1. Submitted to- Submitted by-
Dr. Vikram Singh Ankush Kumar Singh
Associate Professor M.Sc. (Ag) Agronomy
Department of Agronomy I.D. No – 16MSAGRO016
Allahabad School of Agriculture Department of Agronomy
SHIATS SHIATS
Master’s Seminar
on
Kisan Credit Card – A Financial Innovation in Agriculture
Credit Market
COURSE CODE: AGRN-780
2. Introduction
• Kisan Credit Card is a credit card to provide affordable credit for
farmers in India.
• It is a pioneering credit delivery innovation for providing
adequate and timely credit to farmers under single window.
• Kisan Credit Card scheme was introduced by Government of
Indian August 1998 with the aim to provide credit to farmers, on
the basis of their land holdings, so that the farmers may use
them to purchase agricultural inputs such as seeds, fertilizers,
pesticides, etc. and also draw cash for their production needs.
3. Individuals who meet the following requirements can get a Kisan
Credit Card
• Minimum age – 18 years
• Maximum age – 75 years at the end of loan tenure
• For borrowers above the age of 60, co-borrower less than 60 years
old is mandatory. Such a co-borrower show be legal heir/immediate
family member
• Joint holding (single or multiple locations) up to 5 persons is permitted
• Borrowers with good track record over the past 2 years would be the
prime customers. Proof of operational land holding from the Patwari.
Eligibility for Kisan Credit Card
4. Kisan Credit Cards are issued to the farmers on the basis of their land
holdings and other criteria such as timely payment of past credits etc.
Farmers covered under the Kisan Credit Card scheme are issued with a
credit card and a pass book or a credit card cum pass book incorporating
the name, address, particulars of land holding, borrowing limit, validity
period, a passport size photograph of holder etc., which may serve both
as an identity card and facilitate recording of transactions on an on-going
basis.
How it Works
5. The Kisan Credit Card scheme is implemented by public sector
commercial banks, RRBs and cooperative banks. It was launched to
provides short term loans in the form of production credit. However,
later its scope was extended to term loans for agriculture and allied
activities and reasonable component for consumption loan. Thus,
currently this scheme provides:
• Production credit
• Working capital requirements for allied activities
• Ancillary credit requirements related to crop production
• Contingent needs and
• Accidental insurance of KCC borrowers.
Crop loans disbursed under KCC scheme for notified crops are covered
under National Crop Insurance scheme. The purpose of the scheme is to
protect the interest of farmers against crop loss caused by natural
calamities, pest attacks etc.
Features of Kisan Credit Card
6. • Eligible farmers to be provided with a Kisan Credit Card
and a pass book or card-cum-pass book.
• Repayment for the amount borrowed can be made
within a period of up to 12 months.
• Limit to be fixed on the basis of operational land holding,
cropping pattern and scale of finance.
• Card valid for 3 years subject to annual review.
• As incentive for good performance, credit limits could be
enhanced to take care of increase in costs, change in
cropping pattern, etc.
• Conversion/rescheduling of loans also permissible in case
of damage to crops due to natural calamities.
• Withdrawals through slips/cheques accompanied by
card and passbook.
7. Interest Rate Under Kisan Credit Card
The interest rates on Kisan Credit Cards varies from bank to bank and
also on borrowing limits.
In terms of Government of India instructions for 2013-14, all the crop
loans up to Rs. 3 lakh are being disbursed at the interest rate of 7% p.a.
Govt. of India also provides interest subvention of 3% p.a. to prompt
repaying farmers, thus making available the crop loans to them at 4% p.a.
and if the customer has a sound track record for three years, he/she is
eligible for an increase in the credit limit.
Security - In terms of RBI instructions, no separate security is required
for crop loans up to Rs. 1 Lakh. Beyond Rs. 1 lakh the security is decided
by the individual bank in terms of RBI guidelines.
8. Insurance under Kisan Credit Card
Kisan Credit Card holders are also covered by a personal accidental
insurance.
The cover is as follows:
Death : Rs. 50,000
Disability: Rs. 25000
In order to be eligible to avail this insurance cover, the customer
should not be above 70 years of age at the time of obtaining the
Kisan Credit Card.
9. Benefits of Kisan Credit Card
• Repayment only after harvest
• Hassle-free disbursement procedure
• No need to apply for a loan for every crop
• Helps buy seeds, fertilizers at farmer’s convenience and choice
• Single credit facility/ term loan for all agricultural requirements
• Credit is available for a period of up to 3 years, without any seasonal
appraisals.
