crop insurance without the knowledge
of the farmers.
3.28 In Assam, most of farmers were not covered under crop insurance scheme by
the Mangaldoi branch of PNB and Darrang branch of Assam Coop Apex Bank
(except in few cases). In Jorhat district, WBCIS was issued in cases where bank
was allowing crop insurance, although no indication of crop insurance could be
41
noticed from the loan ledgers of the selected farmers. According to the bankers,
the premium was debited from their savings accounts. The other banks are doing
it but not in all cases.
3.29 In Bihar too, although all banks were implanting the crop insurance scheme,
but the bank statements indicated that many a times premium was not debited
to the farmers’ account. In UP, the crop insurance scheme was in operation
except in case of Prathama Bank (RRB) & Syndicate bank in Moradabad district.
The banks indicated that farmers were not very keen to go for crop insurance
since claim settlement was very tardy. As reported, Reliance was the Insurance
provider for Sambhal & Amroha in Moradabad district, which used to return the
insurance premium if the same does not reach to it by 30 June (Kharif) & 31 Dec
(Rabi), despite the issue having been taken up by DLRC.
3.30 Punjab and Arunachal Pradesh are the two states who are not implementing the
crop insurance scheme. It is learnt from the newspapers that Punjab is also not
very happy with the recently announced ‘Pradhan Mantri Fasal Bima Yojana’
(PMFBY) which is hailed as one of the most farmer-friendly crop insurance
scheme. The PMFBY provides an indemnity level of 90 per cent whereas the
average loss of major crops, wheat and paddy in Punjab is estimated between
two per cent and three per cent and therefore, the farmers of Punjab would not
benefit from this scheme. As per a report (Business Standard, 06 Feb 2016), in
a written submission to the Union ministry of agriculture, the state has sought
the indemnity level to be raised to 95 per cent and the insurance premium to
be scaled down to one per cent from the present level of 2% (kharif) and 1.5%
(Rabi). The state demands that the insurance scheme should cover the produce
lying in market yards, waiting to be bought by agencies.
3.31 In the state of Maharashtra, the crop insurance is being implemented by different
banks in different magnitude. For example, Vidharbha Konkan Gramin Bank
(VKGB) & Central Bank of India were doing crop insurance in Akola and
Sidhudurg but in a varying magnitude. The scrutiny of bank statement of farmers
financed by Bank of India indicated that they had not debited the KCC loan
towards crop insurance premium.
3.32 In Bellary district of Karnataka state, Branch Managers informed that they had
collected the premium from farmers in respect of notified crops and forwarded
the same to the concerned Insurance Company. However, the farmers visited/
interacted had not grown the notified crop and hence had not paid insurance
premium. However, the DCCBs (PACS) visited had neither collected the premium
nor sent any amount to the Insurance Company, as farmers had not shown any
interest towards the same and opposed the collection of premium. In Dakshin
Kannada district, none of the banks visited were reported to be implementing the
crop insurance scheme.
3.33. Many bankers indicated that it became very difficult as which crop was to be
insured since only a few crops were notified for crop insurance. So there was
a conflict of interest between the bankers and the borrowers. The borrowers
42
wanted to show high value crops in their cropping pattern to get sanctioned a
higher KCC loan limit irrespective of the crops being grown by them and the
bankers too oblige some farmers keeping in view the credit worthiness of those
farmers. However, when it came to the claiming the crop insurance, the same
had a problem.
Quantum of KCC loan
3.34 A huge difference in the quantum of KCC limit sanctioned to farmers across the
sample states was observed. The minimum amount of KCC loan was varying
from Rs. 5,000 in Bihar to Rs. 25,000 in Karnataka and the maximum amount
sanctioned was ranging between Rs. 82,600 in Assam to Rs. 25.0 lakh in Punjab
in case of sample borrowers.
Table- 3.8: Pattern in Sanctioned Amount under KCC to Sample Borrowers

No of Sample Farmers 104 120 124 120 119 127 714
Avg loan sanctioned per
38,618 78,681 1,14,887 4,83,406 1,08,008 1,58,491 1,66,320
farmer (Rs.)
Minimum sanctioned
13,000 5,000 15,000 20,000 15,000 25,000 -
amount (Rs.)
Maximum sanctioned
82,600 3,00,000 3,00,000 25,00,000 17,00,000 7,30,000 -
amount (Rs.)
Up to Rs. 455
No of cas- 104 88 81 14 110 58
1.0 lakh (63.7%)
es having
Rs. 1.0 -3.0 193
sanctioned 0 32 43 48 7 63
lakh (27.1%)
amount
during 66
More than
2015-16 0 0 0 58 2 6 (9.2%)
Rs. 3.0 lakh
Avg amt of loan & avg

Rs. Rs. Rs. Rs.
size of holding of the
9,11,038 10,05,000 5,74,167 8,83,864
Farmers who were
(13.67 (27.4 (6.99 (13.4
sanctioned KCC > Rs.
acre) acre) acre) acre)
3.0 lakh
3.35 The maximum KCC limit sanctioned to a borrower by a cooperative bank was
found to be quite high in Punjab, Maharashtra and Karnataka states. The highest
loan limit in case of sample farmers was Rs. 17,00,000 by Malvan branch of
DCCB, Sindhudurg followed by Rs. 4,71,900 by Jalal branch of DCCB, Bathinda,
Punjab; Rs. 3,51,000 by DCCB, Kapoorthala, Punjab; Rs. 3,10,000 by DCCB,
Akola, Maharashtra, Rs. 3,58,000 by DCCB, Dakshin Kannada and Rs. 2,90,000
by DCCB, Bellary.
3.36 In Assam, Bihar and Uttar Pradesh, the story was just opposite to that observed in
other three states. The maximum KCC limit fixed to any farmer was Rs. 3.0 lakh
(Uttar Pradesh). The comparison of loan amount assessed during the appraisal
and the actual loan disbursed to the farmer indicated a huge difference between the
two. For example, the KCC loan assessed in case of (A/c No 001671000000461)
43
was Rs. 3.89 lakh but the loan outstanding never went beyond Rs. 70,244.
Similarly, KCC loan assessed in case of (A/c No 001621000001599) was Rs. 5.84
lakh but the loan outstanding never went beyond Rs. 99,900. In Uttar Pradesh,
cooperative banks disbursed 75% of credit limit as cash and the remaining 25%
as kind towards fertilizer, seed, etc. In Bihar, Begusarai DCCB provided the KCC
loan maximum of Rs. 50,000 per farmer (circular No 198 dated 18.03.2016).
Similarly, Magadh DCCB was providing maximum KCC loan of Rs. 82,500 to a
farmer having 5.0 acre of land. In Assam, the maximum loan amount to a farmer
was found to be Rs. 82,600.
3.37 In fact, it was reported by the officials of some banks as well as the farmers
interviewed that HDFC Bank was providing KCC as per the valuation of land
ignoring the Scale of Finance. The HDFC Bank has Agri Business Centre/branch
at Rudrapur, Uttarakhand and Bareilly, UP. Since the land value is very high in
Moradabad and Bijnore, the KCC sanctioned is much higher than what they would
get from Public Sector CBs, RRBs or DCCBs, who apply SOF for calculation of
KCC, and also the repayment capacity of farmers.
Collateral Security
3.38 As suggested in the revised KCC guidelines, no collateral security was being
forced by the banks for KCC limit up to Rs. 1.0 lakh as reported by the sample
farmers. However, the banks were insisting land mortgage for KCC limits above
Rs. 1.0 lakh in all the states. There were a few cases where land mortgage or
other types of collateral were not taken for KCC loans above Rs. 1.0 lakh (but
not in cases where loan amount was quite high). It was observed that banks were
mortgaging entire land which were recorded in the Land Possession Certificate
(LPC) or offered by the farmer for KCC loan and these were found to be very high
as compared to the quantum of loan. This practice was very common in almost
all the banks. Banks should mortgage only that much quantity of land value of
which should be able to cover the loan amount.
3.39 There were some other issues pertaining to the land records too. In the state
of Bihar, Maharashtra and Uttar Pradesh, delay was observed in updating the
Khatauni (the register of all households cultivating or otherwise occupying land
in a village as prescribed according to the State Land Revenue Rules). It is a
document prepared as part of record-of-rights but not always done on real time
basis on ‘Bhulekh’ (the online Land Record system for Uttar Pradesh, being
implemented under the National Land Records Modernization Programme).
Accordingly, there are instances of mismatch between the physical records and
online records, since the mutation on transfer of property, which should officially
be done within 35 days, normally takes two to three months. The manual khatauni
is maintained by the lekhpal and land registration is done by the tehsil office,
which takes about two months. Then the details are forwarded to the Revenue
Department, once in 15 days, which undertakes online registration. Therefore, if
a farmer sells a parcel of land immediately prior to applying for KCC, it becomes
difficult for the bank to ascertain the accurate record of rights. Therefore, in all
44
cases, banks in the district/State, appoint advocates to do a thorough search. The
charges of Rs. 600/- to Rs. 700/- (at the time of loan renewal, the charges are Rs.
200/-), are loaded on to the farmers, who protest the additional charges levied by
the bank. Similarly, the same is also true with the availability of ‘Khasra’ (detail
of all the fields with its measurement, name of owners, crops being cultivated on
it) which should normally be provided by the Lekhpal free of cost.
Composite Loan
3.40 The KGSGB indicated that they were not in a position to provide composite loan
under KCC since there were instructions to the contrary. The Karnadandi branch
of KGSGB indicated that they were required to open separate accounts for crop
loan, tractor financing, dairy, etc., as the Finnacle CBS software does not allow
interest calculation separately for crop loan and ATL, i.e., at different rates of
interest. These observations were made by UBI, Prathama Bank and Syndicate
Bank also.
Rate of Interest
3.41 The ultimate rate of interest charged by banks to KCC farmers for loan up to
Rs. 3.0 lakh was governed by government policy of interest subvention and
incentives for prompt repayment. As of now, Government of India is providing
2 per cent interest subvention to banks to enable them to provide KCC loan to
farmers at 7 per cent. In addition to subvention, GOI also provides an incentive
of 3% to farmers who repay their loan promptly i.e. within the due date. Some
State Governments provide an additional subvention to banks and incentive to
farmers in addition to what GOI is providing. The additional interest subvention
and additional incentives given by state governments, if any, is presented in Table
3.9.
Table- 3.9: The present rate of Interest Subvention and Incentives

being offered by GOI & State Governments
Incentive for Rate of

Interest Subvention Total
prompt repayment interest
(%) subvention
Sr. (%) to
State Loan Amt and
No. prompt
State State incentives
GoI Total GoI Total payee
Govt Govt (6 + 9)
farmer
1 2 3 4 5 6 7 8 9 10 11
Upto Rs.1 lakh - 2 2 - 3 3 5 4
1 Assam $
1-3 Lakhs - 2 2 - 3 3 5 4
Upto Rs.1 lakh - 2 2 - 3 3 5 4
2 Bihar
1-3 Lakhs - 2 2 - 3 3 5 4
Karnataka Upto Rs.1 lakh - 2 2 4 3 7 9 0
Cooperative 1-3 Lakhs - 2 2 4 3 7 9 0
3 Karnataka Upto Rs.1 lakh - 2 2 1 3 4 6 3
RRB &
Comm Banks 1-3 Lakhs 2 2 - 3 3 5 4
45
Incentive for Rate of
Interest Subvention Total
prompt repayment interest
(%) subvention
Sr. (%) to
State Loan Amt and
No. prompt
State State incentives
GoI Total GoI Total payee
Govt Govt (6 + 9)
farmer
1 2 3 4 5 6 7 8 9 10 11
Maharashtra Upto Rs.1 lakh 2.5 2 4.5 3 3 6 10.5 0
Cooperative 1-3 Lakhs 2.5 2 4.5 2 3 5 9.5 0
4
Maharashtra Upto Rs.1 lakh 1 2 3 3 3 6 9 0
RRB &
Comm Bank 1-3 Lakhs 1 2 3 2 3 5 8 1
Upto Rs.1 lakh - 2 2 - 3 3 5 4

