Access to timely credit has always been one of the biggest challenges faced by Indian farmers. Agriculture depends heavily on seasons, weather patterns, and rising input costs such as seeds, fertilizers, pesticides, irrigation, and labor. When funds are not available at the right time, even experienced farmers can suffer crop losses or reduced yields.
To solve this problem and reduce farmers’ dependence on informal moneylenders, the government introduced the Kisan Credit Card Scheme as a structured and farmer-friendly credit solution. The Kisan Credit Card Scheme is designed to ensure that farmers get easy, affordable, and flexible access to institutional credit exactly when they need it. Instead of applying for multiple loans every season, farmers can use a single card to meet their recurring agricultural expenses. Over the years, this scheme has become a key pillar of agricultural finance, helping farmers manage cash flow, reduce interest burden, and plan their farming activities more efficiently.
The Kisan Credit Card Scheme is a government-supported agricultural credit initiative that allows farmers to access short-term loans through banks in a simple and flexible manner. Under this scheme, eligible farmers receive a credit card linked to their bank account, which works much like an overdraft facility. Farmers can withdraw money as per their needs, repay it, and withdraw again within the sanctioned credit limit. This scheme is not limited to crop cultivation alone. It also covers allied agricultural activities such as dairy farming, animal husbandry, fisheries, and poultry. The idea behind the Kisan Credit Card Scheme is to provide a single-window credit solution that supports both production and post-harvest needs. With low interest rates, flexible repayment schedules, and minimal paperwork, the scheme has become one of the most trusted financial tools for farmers across the country.
Kisan Credit Card Scheme
| Particulars | Details |
|---|---|
| Scheme Name | Kisan Credit Card Scheme |
| Introduced By | Government of India |
| Target Beneficiaries | Farmers and allied sector workers |
| Credit Type | Short-term revolving credit |
| Loan Purpose | Crop production, allied activities, post-harvest needs |
| Interest Rate | 7 percent per annum |
| Interest Subsidy | Up to 3 percent on timely repayment |
| Repayment Structure | Based on crop or activity cycle |
| Validity Of Card | Up to 5 years |
| Insurance Coverage | Personal accident insurance |
The Kisan Credit Card Scheme has emerged as one of the most impactful financial initiatives for India’s agricultural sector. By addressing the core issue of timely credit availability, the scheme empowers farmers to make informed and timely decisions. Its low interest rates, flexible repayment structure, and wide eligibility coverage make it suitable for farmers across different regions and farming practices. Beyond providing loans, the scheme plays a crucial role in reducing rural indebtedness, promoting financial discipline, and supporting sustainable agricultural growth. As farming continues to face challenges from climate change and market fluctuations, the importance of the Kisan Credit Card Scheme will only increase. With proper awareness and effective implementation, it has the potential to significantly improve the economic stability of farming households across the country.
Objectives Of the Kisan Credit Card Scheme
The primary objective of the Kisan Credit Card Scheme is to provide timely and adequate credit to farmers at affordable interest rates. Agricultural activities require upfront investment, and delays in arranging funds can directly impact productivity. By offering instant access to credit, the scheme helps farmers make timely decisions related to sowing, irrigation, and crop protection.
Another important objective is to reduce farmers’ dependence on non-institutional sources of credit such as moneylenders. These sources often charge very high interest rates, trapping farmers in cycles of debt. The scheme promotes financial inclusion by bringing farmers into the formal banking system. It also supports income stability by covering allied activities, which play a crucial role in diversifying rural income.
Eligibility Criteria For The Kisan Credit Card Scheme
- The Kisan Credit Card Scheme follows a broad and inclusive eligibility framework. Individual farmers who are engaged in crop cultivation are eligible to apply for the card. This includes small and marginal farmers who often find it difficult to access traditional bank loans.
- Tenant farmers, sharecroppers, and oral lessees are also eligible under the scheme, ensuring that land ownership is not a mandatory requirement. In addition, Self Help Groups and Joint Liability Groups involved in agricultural activities can apply collectively. Farmers engaged in allied sectors such as dairy farming, fisheries, poultry, and animal husbandry are also covered. This wide eligibility ensures that the benefits of the Kisan Credit Card Scheme reach a large section of the rural population.
Loan Limit Under The Kisan Credit Card Scheme
- The loan limit under the Kisan Credit Card Scheme is determined based on several factors. These include the area of land cultivated, type of crop grown, scale of finance fixed by district-level committees, and the farmer’s past credit history. The credit limit also takes into account post-harvest expenses and household consumption needs related to farming.
- For farmers involved in allied agricultural activities, the loan limit is assessed based on working capital requirements and the scale of operations. Typically, the credit limit is fixed for a period of five years, with annual reviews. This long-term validity reduces the need for repeated loan applications and simplifies the borrowing process.
Interest Rate And Interest Subvention
- One of the most attractive features of the Kisan Credit Card Scheme is its concessional interest rate. Farmers are charged an interest rate of 7 percent per annum on short-term crop loans up to the approved limit. This rate is significantly lower than what is charged by informal lenders.
- To encourage timely repayment, the government provides an additional interest subvention of up to 3 percent. Farmers who repay their loans on time effectively pay an interest rate as low as 4 percent per annum. This benefit not only reduces the financial burden on farmers but also promotes a healthy credit culture and improves repayment discipline.
Repayment Period
The repayment structure under the Kisan Credit Card Scheme is aligned with the crop harvesting cycle. This means farmers are required to repay the loan only after they have sold their produce and generated income. Such flexibility helps farmers manage their finances without unnecessary stress. For allied agricultural activities, repayment periods are customized based on the nature of the activity and expected cash flow. Since the scheme offers a revolving credit facility, farmers can withdraw and repay funds multiple times within the sanctioned limit. This flexibility makes the scheme suitable for both seasonal and year-round agricultural activities.
Insurance Coverage
- The Kisan Credit Card Scheme also provides personal accident insurance coverage to cardholders. This insurance offers financial support in the event of accidental death or permanent disability of the farmer. Given the occupational risks involved in agriculture, this coverage adds an important layer of financial security.
- The insurance premium is minimal and is often shared between banks and the government. This ensures that farmers receive protection without facing additional financial burden. Insurance coverage under the scheme helps safeguard farming households against unforeseen circumstances.
E-Shram Card ₹3000 Monthly Claim — What’s True and What You Should Know
Benefits Of the Kisan Credit Card Scheme
The Kisan Credit Card Scheme offers several benefits that make it highly valuable for farmers. It ensures timely availability of funds, reduces dependence on moneylenders, and lowers the overall cost of borrowing. The scheme also simplifies the loan process through minimal documentation and faster approvals. Another major benefit is flexibility. Farmers can use the card multiple times within the credit limit and repay according to their income cycle. The scheme also supports allied agricultural activities, encouraging income diversification. By promoting the use of formal banking channels, the Kisan Credit Card Scheme strengthens financial inclusion and contributes to long-term rural development.
FAQs on Kisan Credit Card Scheme
What Is the Kisan Credit Card Scheme
It is a government-backed scheme that provides farmers with easy and affordable access to short-term agricultural credit.
Who Can Apply for A Kisan Credit Card
Farmers, tenant farmers, sharecroppers, Self Help Groups, and Joint Liability Groups involved in agriculture or allied activities can apply.
Can The Card Be Used For Allied Activities
Yes, the scheme covers dairy, animal husbandry, fisheries, poultry, and other allied agricultural activities.
What Is the Interest Rate Under the Scheme
The interest rate is 7 percent per annum, with additional subsidy for timely repayment.
