The Reserve Bank of India (RBI) has recently said that the interest rate for short-term loans up to Rs 3 lakh through Kisan Credit cards (KCC) will be 7 percent and interest subsidy will be 1.5 percent for the current financial year (FY23) and next financial year (FY24). Also, an additional interest subvention of 3 percent per annum will be provided to the farmers repaying in time, subject to a maximum period of one year from the date of disbursement.
The interest subvention
will be calculated on the loan amount from the date of disbursement up to the date of actual repayment of the loan by the farmer or up to the due date of the loan fixed by the banks, whichever is earlier, subject to a maximum period of one year.
What is interest subvention?
Subvention means grant of money by the government. And interest subvention refers to the government subsidising the interest on a loan. The government offers interest subvention mostly on home, crop and education loans.
What is the KCC scheme aimed at?
The Kisan Credit Card scheme
aims at providing adequate and timely credit support from the banking system under a single window with a flexible and simplified procedure to the farmers for their cultivation and other needs, according to the RBI statement.
Farmers—individual/joint borrowers who are owner cultivators, tenant farmers, oral lessees and share croppers; self-help groups (SHGs) or Joint Liability Groups (JLGs) of farmers including tenant farmers, share croppers etc can apply for KCC.
The borrower should be a minimum of 18 years of age and a maximum of 75 years. In the case of senior citizens, it is compulsory to have a co-borrower who is a legal heir.
What is the repayment period?
The repayment period may be fixed by banks as per the anticipated harvesting and marketing period for the crops for which the loan has been granted.
Normally, the term loan component is repayable within a period of 5 years depending on the type of activity/investment as per the existing guidelines applicable for investment credit, as per RBI norms.
Financing banks may, at their discretion, provide a longer repayment period for term loans depending on the type of investment.
Is there any insurance provided with KCC?
Eligible crops may be covered under 'Pradhan Mantri Fasal Bima Yojna' on premium payment. Borrowers should also opt for personal accident insurance and health insurance (wherever applicable).
What are the documents required to apply for KCC?
ID proof such as driving license/Aadhaar card/voter identity card, passport, etc is required. Also, proof of landholding duly certified by the revenue authorities, cropping pattern (crops grown) with acreage, security documents for loan limit, passport size photographs must be submitted.