5 Punjab
1-3 Lakhs - 2 2 - 3 3 5 4
Upto Rs.1 lakh 1 2 3 - 3 3 6 3
6 Uttar Pradesh
1-3 Lakhs 1 2 3 - 3 3 6 3
Source: Department of Refinance, NABARD
Note: $ Govt of Assam provides interest subvention upto crop loan of Rs.35000.
3.42 The rate of interest on KCC loans above Rs. 3.0 lakh and agricultural term
loan by the banks covered in the present study in presented in Table 3.10. It
is observed from the Table that there was not much difference in the interest
rate between KCC loan above Rs. 3.0 lakh and term loan for agriculture & allied
activities. However, the comparison of interest rates presented in table 3.9 &
3.10 indicates that there was a very large gap in the interest rate being charged
on KCC loan up to Rs. 3.0 lakh and all other loan components. Therefore, the
farmer’s choice of restricting KCC loan to Rs. 3.0 lakh even if a slightly higher
amount was required, can be understood.
Charges Levied by Banks on KCC Accounts
3.43 The revised KCC circulars by NABARD (Circular No. 71/PCD 04/2011-12 dated
29 March 2012 to RRBs & Cooperative Banks Commercial Banks and Circular
No. 97/PCD 10/2012 dated 20 April 2012 to Commercial Banks) suggested
that no processing fee should be charged for loan upto Rs. 3.0 lakh. However,
NABARD again modified the instruction on this issue vide circular No. NB 228/
PCD-25/2012 dated 13 Sept 2012 and suggested that the processing fee may be
decided by the respective bank. The most common types of charges levied by the
banks were annual charges, inspection charges, processing charges, ledger folio
charges, cash handling charges, ATM issue charges, Miscellaneous charges, SMS
charges, etc. These charges were found to be varying from bank to bank, even
branch to branch of the same bank. However, these charges are not very high and
account for less than one percent of total loan disbursed during the year.
46
Table- 3.10: The rate of Interest on KCC loans above Rs. 3.0 lakh
and agricultural term loan
Particulars/ Parameter Assam Bihar UP Punjab Maha Kar

Commercial 11.15-
7 11.6 9.0 12 10.7
Int rate (%) on Banks 12.1
KCC loan above 11.0- 12.0-
RRBs 7 13.5 12.5-13.5 12.5
Rs 3.0 lakh 13.0 13.5
Coop Banks 7 NA 10.7 10.5 9.5 12.0
Commercial 11.0 11.15-
Agricultural 11.0-13.0 10.7 12 10.7
Banks 12.1 12.1
Term Loan (%)
11.2- 12.5 12.75- 13.0-
up to Rs.3.0 RRBs 9.65-9.9 12.5
13.0 -13.0 13.5 14.0
lakh
Coop Banks 12.5 NA 10.7 11.5-13.5 13-13.5 NA
Commercial 10.45- 11.15-
Agricultural 11.4-13.1 12 10.7
Banks 12.4 12.1
Term Loan (%)
12.5- 12.75- 13.0-
above Rs.3.0 RRBs 11.0 13.0 12.5
13.0 13.5 14.0
lakh
Coop Banks 12.5 NA 10.7 11.5-13.5 13-13.5 NA
Number of Kisan Credit Cards with a Farmer
3.44 During the field visit, it was gathered that some of the farmers had taken KCC
from more than one banks, normally one from cooperative banks and the other
from either a commercial bank or a regional rural bank. As such there is nothing
wrong in it since these farmers have offered a portion of their total land to one
bank and the other portion to the other bank. Such farmers, despite average loan
sanctioned by cooperative banks being quite less, still preferred to have KCC
from cooperative Bank just to get good quality fertilizer and seed, etc. However,
the farmers were reluctant in revealing their availment of KCC loan from multiple
sources. For example, 4 farmers having KCC with Sherghati branch of Magadha
DCCB, Bihar indicated that they had KCC from some other banks too -Mr. Manoj
Kumar (A/C 00515008000599) with MBGM, Karanauli branch; Mr. Shailesh
Kr Sinha (A/c 000515008000997) with Bank of Baroda; Mr. Dilip Kumar (A/c
000515008100277) with Bank of Baroda; Mr. Khairat Ahmad also with Bank of
Baroda.
3.45 Some farmers in Moradabad and Bijnore districts of UP who had large farm
holdings, were also having more than one KCC. For example, Ashok Kumar,
(DCCB, Surjannagar) who had 9 acres was eligible for loan of Rs. 4.5 lakh, but
since there was no interest subvention beyond Rs. 3 lakh, he had availed two
KCCs, one from HDFC Bank, Kashipur branch and another KCC from DCCB
Moradabad. In fact, the farmer indicated that the private bank disbursed the
loan in less than a fortnight whereas the DCCB took about six months, and
imposed additional conditionality of cash and kind component, and fixed the
repayment date as 30 June. Similarly, Naubhar Singh also had two KCCs, for
his 9 acre landholding, Rs. 3.00 lakh from Prathama Bank & Rs. 0.50 lakh from
DCCB Moradabad.
47
Ever Greening of accounts
3.46 In some of the KCC accounts, the repayment of earlier loan by the farmer and the
disbursement of the new loan was found to had been done either on the same day
or within a gap of one or two days and both the amounts were almost same in
majority of the cases, clearly indicating the case of book adjustments. Although
such cases were noticed in almost all the banks in all the states, but the number
of such cases were not many. A few examples of repayment and withdrawal of
KCC loan on the same day is given below:
Table- 3.11: Ever greening of Accounts
Name of Farmer/ Bank Date of repayment by farmer/ Amount trans-

disbursement of loan ferred (Rs.)
Bihar Gramin Bank, Cheria Bazar, Begu- 27.03.2015 By Cash 1,07,000
sarai, A/C No. 3808050000360 27.03.2015 To Cash 1,00,000
14.12.2015 By Cash 54,000
PNB, Rahatpur, Begusarai, Bihar
14.12.2015 To Cash 50,000
State Bank of Patiala, Kapurthala, Punjab 28.05.2015 By Cash 3,10,000
A/c no: 65224659218 28.05.2015 Cash Withdrawal 3,00,000
Assam Gramin Vikas Bank, Assam 07.03.2015 By Cash 48,000
A/C No. 7071250004312 07.03.2015 Cash Withdrawal 25040
27.032014 By Cash 68,208
Central Bank of India, Gandhigram, 27.03.2014 To TRF 1,49,000
Akola, A/c No. 2381458111 07.03.2015 By Cash 1,58,000
07.03.2015 To TRF 1,64,000
Syndicate Bank, Kanth, Moradabad 11.10.2014 By Cash 70,000
A/C No. 85922200064341 11.10.2014 To Self 70,000
Impact of KCC on Farm Income
3.47. A comparison of farm income between KCC holders and Non-KCC farmers was
made to assess the impact of KCC financing on the income of loanee farmers
(Table 3.12). The assessment of farm income was made for the agricultural year
2015-16. The agricultural years 2014-15 and 2015-16 were not a normal year
due to deficient rainfall for two years back to back. The monsoon rainfall, between
June and September, was 14% below normal in 2015-16 and 12% deficient in
2014-15. As far as growth of agriculture sector is concerned, the agriculture
sector was estimated to grow 1.2% in 2015-16, better than the (-) 0.25% seen in
the previous fiscal (NITI Aayog in Economics times 31 Mar 2016).
3.48 It may be observed from Table 3.12 that agricultural income was higher on KCC
holder’s farm as compared to that on non-KCC holders, in varying amount. It
may be concluded that the KCC scheme has certainly benefitted to agriculturists
albeit in varying magnitude to different people depending upon the availability
and quality of land resources and the capacity of the farmer to manage these
48
resources. The average gain per acre on KCC loanee’ farm over non-loanee’
farm on account of financing through KCC comes to Rs. 5463 with minimum
gain of Rs. 858 in Akola district of Maharashtra and maximum of Rs. 13657 in
Moradabad district of Uttar Pradesh.
Table- 3.12: Contribution of KCC loan in Increasing Net Farm Income

(Amount in Rs.)
KCC Holders Non-KCC holders In-
crease
in net
Avg Avg net
Avg net Avg Avg net Avg net farm
size farm in-
Sl States Districts Avg farm In- size of farm farm
Sam- Sam- of Income
loan per come per hold- Income Income come
ple ple hold- per per
farmer House- ing per per
ing House- acre
hold (acre) acre acre
(acre) hold due to
(No.) (No.) KCC
Jorhat 54 34994 56369 2.82 19989 20 1.06 15387 14516 5473
1 Assam
Darrang 50 42532 40090 2.32 17280 25 2.44 37976 15564 1716
Gaya 57 68900 93135 3.91 23820 17 1.67 36059 21592 2228
2 Bihar
Begusarai 63 87530 124782 5.14 24277 22 3.23 64203 19877 4400
Var/ Bij 60 102234 103702 3.53 29377 23 0.76 16988 22353 7024
3 U. P.
Moradabad 64 126750 137661 3.28 41970 30 1.28 32389 25264 13657
Pun- Kapurthala 60 512518 418185 10.42 40133 23 5.41 168782 32396 5319
4
jab Bathinda 60 454293 364198 8.78 41480 17 8.59 270118 29871 11609
Akola 60 82236 92352 6.05 15265 13 6.68 96239 14407 858
5 Maha
Sindhudurg 59 134668 104018 4.9 21228 10 2.22 36803 16578 4650
Dakshin
60 169980 114329 4.37 26162 30 2.31 51411 22256 3906
6 Kar Kannada
Bellary 67 148202 114880 6.27 18322 25 3.70 61250 16554 1609
Total sample
714 166275 149060 5.21 26809 255 3.04 69850 21346 5463
(% of total sample)
3.49 The net gain to KCC holders (over non-KCC holders) after paying the interest
amount accrued on the loan availed from banks is analyzed and presented in
Table 3.13. The financing of crop loan through KCC mode even without interest
subvention (i.e. 9%t interest) had contributed to the farm income of KCC farmers
(net of interest burden) over non-KCC farmers to the extent of Rs 2591 over total
sample. Although income net of interest burden was as high as Rs. 13188 per
acre in Moradabad district, the farmers of Akola (net income minus 366/ acre)
and Bellary (net income minus 359/ acre) were not able to liquidate interest
burden of KCC. However, with the support of 2% interest subvention to banks
and 3% rebate on prompt repayment, all the farmers including those of Akola
and Bellary were able to generate some gain over non-KCC farmers. The average
gain on KCC farms over non-KCC farms was estimated at Rs. 2974/ acre when
2% interest subvention was taken into account and a gain of Rs. 3548/ acre when
calculation was made assuming all farmers will be repaying their dues within the
stipulated time period (prompt repayment).
49
Table- 3.13: Benefit from KCC Loan net of Interest Burden to the Farmers
Annual interest burden per Gain per acre per annum

acre per annum In- net of interest
crease
Average 7% on 4% on in farm 7% on
4% on
loan portion portion income portion
Sl State District portion
per eligible eligible per eligible
eligible
acre 9% # for IS for IS acre 9% # for IS
for IS &
& 9% & 9% due to & 9%
9% on
on rest on rest KCC on rest
rest amt
amt amt amt
Jorhat 12409 1117 869 496 5473 4356 4604 4977
1 Assam
Darrang 18333 1650 1283 733 1716 66 433 983
Gaya 17621 1586 1233 705 2228 642 994 1523
2 Bihar
Begusarai 17029 1533 1192 681 4400 2867 3208 3718
Var/ Bij 28961 2606 2027 1158 7024 4418 4997 5866
3 U. P.
Moradabad 38643 3478 2705 1546 13657 13188 13961 15120
Kapurthala 49186 4427 4222 3916 5319 4508 4712 5019
4 Punjab
Bathinda 51742 4657 4293 3747 11609 5378 5742 6287
Akola 13593 1223 952 544 858 -366 -94 314
5 Maha
Sindhudurg 27483 2473 2063 1447 4650 2177 2587 3203
Dakshin
38897 3501 2917 2041 3906 406 989 1865
6 Kar Kannada
Bellary 23637 2127 1697 1053 1609 -359 71 716
Total sample 31923 2872 2489 1915 5463 2591 2974 3548
Note: # since 2% subvention is given to banks so that they lend at 7% to the farmers, it is assumed that
banks would be lending to farmers at 9% in absence of interest subvention scheme.
Table- 3.14: Apportionment of KCC loans towards amount

