The Kisan credit card aims to provide formal credit to the farmers and avail of low-interest credit. The credit holders under the Kisan credit card will be covered under the personal accident insurance up to Rs. 50,000 for death and permanent disability and up to Rs. 25,000 for other risks. The premium borne by the borrower and bank will be in the ratio of 2:1. With an option to extend the scheme for up to three more years, the validity period of the Kisan credit card will be for 5 years.
Agriculture is the largest source of livelihoods in India with almost 70% of the rural population is primarily dependant on agriculture. The farmers in India are the food provider and they play a major role in contributing 18% to the GDP and diversifying the economy. Farmers are the men who work in the searing heat and bitter cold to put food on our tables. Despite being the backbone of the Indian economy, 82% of the farmers are still small and marginal. Due to this the agricultural credit is one of the basic inputs for conducting all the agricultural development programs.
Indian farmers being poor, there is an immense need to provide proper agricultural credit. From time immemorial, the major source of agricultural credit in India was money lenders. The Indian Government post Independence has adopted an institutional credit approach through various agencies like the commercial banks, cooperative banks, regional and rural bans, etc, to provide an adequate amount of credit to the farmers, at low rates and interest. Moreover, with the growing modernization of agriculture and technological advancement, the requirement of agricultural credit has increased more in recent years.
The Kisan credit card scheme was launched in the year 1998 which was prepared by the National Bank for Agriculture and Rural Development (NABARD) on the recommendations of the R.V.Gupta Committee to provide term loans for the agricultural needs. It aims to give financial support to the farmers to meet the comprehensive credit requirements of the agricultural sector, fisheries, and animal husbandry.
The timeline of agricultural credit can be traced back to the early twentieth century. To provide affordable credit to the farmers, the Agricultural Credit Department was set up in the Reserve Bank of India, through the RBI Act, 1934. But it failed to sustain due to the overburden of delays in repayment of the credits. On the recommendations of the All India Rural Credit Committee, the commercial banks were also enrolled to provide credit to the farmers. This new mandate further strengthened after the nationalization of commercial banks in 1969.
The concessional interest rates to people below the poverty lines were introduced in the year 1972 and the demarcation of agricultural and weaker sections was done in the year 1980. The small farmers were categorized under ‘weaker sections’ as the beneficiaries under the category of ‘agriculture’. This endeavor has brought positive effects in increasing access to agricultural credit.
The conventional method of credit system was replaced by the Kisan credit card scheme. It is a mechanism to aid the farmers to access timely and adequate credit from the banking sector for the cultivation of crops, marketing requirements, post-harvest needs, maintenance of their farms, and financial assistance for purchasing the high-value agricultural assets. The credit offered to the farmers in the scheme will be of two types viz, 1. Cash -credit, 2. Term-credit.
The eligibility criteria of the Kisan credit card are as following:
The eligibility criteria for fisheries and animal husbandry under the Kisan credit card scheme are as following:
The interest charged on the short term loans to the farmers will be 4% on the condition of timely repayment of the loan. The interest, however, can be reduced by up to 3% based on the discretion of the bank and prompt re-payment of the loan by the farmers.
The maximum limit of the Kisan credit card varies from each bank which will be based on the estimated income of the farmer, the harvesting, and the cultivation pattern of the crops.
The farmers are required to furnish the identity and address proof to get a Kisan credit card. The approved documents for this purpose are as following:
Following are the steps to apply online for the Kisan credit card-
The Kisan credit cards can be obtained from all the cooperative banks, regional rural banks, and public sector banks. Any farmer, tenant, crop sharer in India can avail of the benefits of this scheme.
NPCI– The National Payments Corporation in India offers Rupay Kisan credit cards as a part of its domestic card scheme for multi-lateral payments.
NABARD– NABARD will offer term loans and easily accessible credit to the farmers.
SBI– The State Bank of India provided flexible financial support to the farmers at low interest.
IDBI– The IDBI provides the Kisan credit card to farmers together with the investment credit, crop loans, and working capital to meet the agricultural expenses.
Thus, above are the top banks which offer credit facility under the Kisan credit card scheme to help them carry out agricultural activities smooth and steady.
To improve the productivity of farmers’ land at Rubby and Kharif seasons and to assist the farmers with the required credit, the Kisan credit card scheme is playing a significant role in increasing the productivity of the agricultural sector of India. Any registered cultivator in need of the credit can apply for the scheme at lesser rates of interest.
The Reserve Bank of India under the Kisan credit card scheme has initiated the guidelines and made some changes for the welfare of the cultivators. The Finance Ministry to provide the credit loans to the livestock breeding and fisheries workers have made some change to increase the development in the agricultural sector and improve the standard of living of farmers.
To avoid stepping into a debt trap associated with the informal borrowings of the farmers, the Indian Government in June 2019 intends to reach out to one crore farmers in 100 days through the Kisan Credit Card Scheme. The move of the government will provide direct benefits to the farmers and ease the pressure on them.
The Kisan credit card scheme is being implemented to simplify the credit delivery system and to provide timely loans to the farmers for agricultural production in a cost-effective way. This scheme has become a landmark in the history of the rural credit system in India and to outreach and expand the banks and simplify the credit delivery system. We cannot deny the importance of focusing the credit on the small farmers in rural distress and migration. However, the fragmentation of the landholdings and tenancy are the factors that need to be addressed by the government which can be solved by encouraging the consolidation of the landholdings. Aatmnirbhar Sena is here to familiarize the farmers with the concept of the Kisan Credit Card scheme.
The ambitious target of the Prime Minister to double the farmer’s income by 2022 and to expand the economy to a five trillion dollar by 2024 can be achieved by improving the access to institutional finance at competitive rates. This can help in reducing the burden of financing activities like buying seeds, fertilizers, and pesticides.
The Reserve Bank of India has made few recommendations to make formal banking more inclusive in the rural areas and to push the States to digitalize and update their land records which will ease the lending to small and marginal farmers. To ensure transparent land transactions, digital titles are required. Thus, we can say that there is a positive relationship between agricultural growth and agricultural credit. A farmer must sustain a good crop cycle based on quality inputs that can be achieved by giving access to affordable institutional credit. The agricultural credit lays a very crucial role in providing them with essentials at the time of adversaries and to absorb the shock of crop failure due to various reasons.