New Delhi: In a bid to modernise a three-decade-old lifeline for India’s farmers, the Reserve Bank of India (RBI) is preparing sweeping changes to the Kisan Credit Card (KCC) scheme.
The proposals aim to expand coverage, raise loan limits, and streamline operations to meet evolving needs in the agriculture sector.
Launched originally to provide timely and adequate credit for farming activities, the KCC offers subsidised loans at an effective rate of just 4% annually, thanks to a 2% interest subsidy and a 3% prompt repayment incentive from the government. Over the years, it has evolved to include investment loans for allied and non-farm activities, with expansions in 2004 and a review in 2012 to simplify processes and introduce electronic cards.
Key reforms include standardising crop loan approvals and repayments based on crop cycles — short-term (up to 12 months) and long-term (up to 18 months)— to reduce inconsistencies between banks and states.
The RBI also proposes extending the overall KCC validity to six years, easing repayment pressures for farmers cultivating long-duration crops.
Further, loan limits will be tailored to specific crop costs, addressing underfunding issues and ensuring sufficient working capital. Emphasising technology and sustainability, the central bank suggests expanding the 20% additional component for asset maintenance to cover expenses like soil testing, real-time weather forecasting, and certifications for organic or good agricultural practices.
In its February 6 notification, the RBI stated, “We will soon issue revised guidelines to address emerging requirements of farmers and the agri sector.” The proposals target commercial banks, regional rural banks, and cooperative banks, with flexibility for local needs.
Stakeholders, including farmers and regulated entities, can submit feedback via the RBI’s ‘Connect 2 Regulate’ portal or email by March 6, 2026.