not eligible for Interest subvention
Average amount of loan per

No of Sample HHs Avg land holding (acre)
Farmer (Rs.)
HHs HHs
HHs
issued issued HHs HHs HHs
Sl State District issued
Dis- loan loan Dis- issued issued issued
loan District
trict less more trict loan less loan < loan >
more total
total than than total than Rs. Rs. 3.0 Rs. 3.0
than Rs.
Rs. 3.0 Rs. 3.0 3.0 lakh lakh lakh
3.0 lakh
lakh lakh
Ka-
1 60 24 36 10.42 5.38 13.78 512518 266162 676756
Punjab purthala
2 Bathinda 60 38 22 8.78 6.05 13.49 454293 252121 803500
Sindhu-
3 Maha 59 57 2 4.9 4.11 27.4 134668 104130 1005000
durg
D. Kan-
4 60 55 5 4.37 4.33 4.86 169980 139160 509000
Kar nada
5 Bellary 67 66 1 6.27 6.11 17.66 148202 136811 900000
50
3.50 It can also be concluded that Interest Subvention as well as incentives for prompt
repayment have positive impact on the agricultural income of farmers covered
under KCC scheme.
3.51 A total of 66 sample farmers in five districts viz., Kapurthala and Bathinda in
Punjab, Sindhudurg in Maharashtra & Dakshin Kannada & Bellary in Karnataka
were issued KCC loan of more than Rs. 3.0 lakh. The KCC limit sanctioned to
these farmers was divided in to the amount eligible for interest subvention (Rs.
3.0 lakh attracting 7% interest rate) and amount excess of Rs. 3.0 lakh attracting
9% interest amount. The weighted average annual interest burden on farmers in
case of these districts was arrived at by applying suitable interest rates on the
proportionate amount falling under various interest slabs.
3.52 It is evident from the table (3.10) that if farmers avail the KCC loan and repay in
time, they would not be incurring any loss from cultivation of agricultural land
although the conditions may vary from farmer to farmer. However, the farmers
in Akola and Bellary districts appeared not to even have covered their interest
burden this year (2015-16), probably, on account of drought conditions in these
two districts.
3.53 The overall impression from the analysis of implementation of KCC scheme is
that the KCC scheme has benefitted the farmers and they are able to generate
profit, although in varying quantities. There may be some issues relating to
the implementation of the scheme in light of the revised guidelines but those
deviations (not being adhered to either by the banks or by the farmers), do not
seem to be affecting the prospects of farmers getting the KCC loans from the
bank and making the best use of it for crop cultivation. Similarly, the Interest
Subvention as well as incentives for prompt repayment too have positive impacts
on the agricultural income of farmers covered under KCC scheme.
51
CHAPTER 4
Issuance of ATM/ RuPay Debit cards
4.1 The revised guideline of KCC dtd 29 March 2012 suggested the withdrawal
through ATM/ debit cards & operations through PoS available with sugar mills/
input dealers as some of the options for withdrawal of KCC loan sanctioned to
a farmer. Further, in a meeting of Union Finance Minister with Bankers on 15
November 2012, it was decided to convert all old KCCs into ATM-cum-Debit/
RuPay Cards by June 2013 and thereafter, number of initiatives were made to
expedite the process of issuance of ATM/ debit cards by the banks. While reviewing
the progress of the KCC scheme on 15 Nov 2015, the Ministry of Finance,
Department of Financial Services, GOI had observed that the implementation of
the scheme among cooperative banks and RRBs was not very satisfactory.
4.2 NABARD vide circular No 115/ DoR-35/2013 dated 16 May 2013 had advised
the controlling offices of the banks to issue the instructions to all the branches
for converting all KCCs into ATM-cum-Debit/RuPay Cards immediately. It was
also suggested that the implementation of the scheme may also be monitored at
Senior Management level at Head office of the banks on Weekly basis and also
the progress in this regard may be placed before the respective boards regularly.
NABARD once again vide circular No 159/ DoR /2013 dated 24 July 2013
reiterated that all the branches to convert their KCCs into ATM-cum-Debit/RuPay
Cards latest by 31 August 2013. It may be mentioned here that GIZ – NABARD
Rural Financial Institutions Programme in Cooperation with NPCI had prepared
a ‘Reference Guide for On-boarding ‘RuPay Kisan Card’ and ‘RuPay Debit Cards’
for the benefit of the banks, which is readily available with all the banks.
I. Role of NPCI in Promoting RuPay Cards:
4.3 National Payments Corporation of India (NPCI) is an umbrella organization for

all retail payments system in India. It was set up with the guidance and support of
the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA). During the
last five years, the transactions have grown multi-fold from 2 million a day to 20
million now. From a single service of switching of inter-bank ATM transactions,
the range of services have grown to Cheque Clearing, Immediate Payments
Service (24 x 365), Automated Clearing House, Electronic Benefit Transfer and
a domestic card payment network named RuPay to provide an alternative to
international card schemes. As on end-October 2015 over 220 Million Indians
own RuPay cards.
4.4 RuPay, a new card payment scheme launched by the National Payments
Corporation of India (NPCI), has been conceived to offer a domestic, open-loop,
multilateral system which allows all Indian banks and financial institutions in
India to participate in electronic payments. The RuPay debit card is conceived to
have the following benefits:
(i) Since the transaction processing happens domestically, it leads to lower cost
of clearing and settlement for each transaction. This makes the transaction
cost affordable and drives usage of cards in the industry.
52
(ii) RuPay, being a domestic initiatives, it offers development of customized
product and service for Indian consumers.
(iii) Transaction and customer data related to RuPay card transactions will
reside in India.
(iv) There are under-penetrated/untapped consumers segments in rural areas
that do not have access to banking and financial services. Right pricing of
RuPay products makes the RuPay cards more economically feasible for
banks to offer to their customers.
(v) RuPay card is uniquely positioned to offer complete inter-operability
between various payments channels and products. NPCI currently offers
varied solutions across platforms including ATMs, mobile technology,
cheques, etc. and is extremely well placed in nurturing RuPay cards across
these platforms.
I(a) National Financial Switch (NFS) Membership:
4.5 NPCI has developed a hassle free and transparent process for NFS membership
for all banks. Irrespective of the bank type and size, the process remains
the same along with the membership fee. For banks willing to become direct
members with NPCI NFS switch, there is one time fee of Rs. 300,000. Largely
direct membership is required by public sector, private sector, foreign banks or
banks which have or plan to have a large network of branches or ATMs in near
future.
4.6 To achieve the objectives of financial inclusion, NPCI has facilitated a sub
membership model for smaller cooperatives (State Cooperative, District
Cooperative, Regional Rural Banks) where they can use NFS infrastructure under
sub membership with a direct member bank with NPCI. The direct member bank
acts as a sponsor bank for the smaller bank, and the latter is identified as a sub
member bank in NPCIs system. There is no sub-membership fee which is charged
by NPCI. There is only a certification charge of Rs. 75000 for sub member bank
and all other banks (direct members, RRBS, white label ATMs, SBI Associates)
as and when they approach NPCI to get certified on various products like ATM,
POS, Ecom, EMV. The number of members/ sub-members is given in Table 4.1.
Table 4.1: The number of members/ sub-members as of March 2016

Membership Type No of Banks ATM Branches on NFS
Direct Member 96 204904
Sub Member Banks 461 2122
RRBs 56 924
White Label ATMs 7 12962
I(b) Cost Per Transaction:
4.7 The cost per transaction for RuPay usage is the lowest in the country offered by
NPCI as compared to other cards (Master card/ Visa). The ATM/ Micro-ATM charges
are as under:
53
Ib(i) ATM Usage Charges (to banks)
4.7.1 Switching fee is charged to the issuing bank only. The fee is charged only on
approved and successful transactions. No fee is charged to the acquiring bank.
The fee is charged towards the service provided by NPCI to route the transaction
from acquiring bank switch to the issuing bank switch. It’s the same fee charged
on RuPay Debit Card and KCC Cards issued by banks, i.e. the switching fee
remains the same. The switching fee is charged for financial, non-financial and
value added services. The Switching fee charged by NPCI is 45 paise + Service
Tax.
Ib(ii) Micro ATM (to banks)
Adhaar Based Transactions:
4.7.2 The switching fee for Adhaar based transaction is given in Table 4.2.
Table 4.2: The switching fee for Adhaar based transactions
Switching Fee
Transaction Type Description
(Excl. Taxes)
AEPS ‘On us’/Authentication Onus/Authentication 10 Paise
AEPS Off us Balance Enquiry 25 Paise
Cash Deposit 25 Paise
Cash Withdrawal 25 Paise
Fund Transfer 25 Paise
eKYC eKYC 25 Paise
Demographic Authentication Demographic Authentication 10 Paise
4.7.3 The above mentioned switching fee is charged only for the successful financial
or non-financial transactions routed through NPCI. ‘On us’ transactions are such
where only Adhaar authentication is being processed by NPCI. In case of ‘Off us’
transactions, in addition to Adhaar authentication, the transactions take place
between the issuing and the acquiring banks.
Card + Pin Transactions
4.7.4 The switching fee will be as per NFS rule which is Rs 0. 45 + Service Tax for all
approved and successful transactions.
Ib(iii) POS Transactions
4.7.5 In case of POS transactions, the switching fee is charged both to the issuing and
the acquiring bank. Rest of the rules remain same for the applicability of the
switching fee as in case of NFS. The Switching Fee for POS transactions is as
under:
i. Issuing Banks: 60 Paise + Service Tax

ii. Acquiring Banks: 30 Paise + Service Tax
54
Support being provided by NPCI to banks for on-boarding the payment system
including issuance of cards:
4.8 NPCI is observed to be ensuring complete handholding for the banks during the
entire process of certification and membership. It provides the consultation to all
the banks willing to get on the NFS network, and it is also helping them to take a
decision in respect of the following:
a) Model type: What type of model should the bank go with – direct membership
or sub membership model?
b) Application Service Provider: There are about 15 ASPs listed in NPCI’s

list. It helps bank to choose the best as per their geography and scope of
operations.
c) Documentation with NPCI: There are 24 set of documents on which the

banks need to be guided before they come on the NPCI network.
d) Card designing and art work: The product team helps the bank design
the card and provide proper art work as per the customer base of the bank.
e) User Acceptance Testing: The NPCI team located in Mumbai, Chennai,

Hyderabad, Delhi and Kolkata ensure timely and adequate help so that the
testing is performed with the ASPs, CBSs and the recon agent of the bank
before the banks go live and start issuing NPCI products to the customers
for usage on the field.
f) Certification Report: After the testing is over, NPCI provides certification

report to the bank.
4.9 All above mentioned points require regular interaction with the banks on mails,
phones and in person to help them understand which products they should go
with and what will be the certification process for each process type. During the
entire testing and certification process, NPCI guides and hand holds the ASP and
the Bank to go over the process.
4.10 NPCI is reported to have developed a solid dispute management system to

manage disputes within the banks or between a customer and the bank/s. Here
NPCI maintain the recon reports, adjustment files, MIS reports, circulars, etc.
All categories of disputes are managed like chargeback, representment, pre
arbitration, arbitration, good faith etc.
Advantages of RuPay cards over Master/Visa card:
4.11 The RuPay CARD has been found to have the following advantages:
a) The switching fee is charged to banks only in case of approved transactions

unlike other card schemes
b) For every RuPay comes with an in-built insurance cover for the users.
Earlier, cardholders had to use the card within 45 days prior to insurance
55
claim. This has now been extended to 90 days to ensure that the benefit
reaches the user and due time is given to the user to understand the process
of using the cards. The insurance covers are (i) Rs. 1 Lakh to the classic
card holders and (ii) Rs. 2 Lakh to the premium RuPay card holders.
c) The cost of transaction for the banks is lowest in the country @ 0.45 paisa
+ service tax as the switching fee. The economic feasibility of the RuPay
card scheme motivates the banks to offer cards to even untapped/under
penetrated consumer segments in the rural areas.
d) RuPay is the only one which issues KCC cards to the farmers
e) Transaction and customer data related to RuPay card transactions will stay
within India unlike in case of Visa/Master cards.
f) The RuPay scheme is a domestic scheme where the products e.g., Kisan
credit card, PMJDY RuPay Cards etc., can be customized in no time to
reach out to ensure that the benefit goes to all section of society.
II. Support from NABARD to RRBs & Cooperatives for Issuance of RuPay Cards
4.12 NABARD vide circular No 137/SPU-KCC-05/2014 dated 01 August 2014 has

issued a Master Circular for RRBs and cooperatives pertaining to the scheme
on providing technology support through POS/Micro ATM and ICT cards (RuPay
Kisan cards) to enable the RRBs & cooperatives to provide doorstep banking
facilities. This has also an objective to enable the clients of RRBs & cooperatives
to connect to National Payment system and avail all types of financial services.
The Banks have to ensure the certification standards as per specifications of
NPCI, IBA-IDRBT and UIDAI for RuPay Cards and POS/micro ATMs are adhered
to.
4.13 The Support from NABARD to RRBs and Cooperatives is of the following types:
A. Support for ICT Solutions –under Financial Inclusion Technology Fund

