According to the Union Ministry of Finance the total loan sanctioned under the operative Kisan Credit Card (KCC) accounts in the country has crossed the Rs 10 lakh crore figure.

According to the Ministry the total KCC loan in March 2014 was Rs 4.26 lakh crore which has more than doubled to Rs 10.05 lakh crore as of 31st December 2024.

Around 7.72 crore farmers in the country have benefited from the KCC loans.

Union Budget 2025-26 and KCC

In her 2025-26 Union Budget speech, Union Finance Minister Nirmala Sitharaman announced an increase in the short term loan provided under the Modified Interest Subvention Scheme through Kisan Credit Card from Rs 3 lakh to Rs 5 lakh.

About Kisan Credit Card

The Kisan Credit Card (KCC) is a type of revolving credit facility introduced by the government to provide loans at cheaper rates to the farmers through banks.

It is a pre-approved loan and the farmer can withdraw the loan amount when needed.

It was introduced to provide an alternative source of loan to the farmers, which was cheaper and convenient than the traditional moneylenders.

R.V. Gupta Committee

Reserve Bank of India set up a “High Level Committee on Agricultural Credit through Commercial Banks” in 1997, headed by R.V.Gupta.
Based on the recommendation of the Gupta committee, the Kisan Credit Card scheme was introduced for the farmers.
National Bank for Agriculture and Rural Development (NABARD) prepared the KCC model, which was officially launched by banks in 1998.

Objective of the KCC

The objectives of the KCC are as follows:

Provide timely and adequate loans to the farmers through the banking system,
Loans to be provided through a single window system.
A simplified and flexible procedure is adopted to meet the credit needs of the farmers for cultivation.

Loans under KCC

Loans are provided to the farmers to meet their working capital requirement as well as for their investment needs.

Working capital means the money needed to meet the current short-term needs. For farmers, it means the money required to buy seeds, fertilizers, pesticides, payment to farm labourers, etc.

Investment capital is the money invested in the machines, tools, etc and is used for production purposes. For farmers, tractors, tillers, etc, is a capital investment.

Thus, under KCC loans are provided to the farmer for agricultural and allied activities to meet :

Short term credit requirements for cultivation of crops;
Post-harvest expenses;
Produce marketing loan;
Consumption requirements of the farmer household;
Working capital for farm assets, maintenance, and other allied activities:
Investment credit needed for agriculture and allied activities.

Who can issue KCC in India?

According to the RBI, the Kisan Credit Card Scheme will be issued by

Scheduled Commercial Banks,
Regional Rural Banks (RRBs),
Small Finance Banks and
Cooperatives.

Modified Interest Subvention Scheme

Under the Modified Interest Subvention Scheme, short-term loans are provided to farmers for agricultural or allied activities through KCC at 7 % interest rates by the banks
The maximum loan amount will be Rs 3 lakhs for cultivation.
The loan limit for allied activities(fisheries, beekeeping, animal husbandry, etc) is Rs 2 lakh.
The farmers will get a rebate of 3% on the loan, and if the farmer repays the loan within one year, then he will get an additional rebate of 3%. Thus he will get a loan effectively at 4%.

Note: The Union Budget 2025-26 provision will be implemented when RBI issues a notification.