Kisan Credit Card (KCC) Scheme: Features, Eligibility & More| UPSC Notes

The Kisan Credit Card KCC Scheme, launched in 1998 is a government initiative aimed at financial inclusion for farmers. It acts as a single-window credit system. It provides farmers with a pre-sanctioned credit limit on a card for their cultivation, post-harvest needs, marketing expenses, and even consumption requirements. This user-friendly system offers access to formal credit at lower interest rates compared to traditional lenders. It thus eases the financial burden on farmers and promotes holistic support throughout the agricultural cycle.

Source: Ministry of Finance

The Kisan Credit Card KCC UPSC is one of the most important topics for the UPSC IAS exam. It covers a significant part of the General Studies paper-2 syllabus and current events for the UPSC prelims exam. 

In this article on Kisan Credit Card KCC UPSC, we shall discuss its features, benefits, objectives, and eligibility criteria in detail. This will be very useful for aspirants in the UPSC Prelims Exam.

Also, study the Pradhan Mantri Mudra Yojna from the linked article.

What is Kisan Credit Card KCC Scheme?

Kisan Credit Card KCC is a government-sponsored scheme in India that provides farmers with a simplified and affordable credit facility. It aims to meet the financial requirements of farmers for crop production, post-harvest expenses, consumption needs, and working capital.

The Kisan Credit Card KCC Scheme was launched in 1998 by the Government of India in collaboration with the Reserve Bank of India (RBI) and the National Bank for Agriculture and Rural Development (NABARD). The scheme seeks to provide timely and adequate credit support to farmers to meet their agricultural and related expenses. This ensures hassle-free access to credit for farmers across the country. The KCC scheme is implemented by various financial institutions, including commercial banks, regional rural banks, and cooperative banks.

Study the Priority Sector Lending Scheme here.

Features of the Kisan Credit Card KCC Scheme

The following are some of the major features of the Kisan credit card granted to farmers:

• The KCC Kisan Credit Card provides farmers with a revolving credit limit based on their cropping pattern, scale of finance, and the cost of cultivation. The credit limit is reviewed and revised periodically.
• Farmers can make multiple withdrawals from their KCC account within the approved credit limit. This will enable them to meet their agricultural expenses as and when required.
• The KCC scheme allows farmers to repay the credit in a flexible manner, based on the income generated from their agricultural activities. The repayment can be made in installments or as a lump sum after harvest.
• Farmers are eligible for an interest subsidy on their KCC loans, which helps in reducing the burden of interest payments. The subsidy rate is determined by the government and is subject to change.

Study about the PM-Kisan Samman Nidhi Yojna here.

Eligibility for the Kisan Credit Card KCC

Farmers engaged in agriculture-related activities, including crop cultivation, animal husbandry, fishery, and allied sectors, are eligible for the KCC scheme. Individuals, joint borrowers, self-help groups, and tenant farmers are also eligible to apply for a Kisan Credit Card.

Study the Mid Day Meal Scheme here.

Achievements of the Kisan Credit Card KCC Scheme

The achievements of KCC are as follows:

• By June 2020, around 25 lakh applications for the Nationwide Fishery KCC had been approved.
• Under the Atmanirbhar Bharat Package, the Government aims to include 2.5 crore farmers in the Kisan Credit Card KCC scheme, providing a credit boost of Rs. 2 lakh crores through a special saturation drive.
• Through collective efforts, the target of covering over 1.5 crore farmers under KCC has been achieved, with a sanctioned credit limit of Rs. 1.35 lakh crore.

Significance of the Kisan Credit Card KCC Scheme

• The KCC Kisan Credit Card scheme has simplified the credit delivery process for farmers. It ensures easy access to timely and affordable credit for their agricultural and related needs.
• The KCC scheme has played a vital role in promoting financial inclusion among farmers, especially small and marginal farmers, who often face difficulties in accessing formal credit channels.
• By providing timely and adequate credit, the KCC scheme enables farmers to invest in improved agricultural practices, modern inputs, and technology, thereby enhancing productivity and income levels.
• The KCC scheme provides insurance coverage to farmers against unexpected events such as crop failure, natural disasters, or death/disability of the farmer. This helps in reducing the financial risks associated with farming.

Misuse of Kisan Credit Card KCC 

While the KCC Kisan Credit Card scheme has brought several benefits to farmers, it is important to acknowledge that there have been instances of misuse or irregularities associated with the scheme. Some of the common issues include:

• In certain cases, farmers have been found diverting the credit obtained through the KCC for non-agricultural purposes.
• Overborrowing is another form of misuse observed in the KCC scheme. Some farmers, due to lack of financial discipline or understanding, may accumulate excessive debt by availing credit from multiple sources beyond their repayment capacity.
• There have been instances where farmers have availed credit through the KCC but failed to utilize the funds for the intended agricultural purposes.
• Instances of fraudulent practices, such as producing false documents or misrepresenting land ownership or cropping patterns, have been reported in connection with the KCC scheme.

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