(FITF)
(i) Cost of Micro ATM/POS terminals upto Rs. 25,000/- per terminal. The Micro
ATM (POS) devices should adhere to the technical specifications approved
by IBAIDRBT and UIDAI 1.5 Standard.
(ii) Cost of printing and issuing of RuPay Kisan cards upto Rs. 25/- per card
(should be owned by the Bank and confirm to standards specified by NPCI).
The Card can be a non-personalised card, which can be given as a part of
the ‘Welcome Kit’ to the Customer.
(iii) The support to RRBs in these cases is 100% ( i. e Rs. 25,000/- for POS/
Micro ATMs and Rs. 25/- for RuPay Kisan Cards-) in NE regions, Sikkim,
Chhattisgarh, Jammu & Kashmir, Uttarakhand, and Jharkhand, Himachal
Pradesh and Andaman & Nicobar Islands and 80% of Rs. 25,000/- for POS/
Micro ATMs and 80% of Rs.25/ for RuPay Kisan Cards or 80% of the actual
cost whichever is lower in the rest of the country.
56
B.1. Operational support for ATM under FITF: RRBs
(i) The scheme covers only operational cost, No capital expenditure is covered.
(ii) The scheme will cover transaction cost/Interchange charges upto Rs.15/-
per KCC transaction arising out of the use of RuPay Kisan Cards on an
ATM other than the parent Banks ATM of the customer including that of the
white label ATMs as and when these ATMs will be deployed in the field.
(iii) Two types of transactions can be performed at ATMs using RuPay Kisan
Card i.e., Financial and Non-Financial transactions. Our interchange fee
support scheme, for ATM usage is applicable to both Financial and Non-
Financial (e.g. Balance enquiry, mini statement etc.) RuPay Kisan card
transactions.
(iv) Upon stabilization of the system, the bank may forward a letter to NABARD
informing about the number of ATM cum debit cards proposed to be issued
to KCC customers.
(v) The reimbursement will be 100%( i. e Rs.15 inclusive of service charges)

for North Eastern Region, Sikkim, Chhattisgarh, J& K, Uttarakhand,
Jharkhand, Himachal Pradesh and Andaman & Nicobar Islands and 80%
of Rs. 15/-(inclusive of service charges) in case of RRBs for the rest of the
country.
B.2. Operational support for ATM under FITF: Cooperatives
(i) ASP model of CBS: For Banks running its CBS on ASP model (irrespective
of whether or not they have adopted CBS under NABARD model) the ATM
Add- On for CBS will be recurring cost/ fee based on periodicity. The ATM
Add- On fee has been fixed at Rs. 580/- per branch per month for three
years.
(ii) Ownership Model of CBS: If the Bank runs its CBS on ownership model,
ATM add-on will be a onetime cost for banks. An amount of Rs. 20,000/-
(imputed ATM Add-On cost for 3 years) per branch will be reimbursed as
ATM Add-On fee for banks who adopt ownership model.
(iii) Switching Fee- for the Banks which adopt the sponsorship model to join
NFS, involve Switching Fee: This fee is required to be paid to the Switch
provider who owns and maintains the ATM switch. An amount of up to
Rs.3/- per transaction for all transactions will be reimbursed towards
switching fee charge.
(iv) Interchange/Transaction Charges: The scheme will cover transactional cost/

Interchange charges upto Rs.15/- per KCC transaction arising out of the use
of RuPay Kisan Cards on an ATM other than the parent Banks ATM of the
customer including that of the white label ATMs as and when these ATMs
will be deployed in the field.
57
(v) The reimbursement will be 100% for North Eastern Region, Sikkim,
Chhattisgarh, J& K, Uttarakhand, Jharkhand, Himachal Pradesh and
Andaman & Nicobar Islands and 90% for the rest of the country.
C. Support for demonstrating banking technology under FIF
(i) Under this scheme, a mobile van fitted with ATM and POS machines/ micro
ATMs will visit villages in the area of operation of the RRBs and will work
primarily as a literacy tool by demonstrating the use of ATMs/ POS machines/
micro ATMs. The Banks will also provide financial literacy material about
the KCC debit cards, ATM services and POS terminals/ micro ATMs which
is to be provided in vernacular languages in the mobile van.
(ii) The assistance will be utilised for a Mobile Van, ATM, GPRS Router, UPS,
POS terminal/ Micro ATM etc. (and any other incidental expenditures linked
to the project) and financial education material in vernacular language.
(iii) The assistance will be upto Rs. 10 lakh and one Mobile Van per RRB.
(iv) The proposal for the mobile van is to be supported by relevant documents
(quotations, board approval etc.) while submitting the same to NABARD.
(v) The proposal should mandatorily include an ATM, as the mobile van
only for the demonstration of smaller gadgets like micro ATM/POS is not
justified.
(vi) ATMs in the mobile van are to be used for demonstration purpose only.
D. Data migration/feeding of PACS data to CBS-Support for Cooperatives

under FIF
(i) The issuance of RuPay KCC to PACS members will involve migration /
feeding of member account details into the CBS of DCCB. All Cooperatives
which are fully CBS enabled (branch & HO module) will be eligible for
support under this scheme.
(ii). Assistance upto Rs. 10 per account under FIF for data migration.
(iii) Banks may engage the services of suitable agency or appoint individual
data entry operators. In case the bank had used the services of any agency
/ individual data entry operators for data migration during the course of
CBS implementation then bank may consider negotiating and engaging the
services of the same entity.
III. Progress Made so far in Issuance of RuPay Cards: Macro Picture
4.14 The present section proposes to highlight the macro picture of the issuance of
Kisan Credit Cards. The category-wise number of banks which have been issued
Issuer Identification Number-IINs/ Bank Identification Number-BINs and are
live and making transactions is presented below in Table 4.1. As per the data
58
provided by the NPCI (till February 2016), 146 BINS have gone live out against
172 IINs/ BINs issued to 154 banks. The transactions are yet to be started in
just 08 BINs which indicates of good efforts on the part of NPCI. The progress
of cooperatives banks is quite slow as only 56 banks have been issued the BINs
because of their inherent weaknesses relating to ICT. The process of their slow
moving to CBS is one issue but having complete learning of the operations is
another one.
Table 4.1: Total No of Banks with KCC till 15 July 2016
Number Number BINs gone

Bank Type Remarks
of Banks of BINs Live
(i) 8 BINs are now not operational. Those
were allotted to 8 RRBs which were merged
to other banks and don’t exist anymore.
67 (ii) The BINs which have gone live have made
(actually transactions using KCC issued to custom-
Regional Rural
56 only 59 56 ers. Rests of the 3 BINs are yet to be made
Banks
BINs ex- operational/ go live.
ists) (iii) 3 RRBs viz., Jharkhand Gramin Bank,
Narmada Jhabua Gramin Bank & Vid-
harbha Konkan Gramin Bank have 2 BINs
each.
District
Rest 02 BINs are yet to be made operational/
Central Coop 56 56 54
go live.
Banks
Public Sector SBI & Central Bank of India have two BINs
21 23 21
Banks each
Private Sector Rests 4 BINs are yet to be made operational/
10 10 6
Banks go live.
Associate All five Associate Banks of SBI have 2 BINs
5 10 5
Banks of SBI each.
State Coopera- Rest 2 BINs are yet to be made operational/ go
6 6 4
tive Banks live.
Only 164 BINs exists against the 172 allocated
Grand Total 154 172 146 to 154 banks. 8 BINs allocated to 8 RRBs do
not exist anymore
Source: NPCI, Mumbai
4.15 The bank-wise analysis of RuPay KCC transactions indicated that 23 Public
Sector Banks together accounted for 55.4% of total KCC transactions followed
by RRBs (53 functional) which together accounted for another 39 per cent. The
functional DCCBs which have been issued IIN/ BIN together accounted for just
2.2 per cent of the total KCC transactions made by all the banks.
59
Table 4.2: Bank-Wise RuPay KCC Transactions (Apr 2015-Mar 2016)
Channels Total Transactions

Bank Type
NFS POS E-com Total (No.) % in total
SBI Associates ` 13,95,39,800 ` 71,62,405 ` 5,11,630 ` 14,72,13,835 2.03
Private Sector
Banks ` 7,26,46,750 ` 20,48,207 ` 7,46,94,957 1.03
Public Sector
Banks ` 4,27,56,21,950 ` 4,71,34,025 ` 27,47,250 ` 4,32,55,03,225 59.70
DCCB ` 27,13,22,300 ` 1,04,421 ` 27,14,26,721 3.75
RRB ` 2,37,55,20,200 ` 52,97,173 ` 10,680 ` 2,38,08,28,053 32.86
SCB ` 4,62,38,400 ` 4,62,38,400 0.64
Grand Total ` 7,18,08,89,400 ` 6,17,46,231 ` 32,69,560 ` 7,24,59,05,190 100.00
Channel share 99.10% 0.85% 0.05% 100.00%

4.16 An analysis of scale of uses & market share of three card payment systems
indicated that National Financial Switch (NFS)/ ATMs dominated the KCC
transactions accounting for as high as 99.1 per cent followed by Point of Sale
(POS) devices at 0.85 percent and the RuPay PaySecure (E-Commerce operations
launched on 21 June 2013) was having a very negligible share of 0.05 per cent.
With RuPay PaySecure, anyone having RuPay cards can make online payments
to fulfill various need-based services such as reservations, booking, ticketing,
shopping, utility bill payments in a secured manner.
4.17 The pattern of KCC transactions across various banks on NFS and POS channels
was compared over two periods (Apr 14-Sept 14 and Sept 15 –Feb 16) to see
whether any definite trend is there in transactions made through these two
channels. It may be observed from Table 4.3 & 4.4 that there was not much
difference in average ticket size per transaction through NFS or POS devise,
as no definite trend in average amount transacted across various banks was
observed. The average amount transacted in case of RRBs and cooperatives was
less as compared to that in case of other banks. However, these amounts were
under-estimated since the denominator (number of transactions) included both
financial and non-financial transactions. As compared to transactions through
NFS and POS channels, the transactions through E-Com (Table 4.5) channel was
observed to be very less.
60
Table 4.3: Change in NFS Transactions from Apr 14-Sept 14 to Sep 15-Feb 2016
KCC Transactions
KCC Amount on NFS (Rs.) Avg Ticket Size on
on NFS (Fin &
NFS (Rs.)
Banks Non-Fin)
Apr 14- Sept 15– Apr 14- Sept 15 – Apr 14- Sept 15–
Sept 14 Feb 16 Sept 14 Feb 16 Sept 15 Feb 16
RRBs & Coops 138515 354732 53,36,38,050 80,66,27,750 3,853 2,274
SBI Associates 14936 8347 5,04,04,400 3,52,95,100 3375 4228
Private Sector Banks 755 8642 39,37,000 1,89,90,650 5215 2197
Public Sector Banks 485183 268158 1,96,13,96,500 1,05,41,21,331 4043 3931
Table 4.4: Change in POS Transactions from Apr 14-Sept 14 to Sep 15-Feb 2016
KCC Transactions on Avg Ticket Size on

KCC Amount on POS (Rs.)
POS (Fin & Non-Fin) POS (Rs.)
Banks
Apr 14- Sept 15 – Apr 14- Sept 15 – Apr 14- Sept 15–
RRBs & Coops 115 1508 4,59,514 33,86,944 3,996 2,246
SBI Associates 304 834 18,79,496 40,24,874 6183 4826
Private Sector Banks 2 196 144 10,39,831 72 5305
Public Sector Banks 3070 6530 1,38,60,589 2,58,89,129 4515 3965
Table 4.5: Change in E-Com Transactions from Apr 14-Sept 14 to Sep 15-Feb 2016
KCC Transactions on KCC Amount on Ecom Avg Ticket Size on

Ecom (Rs.) Ecom (Rs.)
Banks
Apr 14- Sept 15 – Apr 14- Sept 15 – Apr 14- Sept 15 –
SBI Associates 1 231 460 3,86,807 460 1674
Private Sector Banks 0 0 0 0 0 0
Public Sector Banks 102 1834 1,82,216 14,82,809 1786 809
States Leading in KCC RuPay Transactions by RRBs & Coops
4.18 The comparison about the number and amount transacted by KCC RuPay cards
issued by RRBs & Coop on NFS and POS devises is made in Table 4.6 (also
Annexure 4.1). It may be observed that the number of transactions, total amount
transacted as well as average amount withdrawn per transaction is varying a lot
across the banks. Similarly, the average amount transacted through NFS and
POS devices too varying a lot and no definite trend is observed in it.
61
Table 4.6: Leading States for Transactions on NFS & POS
during Sept 15-Feb 16: RRBs & Coops
Chan- Leading States

