Kisan Credit Card (KCC)
The Kisan Credit Card Scheme, launched in 1998 by NABARD, is a flagship institutional credit mechanism for farmers. It ensures timely and adequate credit for agricultural and allied activities through a simplified, single-window system. It is now being converged with PM-KISAN to improve credit outreach.
Quick Overview
| Feature | Details |
| Type | Institutional Credit Scheme |
| Launched by | NABARD (1998) |
| Implemented by | Commercial Banks, RRBs, Cooperative Banks, Small Finance Banks |
| Eligibility | Owner cultivators, tenant farmers, oral lessees, sharecroppers, SHGs, JLGs |
| Coverage | Agriculture + Allied sectors (Animal Husbandry, Fisheries) |
Objectives
To provide unified, flexible, and timely credit for:
- Cultivation expenses
- Post-harvest management
- Marketing of produce
- Household consumption needs
- Farm maintenance and equipment
- Investment in allied activities
Salient Features of the Scheme
1. Types of Credit Support
| Type | Purpose | Key Features |
| Short-Term Credit | Seasonal inputs, cultivation, post-harvest, consumption | ₹1.6 lakh loan collateral-free, interest subvention up to ₹3 lakh |
| Long-Term Credit | Investment in farm machinery, cattle, fisheries, etc. | Based on investment needs, separate long-term credit limit |
2. Risk Coverage (Insurance)
- Covers death or permanent disability of KCC holder due to external and visible accidents.
3. Interest Subvention
- 3% interest subvention for prompt repayment (bringing effective rate down to ~4%).
- No processing fee for loans up to ₹3 lakh.
- Premium on credit insurance: Shared in 2:1 ratio between bank and farmer.
Convergence with PM-KISAN: A Seamless Access Strategy
PM-KISAN provides direct income support to farmers. To make this support more impactful, the government linked it with KCC to enable credit + income support synergy.
🔄 How the Convergence Works
| Step | Explanation |
| ✅ Eligibility | All PM-KISAN beneficiaries are pre-approved for KCC |
| 🧾 Documentation | One-time, minimal paperwork for ease of onboarding |
| 💳 ATM-enabled RuPay KCC Card | Works like a debit card; ensures flexible access to sanctioned credit |
| 💸 Unlimited Withdrawals | Farmers can withdraw as needed within the credit limit |
| 🏦 Institutional Credit Access | Ensures farmers don’t fall prey to informal credit or moneylenders |
📌 Strategic Benefits of KCC
- Reduces dependence on non-institutional credit.
- Encourages formal banking inclusion for small & marginal farmers.
- Strengthens agriculture + allied sector financing (esp. for SHGs, fisheries, dairy, etc.).
- Enhances credit discipline through interest subvention incentives.
📝 UPSC Answer Writing Points
The Kisan Credit Card (KCC) is a critical financial inclusion initiative aimed at providing timely, affordable, and flexible credit to farmers. Its convergence with PM-KISAN has improved access, transparency, and institutional outreach. With ATM-enabled RuPay cards, collateral-free loans, and DBT integration, KCC is a strategic bridge between direct income support and working capital financing, making it vital to India’s goal of increasing farmers’ income.
📚 UPSC Syllabus Mapping
- GS Paper 3: Agriculture, Credit and Subsidy Reforms
- GS Paper 2: Welfare Schemes for vulnerable sections
- Essay & Ethics: Themes of Financial Inclusion, Agrarian Crisis