• Income from agricultural sources determines the maximum credit limit.
• There is no restriction on the cash withdrawals that can be made by the
Kisan Credit Card holder, as long as it is within the credit limit set by the
bank.
• Flexible repayment options. It can be rescheduled if there is a bad
crop season, and extensions are offered for up to four years
10. • Margin, security and documentation terms and conditions are similar to
that applicable to agricultural advance.
• Minimal documentation and maximum flexibility offered for withdrawal
of the required funds from the Bank.
• Funds can be withdrawn from any of the Bank’s branches.
• Conversion/re-scheduling of loans also permissible in case of
damage to crops due to natural calamities.
11. Banks Providing Kisan Credit Card Facilities
Commercial banks Co- Operative banks Regional rural banks
Allahabad Bank Uttar Pradesh Co-operative Bank Allahabad UP Gramin Bank
Andhra Bank Maharashtra State Co-operative Bank Baroda UP Gramin Bank
Bank of Baroda Gujarat State Co-operative Bank Gramin Bank Of Aryavrat
Bank of India Kerala State Co-operative Bank Madhyanchal Gramin Bank
Bank of Maharashtra Prathama Bank
Bharatiya Mahila Bank Sarva UP Gramin Bank
Canara Bank Kashi Gomati Gramin Bank
Central Bank of India Purvanchal Bank
State Bank of India Shreyas Gramin Bank
13. Figure 1. Diagrammatic representation of Agency-wise Kisan
Credit Card issued in India
37.05 %
15.07 %
47.86 %
Cooperative Bank RRBs Commercial banks
0
10
20
30
40
50
60
(Source: Patil et al., 2016)
14. Benefits to Banks
• Reduction in work load for branch staff by avoidance of repeat
appraisal and processing of loan papers under Kisan Credit Card
Scheme. One time documentation at first availment and
thereafter simple declaration from second year.
• Minimum paper work and simplification of documentation for
drawl of funds from the bank.
• Improvement in recycling of funds and better recovery of loans.
• Reduction in transaction cost to the banks.
• Better Banker – Client relationships.
16. • The study was conducted in Ashta block of
Sehore district of Madhya Pradesh.
• Due to impact of short term crop loan, highest
increase in yield was with wheat crop which
amounted to 82.37 %.
• The highest percentage of magnitude of
increased income 75.28% was for wheat crop
followed by 68.78 % and 46.75 % respectively for
gram and arhar respectively.
Impact of KCC on Crop Yield and Income
17. (Source: Arvind et al., 2013)
Table 2. Crop wise distribution of yield per acre before and
after borrowing loan under KCC scheme and change in yield
S.no Crops
Yield (q/acre) Absolute
change
(q/acre)
Relative
Change
(%)Before
borrowing loan
After borrowing
loan
1. Soybean 05.88 07.81 1.93 32.82
2. Arhar 03.74 05.65 1.91 51.07
3. Wheat 06.41 11.69 5.28 82.37
4. Gram 03.43 05.98 2.55 74.34
18. (Source: Sharma et al., 2013)
Table 3. Crop wise distribution of income per acre before
and after borrowing loan and change in income
S.no. Crops
Income (Rs./acre) Absolute
Change
(Rs.)
Relative
Change
(%)Before
borrowing loan
After borrowing
loan
1. Soybean 6174 8519 2345 37.98
2. Arhar 13090 19210 6120 46.75
3. Wheat 7051 12089 5308 75.28
4. Gram 8149 13754 5605 68.78
19. Impact of KCC on cropping pattern
• The study was conducted in Krishnagiri district of Tamil
Nadu.
• The availability of adequate amount of credit and in proper
time enables the farmers to take up cultivation of
commercial crops.
• It is observed that the beneficiary farmers have recorded a
higher cropping intensity of 233.33 per cent as against the
non-beneficiary farmers who have recorded cropping
intensity of only 208.03 per cent.
• It is also observed that the beneficiary farmers have
allocated more area for the commercial crops like Sugarcane
and banana which are a 10 months crop in the area.