Particulars
nels Rank 1 Rank 2 Rank 3 Rank 4 Rank 5
National States U. P. Punjab Telangana Bihar H. P.
Finan- No of Transac-
cial 79083 26668 80069 18322 12858
tions
Switch
(NFS) Amount Trans- 21,04,17,500 13,01,04,200 7,20,97,500 7,19,15,100 5,78,85,050
RRB & acted Rs.
Coop Ticket size Rs. 2661 4879 900 3925 4502
States U.P. Bihar Maharashtra Assam Karnataka
Point No of Transac-
of Sale 1075 341 265 68 31
tions
(POS)
RRBs & Amount Trans- 27,21,597 8,01,167 3,08,310 2,00,615 1,60,049
Coop acted Rs.
Ticket size Rs. 2349 1163 2950 5163 2349
Banks Leading in KCC RuPay Transactions on NFS Channel
4.19 It is observed from the comparison about the number and amount transacted by
KCC RuPay cards issued by various banks under ‘RRB& Coop’ & ‘Public Sector
Banks’ (Table 4.7 & Annexure 4.2), that KCC RuPay transactions through NFS
channel is highest by Punjab Gramin Bank in case of ‘RRBs & Cooperatives’ and
Union Bank of India in case of Public Sector Bank.
Table 4.7: Leading Banks for Transactions on NFS during Sept 15- Feb 16
Chan- Leading Banks

Particulars
nels Rank 1 Rank 2 Rank 3 Rank 4 Rank 5
Kashi Gomti Telangana Assam
Punjab Gar- Purvanchal
Banks Samyut Grameena Gramin Vi-
min Bank Bank
Gramin Bank Bank kash Bank
RRB & No of Transac-
24151 18782 80069 15126 21930
Coop tions
Amount Trans-
12,01,98,500 7,96,69,800 7,20,97,500 5,75,89,700 5,38,41,700
acted Rs.
Ticket size Rs. 4977 4242 900 3807 2455
Union Bank Punjab Na- State Bank of Punjab and
Banks UCO Bank
of India tional Bank India Sind Bank
Public No of Transac-
55295 36037 31215 25042 20599
Sector tions
Banks Amount Trans-
22,10,28,731 14,26,61,000 11,99,19,100 10,39,28,900 10,35,17,500
acted Rs.
Ticket size Rs. 3997 3959 3842 4150 5025
62
IV. Issue Relating to Interoperability
4.20 The formalities to be done by banks for required interoperability of Micro ATMs
is presented below:
A) If transactions are routed from Banks ATM switch to NCPI NFS switch.
• Bank to confirm development of populating MCC code as 6012 to identify

Micro ATM transactions.
• Bank to confirm the readiness to perform testing of cash withdrawal,
approved & declined transaction (full certification not required).
• NPCI will not be providing any sign off for the testing. However, if required
it can provide settlement files to bank for recon testing purpose.
• Bank can move into production directly.
B) If transactions are routed from Banks FI gateway to NPCI NFS switch.
• Bank to go for full certification like NPCI does for ATM.

• Bank to install HSM at FI gateway for PIN encryption.
• New IP and Port need to enable at both ends (Bank & NPCI).
• New public keys provided by NPCI to be injected at Bank FI gateway switch.
• Before going to production NPCI certification team and bank will give signoff
on 2 rounds of testing performed
• Post formal signoff and Go ahead, bank to move into production in
coordination with NPCI.
4.21 The status of interoperability of micro ATMs is given in Table 4.8.
Tabl1e 4.8: Status of Interoperability
Testing Tracker for Micro ATMs

Approach ON IP and Interoperable
Sr Start
Bank (FIG or ATM US Port Acquiring Testing End Date
No Date
Switch) Live Status Status
1 Allahabad Bank Live Work in Progress 31/03/16
2 Andhra Bank Live Work in Progress 29/03/16
3 Axis Bank ATM Switch Live Live 12/02/2016
4 Bank of Baroda ATM Switch Live Work in Progress 30/12/15
5 Bank of India Live
Bank of Maha-
6 Live Work in progress 18/03/16
rashtra
Bhartiya Mahila
7
Bank
8 Canara Bank Live Work in progress 03/03/16
63
Sr Start
No Date
Central Bank of
9 ATM Switch Live Live
India
City Union Bank
10 Live
Ltd
Corporation
11 Live
Bank
12 Dena Bank FIG Live Work in Progress 22/03/16
13 Federal Bank Live
14 HDFC Bank FIG Live
15 ICICI Bank Live Work in Progress 07/01/16
16 IDBI Bank Live
17 IDFC Bank ATM Switch Live Live 24/02/2016
18 INDIAN BANK Live
Indian Overseas
19 Live
Bank
20 IndusInd Bank Live Work in Progress 08/02/16
Karur Vysya
21 Live Work in Progress 16/03/16
Bank
Kotak Mahindra
22 Live
Bank
Lakshmi Vilas
23 Live
Bank
Oriental Bank of
24 Live
Commerce
Punjab and
25 Live Live
Sind Bank
Punjab National
26 ATM Switch Live Live
Bank
27 Ratnakar Bank
State Bank of
28 Bikaner and Live
Jaipur
State Bank of
29 Live
Hyderabad
State Bank of
30 Live Live
India
State Bank of
31 Live
Mysore
State Bank of
32 Live
Patiala
64
Sr Start
No Date
State Bank of
33 Live
Travancore
34 Syndicate Bank Live Work in Progress 05/03/16
The Jammu
35 And Kashmir FIG Live Open Live
Bank Ltd
The South In-
36 Live
dian Bank
37 UCO Bank Live
Union Bank of
38 ATM Switch Live Open Work In Progress 06/02/16
India
United Bank of
39 Live
India
40 Vijaya Bank Live Live
41 Yes Bank ATM Switch Live
4.22 The RuPay Kisan Cards are acceptable at all the 220912 ATMs across the
country of all banks. Any ATM proposed to be installed by banks and connected
to the National Financial Switch operated by National Payments Corporation of
India accepts the RuPay Kisan Cards issued by any Bank. The RuPay KCC would
function smoothly as long as the issuing bank is certified by NPCI to use the card.
4.23 As far as interoperability of RuPay Cards/Kisan cards on Micro-ATMs are

concerned, it has gone live for 8 banks and the work is in progress in case of
other 11 banks. Except these 19 banks, all other banks are yet to approach to
NPCI for making their RuPay cards inoperable on Micro-ATMs/POS.
V. Observations from Field of Implementation of RuPay Card
4.24 The following sections propose to present the observations on implantation of

RuPay Cards by the selected bank branches in the study area.
Time frame set by Banks/ Branches to Convert all KCC to RuPay Cards
4.25 Except 12 branches of cooperative banks in Assam, Bihar & Punjab, all other 59
branches had opined that they all had been instructed by their controlling offices
to convert the existing as well as new KCC accounts to RuPay Cards, although
majority of them were not able to show the instructions in written form. But
certainly they all were aware about the RuPay Cards. However, no definite plan
for issuance of RuPay card was found to have been prepared by the majority of
bank branches (69%).
65
Table 4.1: Time frame set by Branches to Convert all KCC to RuPay Cards
No of
Particulars/ Parameter Assam Bihar UP Punjab Maha Kar
Branches
Comm.
24 (10) 4 (3) 4 (2) 4 (2) 4 (2) 4 (3) 4 (1)
Banks
No of Branches RRBs 25 (11) 4 (1) 5 (2) 4 (2) 4 (2) 4 (2) 4 (2)

(banks) covered Coop
22 (11) 2 (1) 4 (2) 4 (2) 4 (2) 4 (2) 4 (2)
Banks
Total 71 (32) 10 (5) 13 (6) 12 (6) 12 (6) 12 (7) 12 (5)
Comm. 24
4 4 4 4 4 4
Banks
No of branches
received instruc- RRBs 25 4 5 4 4 4 4
tions to issue Coop 22 0 4 0 4 4
RuPay Cards 0
Banks
Total 59 8 9 12 8 12 12
Comm. 10
2 2 4 0 0 2
No of branches Banks
have fixed a time RRBs 10 2 2 4 1 1 2
frame to convert
all KCC to RuPay Coop 2
0 0 2 0 0 0
Card Banks
Total 22 4 0 10 1 1 4
Note: (i) Figures in parenthesis indicate the number of banks visited
4.26 Some branches (22) were optimistic to complete the task of issuing the RuPay
card by March 2017 depending upon the availability of cards at their end.
Prathama Bank (RRB) had set a target of issuing the card to all by June 2016.
Two branches (Harhua Branch -90% and Baragaon -100%) of Union Bank of
India in Varanasi district were the only branches out of total 71 visited in six
states which were near completion in issuance of KCC cards to the existing KCC
accounts. Further, two branches (Raipur Saadat & Haldaur) of Bijnore DCCB in
UP were the only cooperative branches out of the total 22 selected for the study
which had fixed a time frame of 30 June 2016 to convert all the existing/ old
KCC into RuPay cards. All other branches told that they would by completing the
issuance of RuPay card at the earliest possible subject to availability of cards at
their end.

Bankers’ Perspective
4.27 The status of issuance of KCC RuPay cards as reported by sample bank branches
has been analyzed and presented in Table 4.2.
66
Table 4.2: Status of Issuance of KCC RuPay Cards by Sample Branches
Particulars/ Parameter Total Assam Bihar UP Punjab Maha Kar

No of Branches Total
71 (32) 10 (5) 13 (6) 12 (6) 12 (6) 12 (7) 12 (5)
(banks) covered
Comm. Banks 19 4 4 4 3 2 2
No of branches RRBs 20 4 5 3 4 1 3
having issued
RuPay Card Coop Banks 7 0 0 1 0 2 4
Total 46 8 9 8 7 5 9
Comm. Banks 13158 908 5421 1528 2218 2285 798
No of KCC Ac- RRBs 14843 2454 4580 2583 1053 2080 2093
counts –A/c out-
standing Coop Banks 27013 822 1665 12113 6800 3398 2215
Total 55014 4184 11666 16224 10071 7763 5106
Comm. Banks 7689 1632 2336 668 268 2363 422
No of RuPay RRBs 4459 1026 1469 1109 654 140 61
Card received at
branch Coop Banks 3421 0 0 4 0 2680 737
Total 15569 2658 3805 1781 922 5183 1220
Comm. Banks 4037 530 1832 493 268 492 422
No of RuPay Card RRBs 3523 849 1469 508 496 140 61

