On Saturday, Union Finance Minister Nirmala Sitharaman announced an important change to the Kisan Credit Card (KCC) scheme, increasing the loan limit from Rs 3 lakh to Rs 5 lakh. This move is aimed at helping farmers, fishermen, and dairy farmers access larger loans at subsidized interest rates.
The KCC scheme currently serves around 7.7 crore (77 million) individuals and provides them with short-term loans to support agricultural and allied activities. With the new limit, farmers can now borrow up to Rs 5 lakh, providing more financial support for their agricultural needs.
Impact on Rural Economy and Farmers
Ritika Nayyar, Partner at Singhania & Co., commented that the increase in loan limits would strengthen rural economies and contribute to long-term growth in agriculture. “This initiative will offer farmers more financial flexibility, easier access to institutional credit, and reduce their reliance on informal lending. It will also allow them to invest in modern equipment and sustainable farming practices,” she explained.
Ashwin Sapra, Partner at Cyril Amarchand Mangaldas, also welcomed the change, saying, “This increase will help farmers cover immediate financial needs, especially during crop cycles.”
However, some experts have raised concerns about how the increased loan amount will be managed. Sandeep Chilana, Managing Partner of Chilana & Chilana Law Offices, pointed out that while the move is positive, there needs to be a smooth and quick disbursal process, particularly for small and marginal farmers. “The government must ensure that farmers do not face challenges in accessing these loans and that the increase in credit results in real benefits, rather than creating additional debt burdens,” he said.
Alay Razvi, Managing Partner at Accord Juris, echoed these concerns, stating, “The government needs to ensure that small farmers are able to access the credit effectively and that they are empowered rather than left unable to utilize the loans appropriately.”
About the Kisan Credit Card Scheme
Launched in 1998, the Kisan Credit Card scheme helps farmers by providing short-term loans for agricultural activities at an interest rate of 9%. The government offers an interest subvention of 2% and a prompt repayment incentive of 3%, bringing the effective interest rate down to just 4% per year.
As of June 30, 2023, the scheme had over 74 million active accounts, with total outstanding loans amounting to Rs 8.9 trillion.
Farmers looking to apply for a Kisan Credit Card must meet eligibility criteria such as being an owner-cultivator, sharecropper, tenant farmer, or a member of a self-help group. Loans exceeding Rs 1.60 lakh previously required a guarantee, but the Reserve Bank of India (RBI) has raised the limit for guarantee-free loans to Rs 2 lakh.
How to Apply for a Kisan Credit Card
Farmers can apply for a Kisan Credit Card by following these steps:
- Visit the official website of a bank offering the Kisan Credit Card scheme.
- Go to the ‘Kisan Credit Card’ section under loan or agricultural finance options.
- Click on ‘Apply Now’ to access the application form.
- Fill out the form with personal details, farming information, and financial records.
- Submit the form and note the reference number for future tracking.
- If eligible, the bank will contact the applicant within 3 to 4 working days for verification and processing.
With this increase in loan limits, the Kisan Credit Card scheme is expected to provide more financial support to farmers, helping them manage their agricultural activities more effectively and sustainably.