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What is Kissan Credit Card:
Kisan Credit Card is a pioneering credit delivery innovation for providing adequate and timely credit to farmers under single window. It is a flexible and simplified procedure, adopting whole farm approach, including short-term, medium-term and long-term credit needs of borrowers for agriculture and allied activities and a reasonable component for consumption need. Under the scheme, beneficiaries are issued with a credit card and a pass book or a credit card cum pass book incorporating the name, address, particulars of land holding, borrowing limit, validity period, a passport size photograph of holder etc., which serves both as an identity card and facilitate recording of transactions on an ongoing basis.
Brief History of Kisan Credit Cards in India :
What Are the benefits of KCC:
(a) It follows a simplified procedure for credit to farmers, a large number of whom are illiterate or poorly educated;
(b) There is no need to apply for loan every year as KCC provides the farmers with a credit facility on ongoing basis or revolving credits;
(c) This allows the farmers to buy seeds, fertilizers and other inputs as per his needs;
(d) Repayment is allowed after harvest period and thus farmer finds it easier to settle the loan by selling his produce;
(e) There is a flexibility of drawal of funds from any branch even when he has gone to town for purchase of agricultural inputs
Applicability of the Scheme –
It is to be implemented by Commercial Banks , RRBs , and Cooperatives. The implementing banks have the discretion to adopt the scheme to suit institution/location specific requirements.
Activities covered -
Kisan Credit Cards can be issued for short term credit requirements for cultivation of crops, post harvest expenses, produce marketing loan, consumption requirements of farmer household, working capital for maintenance of farm assets and activities allied to agriculture, like dairy animals, inland fishery etc. and investment credit requirement for agriculture and allied activities like pump sets, sprayers, dairy animals etc.
(i) Farmers - Individuals/Joint borrowers (owner cultivators)
(ii) Tenant Farmers, Oral Lessees & Share Croppers
(iii) SHGs or Joint Liability Groups of Farmers including tenant farmers, share croppers etc.
4. Fixation of credit limit/Loan amount
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5. Disbursement :
The short term component of the KCC limit is in the nature of revolving cash credit facility. There should be no restriction in number of debits and credits.
6. Delivery channels -
The amount can be drawn (a) from branch (b) through cheque facility (c) through ATM / Debit cards (d) through Business Correspondents and ultra thin branches (e) through PoS available in Sugar Mills/ Contract farming companies, etc., especially for tie-up advances (f) through PoS available with input dealers or (g) as mobile based transfer transactions at agricultural input dealers and mandies. As the CC limit and the term loan limit are two distinct components of the aggregate card limit bearing different rates of interest and repayment periods two separate electronic cards may be issued.
7. Validity / Renewal
i. Banks may determine the validity period of KCC and its periodic review.
iii. When the bank has granted extension and/or re-schedulement of the period of repayment on account of natural calamities affecting the farmer, the period for reckoning the status of operations as satisfactory or otherwise, would get extended together with the extended amount of limit. When the proposed extension is beyond one crop season, the aggregate of debits for which extension is granted, is to be transferred to a separate term loan account with stipulation for repayment in installments.
8. Repayment Period:
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.
9. Margin: To be decided by banks.
a) Hypothecation of crops up to card limit of Rs. 1.00 lakh as per the extant RBI guidelines.
b) With tie-up for recovery: Banks may consider sanctioning loans on hypothecation of crops up to card limit of Rs.3.00 lakh without insisting on collateral security.
c) Collateral security may be obtained 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.
11. Classification of account as NPA
The extant prudential norms for income recognition, asset-classification and provisioning will continue to apply for loans granted under revised KCC Scheme.
12. Other Conditions:
Besides the mandatory crop insurance, the KCC holder should have the option to take benefit of Assets Insurance, Personal Accident Insurance Scheme (PAIS), and Health Insurance (wherever product is available) and have premium paid through his KCC account. Necessary premium will have to be paid on the basis of agreed ratio between bank and farmer to the insurance companies from KCC accounts. Farmer beneficiaries should be made aware of the insurance cover available and their consent (except in case of crop insurance, it being mandatory) is to be obtained, at the application stage itsel
• All new KCC must be issued as per the revised guidelines of the KCC Scheme. At the time of renewal of existing KCC; farmers must be issued smart card cum debit card.
What are the Benefits to Banks
(a) Work load of rural branches is considerably reduced as there is no need for repeated appraisal and processing of loan papers. Scheme.
(b) Simplification of documentation and disbursement procedure.
(c) Improvement in recycling of funds and better recovery of loans.
(d) Reduction in transaction cost to the banks.
(e) Better Banker - Client relationships