Introduction accounted for to be particularly extreme, for example,


The agrarian crisis that has spread through rural
India for the past few years has been related mainly with the rising burden of
obligation among farmers. The inability to repay past obligation and along
these lines to get to crisp advances has been generally acknowledged as the
most noteworthy proximate reason for the farmers suicides that were so far
reaching in Andhra Pradesh and Karnataka, and are clearly proceeding in regions
as far separated as Kerala, Maharashtra and parts of Punjab and Rajasthan.

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In spite of this, aside from reports from the field
by some columnists and different observers, there has been nothing in the state
of total information that would give some gauge of the real degree of

These reports have proposed that the decrease in
access to institutional credit has driven more agriculturists back to
conceivably more exploitative relations with customary moneylenders or
information merchants. Reimbursement issues, coming about because of the more
noteworthy challenges of development due to rising information costs and
unstable yield costs, have been intensified by the higher loan fees charged by
these casual sources.

This is a piece of a series of reports in view of
the Situation Assessment of Farmers, which covered the education level of
agriculturist families; level of living as estimated by customer use, pay,
beneficial resources and obligation; their cultivating practices and
inclinations; asset accessibility; awareness and access to mechanical
advancements, etc.

The study was done only in the rural parts of the
nation over a period of 12 months. In every one of the 51,770 families spread
more than 6,638 towns were overviewed in the Central example. The frequency of
obligation was most elevated in Andhra Pradesh, where more than four-fifths of
studied ranchers were paying off debtors, trailed by Tamil Nadu with almost
three-fourths of homestead family units revealing obligation. In Punjab, Kerala
and Karnataka the extent was about 66%.

It is important that a portion of the States where
the agrarian misery is accounted for to be particularly extreme, for example,
Andhra Pradesh, Karnataka, Maharashtra, Punjab and Rajasthan, are likewise
those which report large amounts of obligation.

The issue of rural obligation is personally
connected with issues of continually expanding input costs, unpredictable yield
costs and challenges in getting to business sectors. In this way, it is to
these parts of generation conditions in agribusiness that approach intercession
should now be coordinated.

Figure 1: Debt outstanding
on farmers (source: The Hindu Business Online)



Kisan Credit Card Scheme


Kisan Credit Card (KCC) scheme was introduced in 1998 for issue of Kisan Credit
Cards to farmers on the basis of their holdings for uniform adoption by the
banks so that farmers may use them to purchase agriculture inputs such as
seeds, fertilizers, pesticides etc. and draw cash for their production needs. It
was further extended for non-farm activities in the year 2004. The scheme was
further revisited in 2012 by a working Group with a view to simplify the scheme
and facilitate issue of Electronic Kisan Credit Cards. The scheme provides
broad guidelines to banks for operationalizing the KCC scheme.

The scheme can
be implemented by Commercial Banks, RRBs, Small Finance Banks and Cooperatives.
It aims to provide adequate and timely credit support from the banking system
under a single window with flexible and simplified procedure to the farmers for
their cultivation and other needs as indicated below:

To meet the
short term credit requirements for cultivation of crops;
marketing loan;
requirements of farmer household;
capital for maintenance of farm assets and activities allied to
credit requirement for agriculture and allied activities.



following are eligible to avail KCC:

a.       Farmers – individual/joint borrowers who are owner

b.       Tenant
farmers, oral lessees & share croppers;

c.       Self Help Groups (SHGs) or Joint Liability Groups
(JLGs) of farmers including tenant farmers, share croppers etc.


Features of KCC

scheme currently provides:

capital requirements for allied activities
credit requirements related to crop production
needs and
insurance of KCC borrowers.

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.


of KCC Scheme

disbursement procedures
regarding cash and kind is removed
of loan application for every crop is done away with
availability of credit at any time enabling reduced interest burden for
the farmer.
Assists in buying
seeds, fertilizers as per farmer’s choice and convenience
Helps buy
on cash-avail discount from dealers
Provides credit
facility for 3 years – no need for seasonal appraisal
High credit
limit based on agriculture income
No limit on
number of withdrawals subject to credit limit
Repayment to
be made only after harvest
Rate of
interest as applicable to agriculture advance
margin and documentation norms as applicable to agricultural advance
Access to
adequate and timely credit to farmers
Round the year
credit requirement of the borrower have been taken care of
Reduction in
paper work and simplified documentation process for withdrawal of funds
from the bank
availability of credit at any time enabling reduced interest burden for
the farmer
of withdrawals from a branch other than the issuing branch at the bank’s discretion