Issued Coop Banks 3312 0 0 4 0 2571 737
Total 10872 1379 3301 1005 764 3203 1220
Comm. Banks 4037 530 1832 493 268 492 422
No of RuPay Card RRBs 3523 849 1469 508 496 140 61
handed over to
farmers Coop Banks 3312 0 0 4 0 2571 737
Total 10872 1379 3301 1005 764 3203 1220
Percentage Share in No of KCC Accounts outstanding
Comm. Banks 58.4 179.7 43.1 43.7 12.1 103.4 52.9
No of RuPay RRBs 30.0 41.8 32.1 42.9 62.1 6.7 2.9
Card received at
Coop Banks 12.7 0.0 0.0 0.0 0.0 78.9 33.3
branch as % No of
KCC A/c Out- Total –ALL@ 28.3 63.5 32.6 11.0 9.2 66.8 23.9
standing
Total-
43.4 79.1 38.0 43.2 28.2 57.3 16.7
CB+RRB#
Comm. Banks 30.7 58.4 33.8 32.3 12.1 21.5 52.9
No of RuPay Card
Issued as % No of RRBs 23.7 34.6 32.1 19.7 47.1 6.7 2.9
KCC A/c Out- Coop Banks 12.3 0.0 0.0 0.0 0.0 75.7 33.3
standing
Total 19.8 33.0 28.3 6.2 7.6 41.3 23.9
Total-CB+RRB Total-CB+RRB 27.0 41.0 33.0 24.3 23.4 14.5 16.7
Note: (i) @ Total –ALL is the share calculated over all the three agencies
(ii) # Total-CB+RRB excludes ‘Cooperative banks’ and share is calculated only for Commercial
Banks and RRBs
67
4.28 It may be observed that, on an average, the number of RuPay Cards received
at branch as per cent of number of KCC A/c outstanding stood at 28.3 per cent
which was ranging from 9.2% (Punjab) to 69% (Maharashtra). However, this
percentage went up to 43.4 percent when ‘Cooperative Banks’ was excluded and
analysis was made using data on Commercial Banks and RRBs.
4.29 The number of RuPay cards issued to the farmers as per cent of KCC acounts
outstanding stood at 19.8 per cent (average of all three agencies) and this
percentage went up to 27 percent when analysis was made for commercial and
RRBs together ignoring coop banks. The major difference was on account of
negligible number of RuPay cards issued by cooperative banks against a very
high number of KCC accounts outstanding with them (just 4 cards issued against
12113 KCC accounts with cooperative banks).
4.30 The reasons for gap between the number of KCC accounts with the bank branches
vis-à-vis number of RuPay cards issued by bank branches and/or between the
number of Kisan cards issued by bank branches vis-à-vis the number of RuPay
cards handed over by controlling offices to the sample branches, as opined by the
branch managers, are as under:
(i) Controlling offices not making available the RuPay Cards in sufficient
numbers or delay in supply of cards is one of the important reasons for
not issuing the RuPay cards to the farmers, particularly to the new farmers.
It may be observed from Table 4.2 that only 46 branches out of total 71
covered in the study had issued some cards by end of February 2016. The
Cooperative banks in Assam, Bihar and Punjab had not started issuing the
RuPay Cards.
(ii) Bankers were averse of issuing RuPay cards to NPA and other irregular
accounts. There were many KCC accounts which were opened during the
last three four years but many of the farmers had not turned up to banks
for renewal of their accounts and these accounts had become overdue.
For example, The Madhya Bihar Gramin Bank (MBGB) had 57033 KCC
accounts outstanding with it as on 31 March 2015 in the Gaya District of
Bihar. However, only 24352 KCC accounts were renewed during 2015-16.
Bodhgaya branch, MBGB has issued just 450 RuPay card (382 operative
–at least activated on ATM) against 1400 KCC accounts outstanding as on
31 March 2015. PNB, Deewan Branch, Bihar had as many as 800 accounts
irregular out of total 1100 KCC accounts with it. PNB, Etwan, Gaya district
had issued 300 RuPay Cards to 300 regular accounts out of total 900 KCC
accounts with it out of which just 30 cards are being used by the farmers.
(iii) Both the bankers as well as farmers don’t see much utility in RuPay Kisan
Debit Cards because once the KCC loan was approved by the bank and
credited to the farmers’ account, the farmers preferred to withdraw the
entire amount from the bank in just one or two withdrawals. The farmers,
particularly small farmers, didn’t do the need based or expense based
withdrawal, probably to take care of their other household/family needs.
68
Because of this practice of withdrawal or even repayment in just one or two
installments, they don’t feel the need of having the KCC RuPay Cards.
(iv) Many of the small agricultural holdings in India are not viable. Given the
choice, the bankers willingly don’t extend KCC loans to unviable holding,
but the pressure from the government makes them to cover the agricultural
farmers under KCC loan. Bankers though sanction the loan to such farmers
but try to have control over the withdrawal of amount credited to their
accounts. Bankers feel that issuing RuPay card to such farmers would deny
the bankers the control over the amount in farmers’ account.
(v) The illiterate KCC holders didn’t feel comfortable in doing transactions at
ATM machines. These farmers were also afraid of misuse of their cards
even by their family members. Bankers were of the opinion that biometric
ATMs would be quite useful in rural areas but biometric ATMs were not
available in villages and therefore, there was lukewarm response from
bankers as well as the farmers towards issuance/availment of RuPay cards.
(vi) Further, as per latest guidelines of RBI, chip based cards should be issued
to the farmers. As of now, neither ATMs nor POS are available in sufficient
number. Also, vendors are finding it difficult to supply the cards in time.
Sometimes, it takes vendors 6 to 8 months to supply the chip based cards
after indenting it.
(vii) There were some absentee landlords/ farmers not residing in the villages.
These farmers were not cultivating their lands on their own and therefore,
were not very keen in getting RuPay Card issued.
(viii) It was also learnt that the bank/ branches which were not having ATMs
of their own bank were of the view that extending RuPay cards to every
farmers will add an extra expenditure to them if the farmers go beyond
the minimum number of free transactions (five) allowed on ATMs of other
banks.
4.31 The information/data provided by the sample bank branches indicated that all
the famers who were issued RuPay card had already been handed over the RuPay
cards. Although bankers were preferring the handing over of the RuPay cards to
farmers in branch premises only in order to avoid the delivery of cards in wrong
hands. Some branches (particularly commercial banks branches) had also sent
the RuPay cards by Post or through Banking Correspondents. Normally, bank
branches send a message to the farmers to collect the cards from the branches
itself. In case a village is far away, bank branch holds a camp and distribute the
RuPay KCC and PIN to the farmers.
4.32 In response to the question ‘whether branches were issuing the cards to all the
new borrowers?’, all the branch managers (except cooperative banks in Assam,
Bihar & Punjab) told that although their first priority was issuing the RuPay
cards to the new customers, they were also issuing RuPay cards to existing/old
customers who were regular in repayment.
69
Farmers’ Perspective
4.33 The status of issuance of RuPay card to sample farmers by selected bank branches
is presented in Table 4.3. The number of farmers who got issued the RuPay
Cards accounted for 27 per cent of the total sample KCC farmers. It is observed
from Table that the 98 sample farmers (39%) out of 251 in case of RRBs, 71
sample farmers (30%) of 239 in case of commercial banks and just 24 sample
farmers (11%) out of 224 had got issued RuPay cards, although commercial
banks (59%) were ahead in issuing the RuPay card followed by RRBs (30%) and
the cooperatives (12%) if we take the figures for the entire branch into account in
case of sample branches.
Table 4.3: Status of KCC RuPay Cards issued to Sample farmers

No of Branches
Total 71 (32) 10 (5) 13 (6) 12 (6) 12 (6) 12 (7) 12 (5)
(banks) covered
Comm.
239 40 38 42 40 39 40
Banks
No of sample RRBs 251 40 46 43 40 40 42
farmers
Coop Banks 224 24 36 39 40 40 45
Total 714 104 120 124 120 119 127
Comm.
71 12 7 25 5 11 11
No of sample Banks
farmers got is- RRBs 98 31 17 26 8 10 6
sued the RuPay
Card Coop Banks 24 0 0 4 0 10 10
Total 193 43 24 55 13 31 27
Comm.
38 5 2 13 1 0 10
No of sample Banks
farmers using RRBs 50 11 4 12 4 0 0
their cards on
ATM Coop Banks 10 0 0 0 0 8 0
Total 98 14 6 25 5 8 0
Comm.
No of sample 31 5 2 7 1 0 1
Banks
farmers taking
help of others RRBs 31 9 3 9 2 0 0
for operating Coop Banks 8 0 0 0 0 1 0
on ATMs
Total 70 14 5 16 3 1 1
Percentage Share
Comm.
No of sample 29.7 30.0 18.4 59.5 12.5 28.2 27.5
Banks
farmers got is-
sued the RuPay RRBs 39.0 77.5 37.0 60.5 20.0 25.0 14.3
Card as % of KCC Coop Banks 10.7 0.0 0.0 10.3 0.0 25.0 22.2
accounts
Total 27.0 41.3 20.0 44.4 10.8 26.1 21.3
70
Sample farm- Comm.
43.7 41.7 28.6 52.0 20.0 0.0 90.9
ers using their Banks
cards on ATM RRBs 31.6 35.5 23.5 46.2 50.0 0.0 0.0
as % of sample
farmers got Coop Banks 33.3 0.0 0.0 0.0 0.0 80.0 0.0
issued RuPay
cards Total 36.3 37.2 25.0 45.5 38.5 25.8 37.0
Per cent of Comm.

51.6 100.0 100.0 53.8 100.0 0.0 10.0
farmers who Banks
were using RRBs 74.2 81.8 75.0 75.0 50.0 0.0 0.0
RuPay cards on
ATMs, taking Coop Banks 12.5 0.0 0.0 0.0 0.0 0.0 0.0
help of others
for operating Total 57.1 87.5 83.3 64.0 60.0 0.0 0.0
on ATMs
4.34 Only one third of the farmers who were issued RuPay cards were reported to be
using their RuPay cards on ATMs. Further, about 57 per cent of farmers using
the RuPay Card were taking the help of their family members, mostly the son or
daughter, to operate on ATM machines.
4.35 Further, only 193 out of 714 sample farmers had got/ taken RuPay cards and the
rest 521 farmers were either not issued or had not taken the RuPay cards from
the bank.
4.36 An enquiry into the reasons for non-issuance of RuPay cards indicated that about
55 per cent of the sample farmers were having their KCC accounts with those
banks/ branches which were yet to start the issuing of KCC RuPay cards. This
percentage was very high in case of Assam (88.5%) and Maharashtra (78.4%)
states. In addition to this, another 56 farmers (10.7% of the non-RuPay category)
were such that where their branches were issuing the RuPay cards but they were
not extended the facility of RuPay cards. Non-availability of sufficient number of
RuPay cards with the branches, non-willingness of the branch managers to issue
RuPay cards to the farmers who were either irregular in repayment or due to
some other reasons, very small KCC limits say less than Rs. 15,000/-, etc., were
the major reasons for non-issuance of RuPay cards to the farmers.
Table 4.3: Reasons for non-issuance of RuPay Cards to Sample farmers

No of Branches (banks) covered 71 (32) 10 (5) 13 (6) 12 (6) 12 (6) 12 (7) 12 (5)
Total No of sample farmers 714 104 120 124 120 119 127
No of sample farmers have not got
521 61 96 69 107 88 100
issued the RuPay Card
Reasons for non-issuance of RuPay Cards to Sample farmers
Banks/ Branches have not started
282 54 36 41 50 69 32
issuing RuPay Card
71
Branch has not issued/ not asked
39 3 8 6 5 4 13
the farmer to take the RuPay
Not interested due to fear of Fraud/
56 2 11 8 10 7 18
Safety considerations
Not required as just one or two
97 0 27 8 34 5 23
withdrawal in a year
Not interested – no knowledge of
38 2 12 5 8 3 8
machine handling as illiterate
Not of any use since no machine
nearby and branch is more ap- 9 0 2 1 0 0 6
proachable
Reason for non-issuance of RuPay cards: Percentage share in total no of farmers not issued RuPay
Banks/ Branches have not started
issuing RuPay Card 54.1 88.5 37.5 59.4 46.7 78.4 32.0
Branch has not issued/ not asked
the farmer to take the RuPay 7.5 4.9 8.3 8.7 4.7 4.5 13.0
Not interested due to fear of Fraud/
Safety considerations 10.7 3.3 11.5 11.6 9.3 8.0 18.0
Not required as just one or two
withdrawal in a year 18.6 0.0 28.1 11.6 31.8 5.7 23.0
Not interested – no knowledge of
machine handling as illiterate 7.3 3.3 12.5 7.2 7.5 3.4 8.0
Not of any use since no machine
nearby and branch is more ap-
proachable 1.7 0.0 2.1 1.4 0.0 0.0 6.0
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0
4.37 About 11% of non-RuPay sample farmers were apprehensive of using any type
of plastic card due to fear of frauds and trust issues i.e. likely misuse by their
family members. Further, non-availability of ATMs machines in rural areas was
also cited by a few (9 farmers) as a reason for not availing RuPay card facility.
Therefore, the non- availability of an ATM in the near vicinity had also acted as
a deterrent to farmers opting for RuPay KCC. It was reported that some ATMs in
rural areas were not working for a long period. Also, the banks were ensuring,
for security sake, to close the ATMs after 5 - 6 p.m. Clients found it better to
come to branches to transact instead of withdrawing the money from ATMs. A
very few famers were not interested in using any type of plastic cards as they were
not comfortable with using ATM cards.
4.38 Some of the farmers had declined the offer of availing RuPay Kisan cards as they
did not find it very useful since they were withdrawing the money just once or
twice in a year.
72
CHAPTER 5
Kisan Credit Card Scheme: Macro Impact
5.1 As already indicated in para 2.4, the cumulative number of KCC issued since
inception till 31 March 2015 comes to 14.64 crore of which operative / live KCC
stands at 7.41 crore. The total crop loan issued during the 2014-15 was Rs.
6,35,412 crore which translates into a crop loan of Rs. 85,757 per live KCC
account. Since total crop area covered by KCC loan is not reported by the banks,
although the same is recorded in the application cum appraisal form of KCC
loan by the banks, it is difficult to estimate the actual area for which KCC loan
is extended. However, the following estimates are made in order to arrive at the
total benefits accrued to the farmers on account of KCC financing.
Table 5.1: Macro Estimates of benefits from KCC financing

