Kisan Credit Care Scheme is known as Pradhan Mantri Credit Card Yojana. This scheme was introduced in 1988 by the Government of India. The primary objective of this scheme was to support the farmers financially. Low interest rates help farmers to get funds for financial needs. The validity of the scheme is 5 years.
Along with agriculture, other non-farming activities were also included in 2004. Fishing, poultry, and dairy are the activities for which credit is provided. Various commercial and non-commercial banks are offering this scheme to Farmers. Both online and offline modes are functional when applying for the scheme.
Eligibility of KCC (Kisan Credit Card) Yojana
There is an eligibility criteria for the Kisan Credit Card Yojana-
- 18-75 years old are eligible for the scheme.
- A permanent savings bank account is required to apply for the scheme.
- Farmers should own agricultural land showing active engagement in farming activities.
- Senior citizens need a co-borrower, he should be a legal heir.
- Agricultural land is highly fertile which ensures easy return.
- Tenant farmers and joint cultivators are also eligible for the scheme
Benefits of Kisan Credit Card Yojana
There are several benefits of the KCC scheme listed below-
Low interest rate
The Kisan Credit Card Yojana provides low interest rates to farmers. In times of need, the farmers can easily apply for a loan for agricultural operations at affordable rates.
Government subsidies
Candidates who applied for the scheme can avail themselves of government subsidies. The subsidies provide an adequate amount of funds for agricultural activities. KCC helps farmers to upgrade their farming potential.
Minimal documentation
There is a hassle-free process for applying the scheme. Limited paperwork makes it easy for the farmers to get funds in immediate need.
Easy repayment
There is a relaxation in repaying loans in small monthly instalments. The small-scale farmers and tenant farmers find it easy to pay for the scheme, as low monthly instalments do not burden the farmers financially.
Accident insurance
Personal accident insurance provides relief to farmers. Farmers are compensated with 50,000 in case of mishaps or damages.
Key features of Kisan Credit Card Yojana
Following are the key features of KCC-
- Kisan Credit Cards are used for ATM, POS and ecom transactions.
- Flexibility in the repayment as it can be done post-harvest.
- The threshold limit of credit ranges from 10,000 to 3,00,000.
- The validity of the KCC is for five years without any annual renewal.
- There are no hidden charges or trouble-free loan closures.
- Easy withdrawal of money in time of need using KCC as an ATM.
Interest rates on the Kisan Credit Card Scheme
Different banks have different interest rates. For every bank, there is a different credit limit also on KCC. The interest rates range from 2% to 4%. The banks can ask for additional charges based on the credit card holder’s transaction histories. There are various factors on which interest rates depend-
Amount of loan
The loan amount is a deciding factor for the rate of interest. The interest rates are lower up to 3 lakhs. But loans higher than 3 lakhs have higher interest rates. This distinction is due to the aim of the KCC scheme. The government wants to aid more small farmers to relieve the financial burden.
The interest rate also depends on the banks.
Simple interest
The simple interest also determines the interest rate on the borrowed money. If the borrower can repay within the time limit, then banks ask for simple interest. The simple interest is calculated only on the principal amount borrowed. This enables easy understanding and transparency to farmers while paying off loans.
Compound interest
Compound interests are asked by the bank when the borrower cannot repay within the given time. Along with interest on the principal amount the accrued interest amount is included increasing the interest rate over time. This bank policy encourages the farmers to pay in the given time, decreasing the interest rates.
Bonus Subsidy
The government gives a 3% subsidy in the KCC scheme. The bank offers bonus subsidies to borrowers with a good track record. Responsible financial behaviour triggers the bank to give bonuses and incentives to the borrowers.
Documents required for Kisan Credit Card Scheme
The documents required by KCC are listed below-
- Application form- The first document is to fill out the application form with all details. The details of agricultural activities are to be mentioned.
- Passport size photo- for identity proof two passport-size photos of the borrower are required.
- Identity proof- voter’s ID and Adhar Card are mandatory for identity proof.
- Address proof- Adhar card or Driving licence both are okay for address proof.
- Agricultural Land Proof- They are required to apply for KCC. The land proof demonstrates the possession of the land.
- Security Documents- if the loan amount exceeds three lakhs then security is asked to be submitted by Financial institutions.
- Additional Documents- Financial institutions can ask for other additional documents as required.
Other farming activities under Kisan Credit Card Scheme
Since 2016 government has provided KCC schemes for other agricultural activities like animal husbandry, fishing, and dairy. To encourage these activities short capital loans are offered.
- The dairy farmers are provided with Kisan Credit Cards to upgrade the quality of dairy products.
- The fishing activities are promoted by the government with KCC, for that, you must own a fishing pond.
- Farmers and tenant farmers involved in poultry activities are given KCC.
- To be eligible for KCC the farmers or joint groups must be involved in Animal husbandry, owning animals like goats, rabbits, pigs, etc.
Conclusion
The KCC scheme is easy to apply both online and offline. This scheme has reduced the financial burden of farmers to a large extent. KCC scheme improved agricultural operations by using efficient tools for farming. The misuse of the scheme is observed among farmers. Due to a lack of money management farmers borrow money and cannot repay the amount. The financial discipline is crucial to avail the benefits of the scheme. Around 7.34 crore cards issued by the end of 2023.