20. Note: Figures in parentheses indicate percentage to net cropped area; *others include tomato and brinjal;
**Sugarcane and banana are 10 months crops and the area under it is taken three times for computation of
cropping intensity (Source - Prakash P, 2013)
Table 4. Cropping pattern of the sample non-beneficiary and
KCC beneficiary farmers
(Kharif Season)
Crops
Non Beneficiary Farmers
(Non KCC holder)
Beneficiary Farmers
(KCC holder)
(In Acres)
Rice
15.35
(75.6)
26.20
(52.6)
Sugarcane**
1.58
(7.8)
12.35
(24.8)
Banana**
0.74
(3.6)
7.00
(14.1)
Groundnut
1.38
(6.8)
4.25
(8.5)
Others*
1.26
(6.2)
0.0
(0.0)
Sub Total 20.31 49.8
21. Note: Figures in parentheses indicate percentage to net cropped area; *others include tomato and brinjal.
(Source - Prakash P, 2013)
(Rabi Season)
Crops
Non Beneficiary Farmers
(Non KCC holder)
Beneficiary Farmers
(KCC holder)
(In Acres)
Rice
13.25
(65.2)
23.45
(47.1)
Okra
0.27
(1.3)
0.0
(0.0)
Pulses
1.34
(6.6)
2.25
(4.5)
Groundnut
1.38
(6.8)
0.0
(0.0)
Others*
1.06
(5.2)
2.0
(4.0)
Sub Total 17.3 27.7
Gross Cropped Area 42.25 116.2
Cropping Intensity 208.03 233.33
22. 42.25
208.03
116.2
233.33
Gross Cropped Area (Acres) Cropping Intensity (%)
Figure 2. Diagrammatic representation of the difference
between Gross Cropped Area and Cropping intensity
Non Beneficiary Farmers Beneficiary Farmers
(Source - Prakash P, 2013)
23. • The study was conducted in Krishnagiri district of Tamil
Nadu.
• The primary data was collected from 60 beneficiary farmers
and 60 non beneficiary farmers from district. Data was
collected using pre-tested questionnaire on various aspects
of farm business, factors influencing the adoption and
constraints faced.
• The access to good quality loan enhances the use of inputs
by the farmers. The farmers use good quality inputs and also
use them at right time and in right dosage.
• It is observed that the beneficiary farmers are using higher
dosage of inputs
Impact of KCC on Input in Field
24. (Source - Prakash P, 2013)
Table 5. Input use by beneficiary and non-beneficiary farmers
Items
Paddy Sugarcane Groundnut
(In Rs./ha)
Non KCC KCC Non KCC KCC Non KCC KCC
Seed (Kg) 31.8 70.1 2.7 3.0 71.8 111.2
Inorganic Fertilizer
(Kg)
142.4 250.0 440.4 601.6 94.7 186.9
Organic Fertilizer (Kg) 1.3 1.5 2.3 2.8 0.4 0.7
Irrigation (Hours) 70.0 72.5 157.5 182.5 7.5 16.0
Machine Power
(Hours)
11.6 16.9 9.6 12.6 3.1 3.4
Human Labour (No.) 10.1 18.0 23.9 31.8 14.3 17.3
Plant Protection
Chemicals ( litre)
0.1 4.6 2.1 3.9 0.7 1.9
Total 267.3 433.3 638.5 838.2 198.8 345.5
25. (Source - Prakash P, 2013)
Paddy Sugarcane Groundnut
Input by Non KCC farmer 267.3 638.5 198.8
Input by KCC Farmer 433.3 838.2 345.5
0
100
200
300
400
500
600
700
800
900
Rs./ha
Figure 3. Diagrammatic representation of Input
use by beneficiary and non-beneficiary farmers
26. Kisan Credit Card has played a significant role in farm
operation and income of farmers. The timely availability of
crop loan has helped to realize higher returns from
farming. The farmers use good quality inputs and also use
them at right time and in right dosage.
Conclusion
27. Patil S., Ramesh G. B., (2016). Kisan Credit Card-A Financial
Innovation in Agriculture Credit Market. Indian Journal of Economics
and Development. 12(1): 206-208.
Sharma A., Choudhary S., Swarnakar V.K., (2013). A Study on Impact
of Kisan Credit Card Scheme among the Beneficiary Farmers in
Sehore District of Madhya Pradesh. International Journal of Science
and Research (IJSR). 2(1): 155-157.
Singh A., Prakash P., Kumar D.K., (2007). Performance of Rural Credit
and Factors affecting Choice of Credit Sources. Indian Journal of
Agricultural Economics, 62 (3): 115-119
References