of Kisan Credit Card Scheme

eligible for production credit of ? 5000 or more are eligible for issue of
Kisan Credit Card
farmers to be provided with a Kisan Credit Card and a pass book or
card-cum-pass book
cash credit facility involving any number of withdrawals and repayments
within the limit
Limit to be
fixed on the basis of operational land holding, cropping pattern and scale
of finance
production credit needs for full year plus ancillary activities related to
crop production to be considered while fixing limit
may be fixed at the discretion of banks
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.
Each withdrawal
to be repaid within a period not exceeding 12 months
of loans is permitted in case of damage to crops due to natural calamities
margin, rate of interest, etc. as per RBI norms
may be through issuing branch or other designated branches at the
discretion of bank
through slips/cheques accompanied by card and passbook


to Banks

in work load for branch staff by avoidance of repeat appraisal and
processing of loan papers under Kisan Credit Card Scheme
paper work and simplification of documentation for withdrawal of funds
from the bank
in recycling of funds and improved loan recovery
Reduction in
transaction costs for the banks
Banker – Client relationships


under KCC

holders are covered by a personal accident insurance. This cover is available
when the person enters the scheme. The cover is as given below:

: 50,000
Disability: 25000
Maximum Age
to enter : 70 years


of KCC

KCC scheme, the loan amount is disbursed in cash through
drawings made via withdrawal slips accompanied by KCC-cum-passbook. Cheque
books are also issued to literate KCC holders enjoying KCC limit exceeding ?


and other charges on Kisan Credit Cards

interest rates on Kisan Credit Cards depends on the bank the borrowing limits.
Generally, 9% per annum interest rate is charged for KCC borrowing limit up to ?
3 Lakh. However, central government provides interest subvention to the
financing institutions. For holders with good track record; a further 2%
interest subsidy is provided. Credit limit may be enhanced post three years of
good track record.

are certain overhead costs for borrowing under KCC. These include processing
fee, charges on land mortgage deed, passport photo charges, insurance premium


NABARD Study on revised KCC

conducted a study as per the directive of central government to conduct a study
regarding the implementation of revised KCC in 2015.Given below are the
findings of the study, which included 6 states (Assam, Bihar, UP, Punjab,
Maharashtra and Karnataka):

inception, the cumulative number of KCC’s issued till March 2015 had reached to
146.4 million. However, this number of KCC accounts cannot be considered as
coverage of number of farmers under KCC scheme, as many farmers have got
reissued/ renewed their KCC several times. The number of operative/ live KCC as
on 31 March 2015 stood at 74.1 million. This achievement is against the total
operational land holdings estimated at 138.3

by Agricultural Census (2010-11) or number of agricultural households estimated
at 9.02 by National Sample Survey Organization (70th Round). This is summarized

Figure 2: Total KCC issued since inception (source:
NABARD report)


analysis of live/operational KCC’s indicate that the 6 big states, namely,
Uttar Pradesh, Andhra Pradesh, Maharashtra, Rajasthan and Madhya Pradesh combined
account for about 55% of all live/operational KCC’s.

managers were found to have knowledge regarding the 5 year validity of KCC as
well as adding of 10-20% above the crop loan requirement. However, most of the
managers were unaware that limit was fixed on the assumption that the farmer
would not change his cropping pattern. A change in cropping pattern required
re-working of the limit, but was not followed as evidenced from the absence of
any such instances found for the same.

Figure 3: Year-wise breakup of KCC issued (source:



to higher workloads, most of the managers were unable to visit farmer’s fields
to verify their cropping pattern, which was a factor in deciding KCC limit.

the farmers as well as the bankers were unwilling to go beyond the limit of ?1
Lakh to avoid mortgage of land, or ?3 Lakh if interest subvention was not

crop insurance scheme was implemented in almost all the states except Punjab.

charged interest rate of 7% up to ?3 Lakh but varied from bank to bank for crop
loans exceeding the amount.

farmers preferred to have KCC from multiple banks.

gaps existed between the number of agricultural holding and number of
operational KCC. These were due to:

Farmers having
multiple income sources

unwillingness to finance farmers with small land holdings

Inability to
present land holding documents

Unawareness on
part of farmers about the pros and cons of the scheme