Kisan Credit Card Limit: From 50,000 To 5,00,000

Explore the Kisan Credit Card Limit (KCC) ranging from ₹50,000 to ₹5,00,000, helping farmers with financial support for agricultural expenses and growth.

Introduction

The Kisan Credit Card (KCC) is a government scheme designed to provide short-term credit to farmers for their agricultural needs, such as purchasing seeds, fertilizers, and equipment, as well as for other farming-related expenses. The KCC aims to meet the credit requirements of farmers in a timely and hassle-free manner.

KCC Credit limit Factors:

1. Factors Affecting KCC Limit

The credit limit for a Kisan Credit Card is based on the following parameters:

• Landholding Size: The size of land owned by the farmer plays a crucial role in determining the credit limit. The more the land area, the higher the credit limit.
• Income: The farmer’s income from agriculture, livestock, and other farming activities is considered when calculating the limit.
• Repayment Capacity: The farmer’s ability to repay the loan is assessed by the bank, based on their income and past repayment history.
• Other Requirements: For special needs like purchasing machinery, tractors, or other farming tools, banks may provide an additional limit over the basic KCC limit.

2. KCC Limit for Small and Marginal Farmers:

For small and marginal farmers with a smaller landholding or income, the credit limit tends to be on the lower end, ranging between ₹50,000 to ₹1,00,000. This is a basic loan amount that is generally considered sufficient to meet their seasonal needs, such as purchasing seeds, fertilizers, pesticides, or irrigation facilities.

• Limit Range: ₹50,000 to ₹1,00,000 (may vary slightly depending on the bank)
• Repayment Period: Typically aligned with the crop cycle (6 months to 1 year)
• Interest Rate: Usually between 7-10% per annum (depends on the bank, with possible government subsidies for interest rates)

Example:

• A small farmer with 2 acres of land might be eligible for a limit of ₹50,000 to ₹75,000, which will be used for their seasonal agricultural expenses, to be repaid after the harvest.

3. KCC Limit for Large Farmers:

For large farmers with significant landholding and higher income from agriculture, the credit limit is considerably higher. The KCC limit for large farmers can range from ₹1,00,000 to ₹3,00,000 or more, depending on factors like land size, crops grown, and farm-related income.

• Limit Range: ₹1,00,000 to ₹3,00,000 (or more, depending on the bank and farm size)
• Repayment Period: Generally tied to the harvest cycle, but repayment schedules can vary from 1 to 3 years for larger limits.
• Interest Rate: Similar to small farmers, usually between 7-10%, with government subsidies applied.

Example:

• A large farmer with 10 acres of land, growing a variety of crops like rice, wheat, and vegetables, may qualify for a limit of ₹2,00,000 to ₹3,00,000, to be used for purchasing machinery, fertilizers, and labor costs.

4. Additional Benefits for Specific Needs:

For farmers needing higher credit limits for specific purposes such as:

• Purchasing machinery like tractors or harvesters
• Irrigation equipment like pumps, pipes, or sprinklers
• Expanding or diversifying farming operations

Banks can offer enhanced KCC limits or separate loans under specific categories like Agricultural Term Loans (ATL), which can further increase the available credit limit.

5. Credit Limit Revision:

• Annual Review: Banks often review the KCC limit annually based on the farmer’s repayment behavior and changing requirements. If a farmer successfully repays their loan on time and shows an increase in income or land size, the credit limit can be increased in subsequent years.
• Collateral-Free Loans: Typically, the KCC is a collateral-free loan up to ₹1,00,000. For limits beyond ₹1,00,000, some banks may request collateral security, especially for large farmers.

6. Loan Utilization and Flexibility:

The Kisan Credit Card can be used for various farming-related activities:

• Short-term Credit: For meeting immediate agricultural expenses such as buying seeds, fertilizers, pesticides, and paying for labor or irrigation.
• Long-term Credit: Can be used for purchasing farm equipment, tractors, or expanding farm infrastructure.
• Working Capital: It helps to manage day-to-day operational expenses related to farming.

It’s also available in both credit card format and overdraft facility, allowing farmers to withdraw funds as needed during the growing season.

7. Subsidies and Government Schemes:

The government has been offering subsidies on interest rates to make loans more affordable for farmers. For instance, under the Interest Subvention Scheme, farmers are charged lower interest rates (usually around 7% per annum) with an additional 3% interest subvention if they repay their loans promptly.

Example:

• If a farmer borrows ₹1,00,000, the interest rate could be 7%. If the farmer repays the loan on time, they might be eligible for a 3% subsidy, reducing the effective interest rate to just 4%.

Conclusion

The Kisan Credit Card is a valuable tool for providing timely financial support to farmers, ensuring they can meet their agricultural needs without facing financial constraints. The credit limit is flexible, depending on the size of landholding, income, and repayment capacity of the farmer, with limits ranging from ₹50,000 for small farmers to ₹3,00,000 or more for large farmers. Banks may adjust the limit over time, providing farmers with continued access to credit for agricultural activities.

Kissan Credit Card Subsidy (Up to 4% Interest Rate)

FAQs About Kisan Credit Card Limit:

By: Cibilfree