Source: News on Air
Why in News?
The Reserve Bank of India (RBI) has proposed revised draft norms for the Kisan Credit Card (KCC) scheme to expand farm credit coverage and support technology adoption in agriculture.
Key Proposals
1. Agri-Tech Expenses Eligible for Farm Loans
Expenses related to modern agricultural practices can now be covered under farm loans, including:
- Soil testing
- Real-time weather forecasting tools
- Certification for organic or good agricultural practices
These will be included within the existing 20% additional component allowed for repair and maintenance of farm assets.
2. Easier Access to Credit
- Collateral and margin requirements waived for agricultural and allied activity loans up to ₹2 lakh per borrower.
- Aims to improve credit access, especially for small and marginal farmers.
3. Standardisation of Crop Loan Cycles
To ensure uniformity in repayment and loan sanction:
- Short-duration crops: 12 months
- Long-duration crops: 18 months
4. Longer Loan Tenure
- KCC loan tenure extended to 6 years to better match crop cycles, especially for long-duration crops.
5. Credit Limits Linked to Actual Cultivation Costs
- Drawing limits aligned with the scale of finance for each crop season, ensuring adequate credit based on real production costs.
6. Flexi-KCC for Marginal Farmers
- Flexible credit limit of ₹10,000 to ₹50,000, depending on landholding and crops.
- Designed to meet both working capital and investment needs.
Objective of the Reform
- Promote adoption of modern agricultural technologies.
- Improve access to institutional credit.
- Align loan structure with real farming cycles and costs.
- Support small and marginal farmers.