Sl Particulars Estimates
1 Number of Operative/ Live KCC accounts as on 31.03.2015 7,40,94,090
2 Crop loan disbursed through KCC during 2014-15 Rs. 6,35,412 crore
3 Average crop loan disbursed per farmer during 2014-15 Rs. 85,757
Average crop loan disbursed per acre during 2014-15#
4 Rs. 31923
(Considering average size of holding in India =2.84 acres i.e. 1.15 ha)
5 Average increase in farm income per acre due to KCC Rs. 5,463
Gain per acre per annum net of interest due to KCC financing (Excess of farm income of KCC
6
farmers over non-KCC farmers) (Pl see Table 3.10)
Gain net of interest burden per acre per annum–
6 (i) Rs. 2591
No Subvention (i.e. 9% per annum)
6 Gain net of interest burden per acre per annum– with interest Subvention
Rs. 2974
(ii) (i.e. 7% per annum on loan up to Rs. 3.0 lakh & 9% on above Rs 3.0 lakh)
6 Gain net of interest burden per acre per annum– Prompt Repayment
Rs. 3548
(iii) (i.e. 4% per annum on loan up to Rs. 3.0 lakh & 9% on above Rs 3.0 lakh)
Macro Estimates:
Estimated agricultural cropped area covered by KCC (7.41 crore operative KCC 85.208 mill ha
7
accounts multiplied by average size of holding 1.15 ha) (241.99 mill acre)
Estimated area eligible for Interest Subvention (@ 84.3%- Sample data indicates
71.83 million ha
8 that 9.2% sample farmers with 15.7% share in land holding were sanctioned loan
(204 mill acre)
above Rs. 3.0 lakh.
9 Total increase in farm income of farmers on account of KCC financing $ Rs. 1,32,199 crore
10 Total increase in farm income ‘net of interest cost’ on account of KCC financing
10 Total increase in farm income per annum net of interest –No Subvention (i.e. 9%
Rs. 62,670 crore
(i) per annum) on total land coved under KCC
10 Total increase in farm income per annum net of interest – with interest Subvention
Rs. 71,968 crore
(ii) (i.e. 7% per annum on loan < Rs. 3.0 lakh & 9% on above Rs 3.0 lakh)
10 Total increase in farm income per annum net of interest – Prompt Repayment (i.e.
Rs. 85,858 crore
(iii) 4% per annum on loan up to Rs. 3.0 lakh & 9% on above Rs 3.0 lakh)
Note: (i) ** Since 2% subvention is given to banks so that they lend at 7% to the farmers, it is
assumed that banks would be lending to farmers at 9% in absence of interest subvention
scheme.
(ii) # Average loan per acre disbursed to sample farmers in the study area is Rs. 31,923 per
acre per annum.
(iv) $ The contribution of KCC financing is calculated by taking the increase in farm income
of KCC farmers over non-KCC farmers
73
5.2 The net sown area and the grossed cropped area in India as per the latest figure
available (Pocket Book on Agricultural Statistics, 2014, Min of Agriculture, Govt
of India) are 140.80 million ha and 195.25 million ha, respectively, with cropping
intensity of 138.67 per cent. The agricultural cropped area covered by KCC
financing during 2014-15 has been estimated at 85.21 million ha (7.41 crore
operative KCC accounts multiplied by average size of holding 1.15 ha) which
implies that 60.5 per cent of the net sown area has been brought under KCC fold.
The actual coverage may be a little high or low than this estimate (60.5%) as this
figure is based on number of operative/ live KCC accounts and may have ignored
the number of accounts which were closed during the year. Although, an analysis
based on the cumulative number of KCC accounts opened during last five years
would have helped to cross verify the estimated figure of area (60.5% of net sown
area) covered by KCC financing.
5.3 The above estimate of coverage of net sown area under KCC financing (60.5%)
appears to be quite comparable if we compare the same with the ‘Agricultural
Census 2010-11’ figure of total number of operational holdings (13.83 crore)
covered by KCC financing (53.6%).
5.4 The sample data indicates that 66 farmers (58 in Punjab, 2 in Maharashtra &
6 in Karnataka) out of total 714 sample farmers (9.2%) were sanctioned KCC
loan more than Rs. 3.0 lakh. The average size of holding and average KCC loan
sanctioned to these 66 farmers were 13.4 acres and Rs. 8,83,864, respectively.
The average area not covered under interest subvention and the average loan
sanctioned in case of these 66 farmers were 8.85 acres and Rs. 5,83,864,
respectively. The area not covered under interest subvention comes 15.7 per
cent of the total area (3720 acres) of entire 714 sample farmers.
Impact of KCC financing on Farm Income of KCC loanees
5.5 The gain in net farm income of KCC farmers over and above the net farm income
of non-KCC farmers (Table 3.12 & 3.13) has been used to estimate the macro
impact of KCC financing on income of the farmers in the country. It may be seen
from Table 5.1 that the crop loan disbursement of Rs. 6,35,412 crore during
2014-15 has resulted in an increase of net farm income of all the KCC loanee
to Rs. 1,32,199 crore. The net farms income net of interest (9% per annum
on Rs. 6,35,412) comes down to Rs. 62,670 crore which clearly indicates that
availability of credit from institutional sources through KCC mode has made a
significant contribution to the farm income of the farmers.
Overall Picture of Issuance of Smart Cards against KCC live accounts
5.6 As may be seen from Table 5.2, at the All India level, the progress of issuance
of Smart Cards is quite slow as only 12.2 per cent live KCC accounts have been
issued the smart cards. The agency-wise break up of coverage of operative KCC
accounts by smarts cards is highest in case of Commercial banks (33.8%) followed
by RRBS (11.2%). This percentage is very negligible in case of cooperative banks
at 0.06 per cent.
74
Table 5.2: Smart card issued as percentage of total operative/ live cards
Particulars Coop Banks RRBs Comm Bank Total
Cumulative KCC Accounts (Lakh) 507.99 238.47 717.52 1463.98
No of Operative/ Live KCC (Lakh) 392.27 123.43 225.25 740.94
Operative Cards as % of total KCC Accounts 77.22 51.76 26.91 50.61
No of Smart Cards issued (No) 23959 1378777 7614956 9017692
Smart card issued as % of total live cards 0.06 11.17 33.81 12.17
5.7 As already explained in para 4.29, the bankers’ perception about the major
reasons for gap between the number of smart cards issued vis-à-vis number of
operative KCC accounts with the banks includes the factors like procurement
of sufficient number of RuPay cards by controlling offices and forwarding the
same to the issuing branches, non-issuance of cards to NPA and other irregular
accounts, perception of banks as well as farmers about the utility of RuPay cards
keeping in view just one or two transactions in a year, chances of misuse and
fraud restricting the farmers to accept the RuPay cards, large time being taken by
controlling offices in supplying Chip based cards, extra expenditure on the banks
who don’t own an ATM and their customer will be operating on ATMs of other
banks. The farmers’ view about the utility of RuPay has been eclipsed by their
fear of frauds and trust issues i.e. misused of cards by their family members.
Non-availability of ATMs machines in rural areas, has also been cited as a reason
for not availing RuPay card facility by the farmers. Some of the farmers had
declined the offer of availing RuPay Kisan cards as they did not find it very useful
since they were withdrawing the money just once or twice in year a year.
75
Annexures
Annexure 4.1: State Ranking for KCC Transactions for RRBs & Cooperatives
through NFS during Apr 14 to Sep 14 & Sept 15 –Feb 16
(Amount in Rs.)
NFS Transactions Apr 14 - Sep 14 NFS Transactions Sep 15 to Feb 16

