Kisan Credit Card (KCC) Loan Limit Increased

In the Budget, the loan limit under Kisan Credit Card (KCC) has been enhanced from ₹3 lakh to ₹5 lakh. It will benefit 8 million of 77.7 million KCC accounts only. But it is offered only for farmers with good repayment history and commercial farming, only.

Expansions to Extend Scope

• It will benefit 8 million farmers who account for about 10.3 percent of all the holders of KCC. These have a history of borrowing in ₹3 lakh and more. Having a very sound repayment track will help bring least risk for banks. Will Exclude
  • Farmers who has a weak track record in paying back.
  • Not mainly operating in commodity farming.

Financial Burden

• The subsidy on interest expense is projected to increase to ₹26,000 crore from ₹22,600 crore during FY26.
• The policy will not put an additional burden on banks since the scheme only includes eligible accounts.
• KCC Utilization will increase.
• 77.5 million active KCC accounts as of March 2024, with ₹9.81 trillion outstanding loans.
• The operative KCCs grew at a rate of 5.4% during FY24 and outstanding loans saw a rise of 10.9%.
• Even though growth was seen slowing down from 18.3% to 13.2%, it is the southern region that recorded the highest growth in outstanding KCC loans.

KCC & Interest Subvention Schemes

• Modified Interest Subvention Scheme (MISS)
  • 7% concessional loan rate up to ₹3 lakh.
  • 3% Prompt Repayment Incentive (PRI), which brings down the rate to 4% for timely payers.
  • Includes post harvest loans covered by Negotiable Warehouse Receipts (NWRs).
  • KCC has raised the limit of a ₹1.6 lakh collateral free loan for fisheries & animal husbandry since 2018 19.
  • Kisan Rin Portal is launched for digital claim processing under MISS.

Rising Non Performing Assets in Agriculture

• Agriculture NPAs increased from 25.4% (March 2023) to 28.4% (March 2024).
• Even though the usage of KCC has been increasing, loan defaults are a concern.

What is Kisan Credit Card Scheme?