Kisan Credit Card

Why in news?

• Government recently conducted a special drive to provide Kisan Credit Card (KCC) to 1.5 crore dairy farmers belonging to Milk Unions and Milk producing Companies.
• This was one of the promised made in  the Prime Minister’s Atma Nirbhar Bharat package for Farmers.

What is KCC?

• A Kisan Credit Card (KCC) is a credit delivery mechanism that is aimed at enabling farmers to have quick and timely access to affordable credit.
• It aims to reduce farmer dependence on the informal banking sector for credit.

Developed by:

• It was launched in 1998 by the Reserve Bank of India and NABARD.

Offered by:

• The card is offered by cooperative banks, regional rural banks and public sector banks.

Eligibility:

• All farmers including small and marginal farmers, share croppers and tenants are eligible for the Kisan Credit Card.
• The Self Help Groups (SHGs) or Joint Liability Groups (JLGs)are also eligible for availing KCC.
• Fishermen and diary farmers are also eligible for KCC.

Features of KCC:

• It simplifies the screening and credit delivery process for farmers.
• The credit limit is based on the land holding, income and credit history of the farmer.
• Offers flexible repayment schedule after the harvest season and enables rescheduling of payments in case of a bad crop season.
• Farmer can use it to make cash withdrawals or to take loans.
• KCC also offers insurance coverage.

How does the KCC work?

• The KCC is like a plastic credit card and can be used as such at banks, ATMs and Points of Sale.
• The KCC allows cash credit to farmers to take care of crop related expenses like seeds, fertilizers, pesticides, electricity and diesel charges etc.
• It also offers term credit for allied activities like buying equipment, land development and drip irrigation.

Features and Benefits:

• Loans under the KCC are offered at generally 7% for amounts under Rs. 3 lakh.
• Collateral security is waived for KCC limit upto Rs. 1.60 lac
• In case of farmers whose milk is directly procured by Milk Unions the credit limits without Collateral can be upto Rs.3 lakh.
• Interest subvention @2% p.a is available for loan amount upto Rs. 3 Lacs
• The amount and interest rate on loans above Rs. 3 lakhs is decided by the bank.

PRELIMS QUESTION

Consider the following statements regarding Kisan credit card:
1.The card is offered by cooperative banks, regional rural banks and public sector banks.
2.Farmer can use it to make cash withdrawals or to take loans.
Which of the statements given above is/are correct?
(a)1 only
(b)2 only
(c)Both 1 and 2
(d)Neither 1 nor 2

Answer to prelims question