Transac- Trans-
Sl States Amount Sl States Amount
tions actions
1 Uttar Pradesh 48141 20,65,76,800 1 Uttar Pradesh 79083 21,04,17,500
2 Punjab 25149 11,98,50,650 2 Punjab 26668 13,01,04,200
3 Haryana 9216 4,11,96,400 3 Telangana 80069 7,20,97,500
4 Assam 10359 4,11,87,000 4 Bihar 18322 7,19,15,100
5 Maharashtra 11778 3,62,88,150 5 Himachal 12858 5,78,85,050
Pradesh
6 Bihar 10118 3,08,67,200 6 Assam 15129 5,75,89,700
7 Himachal Pradesh 2896 1,20,80,800 7 Maharashtra 31715 4,97,46,250
8 Uttarakhand 4107 1,05,45,000 8 Haryana 7669 3,26,74,900
9 Karnataka 3524 70,26,350 9 West Bengal 5613 1,61,61,400
10 Jharkhand 2526 51,29,200 10 Karnataka 8859 1,58,74,950
11 Madhya Pradesh 1909 43,13,000 11 Madhya Pradesh 17880 1,55,55,200
12 West Bengal 940 31,81,700 12 J&K 4692 1,40,68,000
13 Orissa 1731 28,01,900 13 Andhra Pradesh 19768 1,17,59,650
14 Tripura 1027 27,77,400 14 Uttarakhand 3272 1,15,27,800
15 Gujarat 1921 27,72,600 15 Jharkhand 7503 90,68,600
16 J&K 942 27,49,700 16 Gujarat 5521 79,24,100
17 Chhattisgarh 823 21,96,900 17 Manipur 2077 70,82,100
18 Mizoram 484 11,37,600 18 Orissa 4256 56,20,750
19 Kerala 98 4,35,800 19 Tripura 1507 33,39,100
20 Arunanchal 105 2,67,700 20 Chhattisgarh 756 23,28,300
Pradesh
21 Andhra Pradesh 384 2,07,300 21 Rajasthan 735 20,74,100
22 Telangana 337 48,900 22 Mizoram 272 5,87,000
23 Goa 0 0 23 Tamil Nadu 247 4,90,900
24 Meghalaya 0 0 24 Goa 91 4,32,600
25 Nagaland 0 0 25 Kerala 62 1,38,900
26 Pondicherry 0 0 26 Arunanchal 68 1,07,000
Pradesh
27 Rajasthan 0 0 27 Pondicherry 30 40,100
28 Tamil Nadu 0 0 28 Nagaland 10 17,000
29 Andaman and 0 0 29 Andaman and 0 0
Nicobar Nicobar
30 Manipur 0 0 30 Meghalaya 0 0
31 Uttarakhand 0 0 31 Uttarakhand 0 0
Total 138515 53,36,38,050 Total 354732 80,66,27,750
76
Annexure 4.2: Bank Ranking for KCC Transactions on NFS during Sept 15-Feb 16
(Amount in Rs.)
Trans- Trans-
Sl Banks Amount Sl Banks Amount
actions actions
A. RRB & Coop Banks
1 Punjab GB 24151 12,01,98,500 32 Madhyanchal GB 6071 60,01,800
2 Kashi Gomti 18782 7,96,69,800 33 Baroda Rajasthan 4474 54,64,000
Samyut GB Kshetriya GB
3 Telangana GB 80069 7,20,97,500 34 Odisha GB 3626 52,90,050
4 Assam Gramin 15126 5,75,89,700 35 Ellaquai Dehati Bank 1989 50,14,400
Vikash Bank
5 Purvanchal Bank 21930 5,38,41,700 36 The Patliputra CCB, 981 42,59,600
Patna
6 Bihar GB 10486 4,78,64,000 37 Sutlej GB 798 37,59,000
7 Himachal Pradesh 8061 3,62,74,650 38 Tripura GB 1507 33,39,100
GB
8 Sarva Haryana GB 7669 3,26,74,900 39 Vananchal GB 1665 29,97,400
9 Gramin Bank of 23692 2,80,08,100 40 Chhattisgarh Rajya 756 23,28,300
Aryavart GB
10 Vidharbha Konkan 20106 1,94,05,700 41 Rajasthan Marudhara 735 20,74,100
GB GB
11 Sarva UP GB 4778 1,77,77,500 42 Saurashtra GB 652 14,93,400
12 Kaveri Grameen 7609 1,35,20,250 43 Pragathi Krishna GB 571 13,25,400
Bank
13 Maharashtra GB 6888 1,29,56,150 44 Andhra Pragathi GB 5131 9,83,400
14 Allahabad UP GB 2809 1,20,74,700 45 South Canara DCCB 518 9,57,000
15 Uttarakhand GB 3272 1,15,27,800 46 Central Madhya 266 8,15,600
Pradesh GB
16 The Kangra CCB 2657 1,15,11,000 47 Mizoram Rural Bank 272 5,87,000
17 Madhya Bihar GB 3729 1,10,51,300 48 Pallavan GB 247 4,90,900
18 A P. Grameena 14495 1,04,35,750 49 The DCCB, 108 4,35,000
Vikas Bank Lakhimpur-Kheri
19 Baroda Uttar 4240 1,02,94,300 50 The Goa State Coop 91 4,32,600
Pradesh GB Bank
20 The Hima Pradesh 2140 1,00,99,400 51 Dena Gujarat GB 176 3,89,500
State Coop Bank
21 Raigad Dist. CCB, 1632 93,84,200 52 Chaitanya Godavari 142 3,40,500
Alibag GB
22 Uttar Banga 4017 93,11,000 53 Utkal GB 630 3,30,700
Kshetriya GB
23 J & K GB 2703 90,53,600 54 Baroda Gujarat GB 143 3,17,100
24 Uttar Bihar GB 3124 87,40,200 55 Prathama Bank 174 3,11,500
25 Narmada Jhabua 11543 87,37,800 56 The Surat DCCB 76 2,60,100
GB
26 Zila Sahakari 2569 80,04,900 57 Kerala GB 62 1,38,900
Bank Ltd, Rampur
77
(Amount in Rs.)
Trans- Trans-
Sl Banks Amount Sl Banks Amount
actions actions
27 Akola DCCB, 3089 80,00,200 58 Bangiya Gramin 27 1,25,800
Akola Vikash Bank
28 Manipur Rural 2077 70,82,100 59 Arunanchal Pradesh 68 1,07,000
Bank Rural Bank
29 Paschim Banga GB 1569 67,24,600 60 Karnataka Vikas GB 161 72,300
30 Malwa GB 1719 61,46,700 61 Puduvai Bharathiar 30 40,100
GB
31 Jharkhand GB 5838 60,71,200 62 Nagaland Rural Bank 10 17,000
B. Public Sector Banks
1 Union Bank of 55295 22,10,28,731 19 Canara Bank 1901 93,40,700
India
2 Punjab National 36037 14,26,61,000 20 Vijaya Bank 1739 57,91,000
Bank
3 State Bank of 31215 11,99,19,100 21 Axis Bank Ltd. 1559 1,03,51,500
India
4 UCO Bank 25042 10,39,28,900 22 State Bank of Mysore 1544 59,78,100
5 Punjab and Sind 20599 10,35,17,500 23 State Bank of 1254 11,21,500
Bank Hyderabad
6 Central Bank of 18037 7,18,80,700 24 Indian Bank 1179 35,63,500
India
7 Oriental Bank Of 14507 7,66,26,000 25 The Federal Bank 1046 60,70,750
Commerce Limited
8 Bank Of 13809 2,86,78,350 26 State Bank of Bikaner 1005 42,11,400
Maharashtra and Jaipur
9 Bank of Baroda 10046 3,07,35,450 27 Syndicate Bank 534 24,77,400
10 Corporation Bank 9743 2,74,01,650 28 State Bank of 443 17,29,900
Travancore
11 Allahabad Bank 7610 3,17,73,400 29 Andhra Bank 112 3,88,500
12 Bank Of India 6580 2,51,86,600 30 The Karur Vysya 62 88,100
Bank Ltd.
13 ICICI Bank Ltd. 5865 19,98,000 31 The Ratnakar Bank 59 3,06,300
Limited
14 United Bank Of 5076 1,88,94,250 32 The Lakshmi Vilas 51 1,76,000
India Bank Ltd
15 State Bank of 4101 2,22,54,200 33 HDFC Bank Ltd. 0 0
Patiala
16 Indian Overseas 3881 1,34,84,800 34 Karnataka Bank Ltd. 0 0
Bank
17 Dena Bank 3122 54,90,800 35 South Indian Bank 0 0
Ltd.
18 IDBI Bank Ltd. 2094 1,13,53,000
78
Annexure 4.3: Bank-wise Count of Micro ATMs
No. of Bank Mitras No. of Bank Mitras
Sl Bank Name Sl Bank Name
Required Deployed Required Deployed
A. Public Sector Banks
1 Allahabad Bank 4,355 4,355 15 Punjab & Sind Bank 351 351
2 Andhra Bank 1,811 1,811 16 Punjab National Bank 5,964 5,964
3 Bank of Baroda 4,931 4,931 17 State B of Bik & Jaipur 1,625 1,419
4 Bank Of India 5,853 4,328 18 State Bank of Hyd 1,343 1,343
5 Bank of Maharastra 2,974 2,237 19 State Bank of India 23,383 20,329
6 Bhartiya Mahila B - - 20 State Bank of Mysore 529 443
7 Canara Bank 2,459 2,382 21 State Bank of Patiala 752 528
8 Central Bank of India 6,387 5,520 22 State B of Travancore 332 332
9 Corporation Bank 637 540 23 Syndicate Bank 2,615 2,515
10 Dena Bank 1,424 1,385 24 UCo Bank 4,317 4,317
11 IDBI Bank 341 190 25 Union Bank of India 5,407 5,407
12 Indian Bank 2,517 2,325 26 United Bank of India 2,958 2,958
13 Indian Overseas B 2,655 2,589 27 Vijaya Bank 862 844
Oriental Bank of Com-
14 1,240 1,240
merce
Total Public Sector Banks 88022 80583
B. Private Sector Banks
1 Axis Bank 208 208 8 Karur Vyasa Bank 117 95
2 City Union Bank 139 139 9 Kotak Mahindra Bank 249 84
3 Federal Bank 169 109 10 Lakshmi Vilas Bank 82 82
4 HDFC Bank 406 406 11 Ratnakar Bank 34 -
5 ICICI Bank 1,231 670 12 South Indian Bank 120 51
6 Indusind Bank 64 64 13 Yes Bank 5 -
7 J & K Bank 615 249
Total Private Sector Banks 3439 2157
B. Regional Rural Banks
1 Allahabad Bank 1,173 1,173 12 Punjab & Sind Bank 26 26
2 Andhra Bank 189 189 13 Punjab National Bank 1,863 1,806
State B of Bikaner &
3 Bank of Baroda 3,342 3,342 14 1,131 927
Jaipur
4 Bank Of India 3,188 2,762 15 State Bank of Hyd 410 410
5 Bank of Maharastra 898 485 16 State Bank of India 7,632 4,794
6 Canara Bank 1,041 707 17 State Bank of Mysore 458 194
7 Central Bank of India 4,713 4,710 18 State Bank of Patiala 43 43
8 Dena Bank 466 230 19 Syndicate Bank 2,071 2,032
9 Indian Bank 400 279 20 UCo Bank 997 997
10 Indian Overseas B 1,400 1,104 21 Union Bank of India 1,335 873
11 J & K Bank 72 21 22 United Bank of India 2,410 2,410
Total RRBs 35258 29514
Grand Total 1,26,719 1,12,254
79
Annexure 4.4: Bank-wise Count of POS Devices as on 31 Dec 2015
No. of PoS No. of PoS

Sl Bank Name Sl Bank Name
On-line Off-line On-line Off-line
1 Allahabad Bank 10 0 15 Catholic Syrian Bank Ltd 0 0
2 Andhra Bank 0 0 16 City Union Bank 2727 0
3 Bank Of Baroda 27498 0 17 Development Credit Bank 714 0
4 Bank Of India 5119 337 18 Dhanalakshmi Bank Ltd 700 0
5 Bank Of Maharashtra 0 0 19 Federal Bank Ltd 8965 0
6 Canara Bank 4397 0 20 HDFC Bank Ltd 280262 0
7 Central Bank Of India 1265 0 21 ICICI Bank Ltd 201000 0
8 Corporation Bank 70257 0 22 IDFC Bank Ltd 0 0
9 Dena Bank 0 0 23 Indusind Bank Ltd 838 0
10 Indian Bank 10 0 24 Jammu And Kashmir 5445 0
Bank
11 Indian Overseas Bank 398 0 25 Karnataka Bank Ltd 2868 0
12 Oriental Bank Of Com- 2392 0 26 Karur Vysya Bank Ltd 10433 0
merce
13 Punjab And Sind Bank 0 0 27 Kotak Mahindra Bank Ltd 0 0
14 Punjab National Bank 13026 0 Ratnakar Bank Limited 479 0
15 Syndicate Bank 2259 0 8 South Indian Bank 3268 0
16 Uco Bank 0 0 9 Tamilnadu Mercantile 1861 0
Bank Ltd
17 Union Bank Of India 23719 0 10 The Laxmi Vilas Bank Ltd 2849 0
18 United Bank Of India 0 0 11 Yes Bank Ltd 16228 0
19 Vijaya Bank 1225 0 12 American Express 13523 0
20 IDBI Ltd 15724 0 13 Bank Of America 0 0
21 State Bank Of Bikaner 2184 0 Barclays Bank Plc 0 0
And Jaipur
22 State Bank Of Hyder- 4352 0 12 Citi Bank 22892 0
abad
23 State Bank Of India 270307 0 13 DBS Bank 0 0
24 State Bank Of Mysore 5505 0 14 Deutsche Bank Ltd 0 0
25 State Bank Of Patiala 4641 0 15 Firstrand Bank 0 0
26 State Bank Of Travan- 3323 0 16 Hongkong And Shanghai 13465 0
core BKG Corpn
27 Axis Bank Ltd 198982 0 17 Royal Bank Of Scotland 0 0
NV
28 Bandhan Bank 0 0 18 Standard Chartered Bank 0 0
Ltd
Grand Total 1245110 337
80

Study On Implementation of KCC Scheme - WB

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Study On Implementation of KCC Scheme - WB

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Title

: Study on Implementation of Kisan Credit Card Scheme

Published by : Department of Economic Analysis and Research (DEAR)

Date of Publishing : December 2016

Design & Printing : M/s Alco Corporation

Place of Printing : Mumbai

Number of copies : 1000

Contact : Plot No. C-24, G-Block, Bandra-Kurla Complex,

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Summary and Recommendations ........................................................................ 01

2. Progress in KCC Financing.......................................................................... 22

3. Implementation of Revised KCC Scheme..................................................... 32

4. Issuance of ATM/ RuPay Debit Cards.......................................................... 52

5. Kisan Credit Card Scheme: Macro Impact.................................................. 73

Application Service Provider............................................................................... (ASP)

Bank Identification Numbers.............................................................................. (BINs)

Business Correspondent....................................................................................... (BC)

Core Banking Solution........................................................................................ (CBS)

Department of Financial Inclusion and Banking Technology........................... (DFIBT)

District Central Cooperative Bank.................................................................... (DCCB)

Farmers Training Centres................................................................................. (FTCs)

Financial Inclusion Gateway..............................................................(FIG/ FI Gateway)

Financial Inclusion Technology Fund................................................................. (FITF)

Gesellschaft für Internationale Zusammenarbeit............................................... (GIZ)

Hardware Security Module................................................................................. (HSM)

Indian Banks’ Association.................................................................................... (IBA)

Institute for Development & Research in Banking Technology......................... (IDRBT)

Issuer Identification Number............................................................................... (IINs)

Interbank Mobile Payment Service.................................................................... (IMPS)

Kisan Credit Card (KCC).................................................................................. scheme

Land Possession Certificate................................................................................. (LPC)

Mahatma Gandhi National Rural Employment Guarantee Act..................... (MNREGA)

National Financial Switch.................................................................................... (NFS)

National Payments Corporation of India.............................................................(NPCI)

Personal Accident Insurance Scheme................................................................. (PAIS)

Point of Sale........................................................................................................ (POS)

Pradhan Mantri Fasal Bima Yojana................................................................ (PMFBY)

Real Time Gross Settlement............................................................................. (RTGS)

Regional Rural Bank...........................................................................................(RRB)

State Cooperative Banks................................................................................. (St CBs)

Unique Identification Authority of India............................................................ (UIDAI)

Weather Based Crop Insurance Scheme..........................................................(WBCIS)

2. Govt of India suggested NABARD to conduct a study on the implementation of the

(v) Overall impact of revised KCC scheme?

Kisan Credit Cards issued

Agency-wise Kisan Credit Card Issued since inception

Gap between number of agricultural households and number of operative KCCs

Profile of Sample Farmers

Awareness of Branch Managers about the Revised KCC Scheme

10. A total of 71 bank branches covering 24 branches of 10 commercial banks, 25

Fixation of Scale of Finance:

Application for KCC loan & Appraisal by Branch Managers

Fixation of Kisan Credit Card Limit

Annual Enhancement in KCC Limit

Season-wise sub limit

Personal Accident Insurance Scheme (PAIS)