At a recently held event in Uttar Pradesh, Prime Minister Narendra Modi distributed Kisan Credit Cards (KCC) to all the beneficiaries under the PM-KISAN scheme as a part of the saturation drive. More than 25 lakh beneficiaries of PM Kisan scheme across the country have been provided with KCC, and more than 2,000 bank branches in rural areas have been tasked with providing KCC to farmers on the condition of timely repayment.
In order to help farmers secure institutional credit to manage the high cost of cultivation, the KCC scheme has been launched by the central government, a year after it was announced to provide financial aid of Rs 6000 a year to farmers.
KCC scheme for farmers
A large section of farmers secures loans from unorganized lenders who charge an exorbitant amount of interest on the loans. The government intends to free small farmers from the clutches of money lenders by introducing the KCC scheme. The government has set an estimate of Rs 20,000 crore which will be utilized to sanction loans to KCC cardholders.
According to the government-run State Bank of India, up to a 3 percent interest waiver will be issued if the farmer repays the loan promptly. However, in case of late payment, the bank will charge an interest rate of 7 percent on the loan amount. The limit on the KCC can be increased up to 3 lakh if the farmer pays dues on time.
According to information provided on the SBI website, collateral security has been waived on loans up to 1.60 lakh. Only simple interest will be charged on the loans, however, in case of untimely payment or bank default, compound interest will be charged by the banks. The amount of loan for the first time will be ascertained by bank officials after factoring in the cost of cultivation and post-harvest expenses.
Besides credit facilities that can be availed, the crop of all farmers who have taken credit under the KCC scheme will be insured by the crop insurance scheme. The basis of this scheme is landholding and no farmer without land ownership can avail of the KCC scheme. The KCC account will provide high interest to farmers on their savings in the account. The saving interest rate will be applied to their credit balance.
Beyond farming and more
Like farmers, the government has extended the facility of Kisan Credit Card (KCC) to fisheries and animal husbandry farmers in the budget for 2018-19 to help them meet their working capital needs. The fisheries ministry now seeks inclusion of fishermen in the PM-KISAN scheme as well.
As recently Punjab finance minister Manpreet Badal in annual budget 2020-21 introduced "Crop Loan Waiver Scheme" has waived off the entire crop loans of all small and marginal farmers (upto 5 acres) having loans upto Rs 2 lakhs. For the next phase, a total allocation of Rs. 2000 crore including Rs 520 crore specifically for waiving off the loans of landless and farm workers is being provided during 2020-21.
Over 6.5 crore of the approximately 8.5 crore beneficiaries under PM-KISAN scheme possesses the Kisan Credit Cards.
