Mumbai, June 21: The Reserve Bank of India (RBI) has issued the final guidelines on the Kisan Credit Card (KCC) scheme, deferring implementation to January 1, next year.
KCC loans sanctioned before that date will continue under existing guidelines until maturity or next renewal.
The revised framework will not apply to overseas branches of Indian banks.
The final guidelines incorporate district-level technical committee Scale of Finance references, an indicative list of technology interventions eligible under KCC, and the applicability of Flexi KCC to allied activities. Credit limits will be rounded off to the nearest Rs 1,000.
Banks are directed to continue using the existing Scale of Finance where it has not been revised in a subsequent year, without automatically increasing the drawing limit by 10 per cent.
Investment loans with a tenure exceeding six years will be treated as separate credit facilities outside the KCC framework, with banks permitted to maintain separate loan accounts for working capital and long-term investment components.
Under Flexi KCC, marginal farmers will be eligible for a credit limit between Rs 10,000 and Rs 50,000 based on the bank’s assessment, without linking it to land value. The limit will factor in crops grown, post-harvest storage needs, farm expenses, consumption needs and investment requirements for agriculture and allied activities.
What RBI Rejected
The RBI rejected demands to raise the collateral-free lending limit, increase the Flexi KCC ceiling, permit lending beyond the prescribed Scale of Finance, simplify the drawing limit methodology and allow renewals based solely on interest servicing, saying these could weaken credit discipline, increase credit risk or lead to over-financing.
The regulator also declined to standardise documentation across banks, waive additional charges beyond priority sector lending norms, provide free life and health insurance to KCC holders, or enhance benefits under the Modified Interest Subvention Scheme.
On insurance, the RBI noted the matter falls under the policy domain of the Government of India.
RBI also clarified that explicit borrower consent is required before insurance premiums are debited from a KCC account. KCC operations may continue through multiple channels, including cash withdrawals. (BVI)
