Agricultural Cash Credit/Kisan Credit Card (KCC)

Objective: To provide time and adequate credit to farmers to meet the production credit needs (cultivation expenses) besides meeting contingency expenses subject to 20% of the peak credit limit without any maximum limit (medical expenses, education expenses for children, marriage, funerals, birth, religious ceremonies etc) and expenses related to ancillary activities through simplified procedure facilitating the borrowers for availing loans as and when they need.

Purpose: Cultivation of short-term crops (Short Term Seasonal Agricultural Operations) and meeting contingency expenses subject to 20% of the peak credit limit.

Target Group and Eligibility: All farmers – individuals (singly or jointly), tenant farmers, oral lessees, share croppers, SHGs and Joint Liability Groups

Loan Amount: Credit limit is based on operational land holding, cropping pattern and scale of finance.

Facility Available

  • Cash Credit: Credit for Short Term Agricultural Operation, contingencies for repairs/maintenance/expenses, domestic consumption requirements, expenses related to ancillary and allied activities.
  • Term Loan: For agricultural activity like purchase of agricultural machinery/equipments/implements etc. and for allied activities e.g. purchase of animals for dairy, poultry etc.

Assessment /Fixation Cash Credit Limit: The credit limit under the Kisan Credit Card shall be fixed by taking into account the entire production credit requirements of the farmer for the full year and for every successive year. Cash credit limit is based on operational land holding, scale of finance + meeting contingency expenses subject to 20% of credit limit as indicated below:

Illustrative

Name of Crop

Scale   of Finance

(per   Acre)

Operational   Land holding (Acre)

Total   Credit Limit

1.   XXX

Rs.50,000/-

1.25

Rs.  62,500/-

2.   YYY

Rs.40,500/-

0.75

Rs.  30375/-

A. Total   Limit for Crop cultivation

Rs.90,500/-

2.00

Rs. 92,875/-

Add: 10%   towards post harvest expenses

Rs. 92,875 x 0.10

Rs.    9300/-

Total

 

Rs. 102,175/-

Add:   20% towards contingency expenses etc

Rs. 102,175 x   0.20

Rs.20,435/-

C. Total Crop   Limit for 1st Year

 

Rs. 122,610/-

Limit for 2nd   Year [ Rs 122,610 + 10%)

Rs. 122,610 x   1.10

Rs.134,871/-

Limit for 3rd   Year [ Rs 134,871 + 10%]

Rs. 134,871 x   1.10

Rs. 148,358/-

Limit for 4th   Year [Rs 148,358 + 10%]

Rs. 148,358 x   1.10

Rs. 163,194/-

Limit for 5th   Year [ Rs 163,194 + 10%] = MPL

Rs. 163,194 x   1.10

Rs. 179,513/-

Term Loan Limit: Term loan for investment towards land development, minor irrigation, purchase of farm equipments and allied agricultural activities shall based on proposed scheme, the bank’s judgment on repaying capacity vis-à-vis total loan burden on the farmer etc.

Flexi Limit

  • A Flexi KCC limit of Rs. 10,000/ to Rs. 50,000/- with simple assessment is prescribed for Marginal Farmers based on land holding and crops grown.
  • For details guidelines please refer to our General Circular No. 06/Adv/2012-12 dated 28-04-2012

Opening of Two Separate Accounts: Cash Credit & Term Loan Account: The total sanctioned limit shall be bifurcated into two separate sub-limits for Cash Credit and Term Loan by opening two different accounts i.e. (a) Cash Credit and (b) Term Loan

Operation of Cash Credit Account:

  • The credit extended under short term components of the KCC limit would be in the nature of revolving cash credit facility involving any number of drawals & repayments within the limit.
  • There shall be no restrictions in number of withdrawals or deposits in the account.

Drawing Limit:

  • Cash Credit - The short term credit limit arrived for the 5th year will be Maximum Permissible Limit and treated as the Kisan Credit Card Limit. Drawing Limit for each year will, however, be fixed within the Cash Credit Limit of that year.
  • Term Loan - The long term loan limit will be based on limit of amount sanctioned and may be drawn as per installment fixed.

Validity of the KCC: The Kisan Credit Card shall be valid for 5 years subject to an annual review.

Margin

  • Crop Loan - For crop loans, no separate margin need be insisted as the margin is in-build while fixing the Scale of Finance
  • Term Loan - For term loan component, it will be in conformity with the guidelines of RBI from time to time. Presently margin requirements are as under:
    • For loan up to Rs. 1,00,000/- No margin
    • For loan above Rs. 1,00,000/ 15% to 25%

Repayment Period

  • Cash Credit - Cash Credit is repayable within 60 days of harvesting. No withdrawal in the account should remain outstanding for more than 12 months. Each drawal is to be repaid within a maximum period of 12 months.
  • Term Loan - The term loan component will be repayable within a period of 5 years depending on the type of activity/investment as per existing guidelines for investment credit.

Security

  • Loan up to Rs. 1,00,000/- : Hypothecation of crop
  • Loan above Rs. 1,00,000/- : In addition to Hypothecation of crop, other collateral security in the form of lien on deposits, mortgage of land, third party guarantee
  • In case of Tie-up Arrangement: In case of any tie-up arrangement for recovery loan up to Rs 3.00 lakh may be sanctioned without collateral security.

Rate of Interest: Interest will be levied as per the prevailing rate of interest circulated by Head Office from time to time.

Credit Balances in Cash Credit Account: The interest is applicable at the prevailing Savings Bank Interest rate and shall be paid on credit balances on daily product basis.

Loan Processing/Pre-payment fee: No Processing fee or pre-payment charges on KCC

Insurance (Crop & Personal Insurance:

  • NAIS: Crop Insurance: Eligible crops in the notified area will be covered under ‘National Agricultural Insurance Scheme’ (NAIS).
  • Assets created out of long term loan shall have to be insured with a Registered Insurance Company.
  • PAIS: All KCC holders shall have to be covered under Personal Accident Insurance coverage (PAIS) for an amount of Rs. 50,000/-
  • Other: Asset created out of Bank loan in case of investment credit shall have to be insured

PAIS & Premium Burden: KCC holders have been covered under Personal Accident Insurance Scheme against Personal death or permanent disability up to maximum amount of Rs 50,000/- and Rs 25,000/- respectively. The premium burden will be shared by the financing Bank and the borrower in the ratio of 2:1(Bank: Borrower). Premium payable Rs 15/- for a one year policy while Rs 45/- for a 3 year policy.