Kisan Credit Card scheme: KCC was established to protect Indian farmers from the excess interest rates imposed by unorganized money lenders. Farmers can get a loan whenever they need one but the interest is fluctuating, if clients pay on time, their rate of interest is reduced. Read the full post for Complete information on KCC.
What is the Kisan credit card scheme?
The Kisan Credit Card (KCC) Scheme was first introduced in 1998 to offer farmers financial assistance for the purchase of agricultural inputs and cash withdrawals for their production needs. Long-term loans and working capital loans for agricultural and related sectors were included in the scheme’s redesign in 2004. For farmers who engage in animal husbandry and fishing, the Reserve Bank of India has expanded the KCC facility to help them with their working capital requirements.
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Objectives & Features of Kisan Credit Card.
The primary goal of the Kisan Credit Card Loan is to offer low-interest loans to farmers. Before the implementation of this plan, farmers were dependent on high-interest lenders who had strict due dates. This caused farmers a lot of trouble, especially when they experienced natural disasters like hailstorms and drought. Also, KCC charges a lower rate of interest and provides a flexible repayment plan.
Here are some features of the Kisan credit card loan scheme:
- The loan’s interest rate may be as low as 2.00%.
- The farmer is given insurance protection against death, permanent disability, and other risks.
- The users are provided with crop insurance coverage for a variety of calamities.
- For loans under Rs. 1.60 lakh, banks won’t ask for collateral.
- The maximum loan the cardholder may obtain is Rs. 3.00 lakh.
- Farmers that pay their bills on time will only be charged a basic interest rate.
- Farmers who deposit money in the Kisan Credit Card account will receive a high-interest rate.
- The crop’s harvesting and marketing time are used to determine the repayment period.
- When cardholders miss payments, compound interest is charged.
Eligibility of Kisan Credit Card loan.
Anyone who is involved in agriculture, related activities, or other non-farming sectors can apply for a Kisan credit card loan. The specific requirements for being eligible for a Kisan Credit Card loan are as follows:
- Minimum Age – 18 years
- Maximum Age – 75 years
- If a borrower is over 60 years old and above, a co-borrower is required, and the co-borrower must be a legal heir.
- All farmers – individuals/joint cultivators, owners
- Oral lessees, sharecroppers, tenant farmers, etc.
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Required Documents for KCC loan.
The following documentation may be needed by the bank to process the Kisan Credit Card Loan scheme in India:
- Proof of Identity: PAN Card, Aadhaar Card, Voter’s ID Card, Passport, Driving Licence, or any other government-approved photo ID.
- Proof of Address: Aadhaar Card, Passport, Electricity bills.
- Proof of Income: Bank statement for the last 3 months, Salary slips for the last 3 months, Form 16, etc.
Application of Kisan Credit card loan.
Step by step process is given below for the application for a credit card loan:
- Go to any bank that offers the Kisan credit card. Download the KCC online application if the bank allows it.
- Complete the application form and submit it to the loan officer.
- If the loan amount exceeds Rs. 1.60 lahks, the loan officer will determine the Kisan credit cards lending limit after considering every relevant factor into account and request collateral.
- Farmers will receive their Kisan credit card after the procedure is completed.
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Banks offering Kisan Credit card loan.
Many local banks as well as nationally-known banks provide their customers with Kisan Credit Cards schemes. Below are a few of the:
- Up to Rs. 3.00 lakhs- 7% p.a. subject to GoI providing interest subvention. For interest subvention, submission of Aadhar details to the Bank is mandatory (wherever applicable).
- Above Rs.3.00 lakhs- as applicable from time to time.
- Low bank interest rates, at an average of around 9%.
- Maximum credit limit of Rs 3 lakh.
- The minimum interest rate is 8.85%.
- But in compliance with government subsidy programmes, the bank offers loans with lower interest rates.
Other local banks, such as Bangiya Gramin Vikash Bank, Odisha Gramya Bank, and others, also provide Kisan Credit Cards loans.
Usage of Kisann Credit Card.
Once the customer receives their credit card, they can immediately use it to make direct purchases or cash withdrawals. Also, some banks offer chequebooks.
The customer is responsible for making prompt repayment of the loan. By doing this, it will be ensured that the loan will only collect simple interest and not compound interest. The farmer will pay less if simple interest is used compared to compound interest, which will result in a higher payout.
Loan Tenure for KCC scheme.
A long-term loan for agriculture can last up to five years, whereas a short-term loan has a maximum duration of one year. However, banks are free to adjust the loan’s duration as they see suitable.
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