Background

To address the long-standing challenges in agricultural credit, the Government of India implemented significant reforms, including the nationalization of major banks and the establishment of institutions like NABARD and Regional Rural Banks (RRBs). However, despite these measures, the flow of credit to farmers remained insufficient. In response, the Reserve Bank of India constituted a high-level committee under Shri R.V. Gupta in December 1997, which ultimately led to the introduction of the KCC scheme, designed to streamline agricultural financing and improve farmers’ access to credit.

• The KCC scheme is implemented by three key agencies: commercial banks, cooperative banks, and Regional Rural Banks (RRBs). As of March 2015, commercial banks led in issuing KCCs, accounting for 49%, followed by cooperative banks at 35% and RRBs at 16%.

• Key objectives of the KCC scheme include meeting short-term credit requirements for crop cultivation, covering post-harvest expenses, providing marketing loans, and supplying working capital for allied activities like dairy and fisheries.

• Eligibility for KCC includes individual or joint borrowers who are owner cultivators, tenant farmers, oral lessees, sharecroppers, and Self Help Groups (SHGs) or Joint Liability Groups (JLGs), with the scheme operating at a benchmark interest rate of 9%, reduced to 4% per annum for farmers through an interest subvention of 2% and a prompt repayment incentive of 3%.

• Recent policy changes have increased the guarantee-free loan limit for farmers from ₹1.60 lakh to ₹2 lakh, facilitating easier access to loans without collateral. Additionally, a personal accident insurance scheme has been introduced with the Kisan Credit Card (KCC), which typically covers up to ₹50,000 for accidental death or permanent total disability and ₹25,000 for partial disability.

• As of March 2024, approximately 7.75 crore KCCs  were operational, benefiting around 5.9 crore farmers under the Modified Interest Subvention Scheme (MISS-KCC), highlighting the scheme’s significant potential to influence agricultural credit and economic outcomes.

• The Kisan Rin Portal (KRP), launched in September 2023, has digitized the Modified Interest Subvention Scheme (MISS-KCC), simplifying operations for  453 banks and their 1.89 lakh branches nationwide.[5]

• Banks are required to allocate 40% of their Adjusted Net Bank Credit to priority sectors, including agriculture, ensuring ample credit flow. Ground-level credit to agriculture grew at a CAGR of 12.98% from 2014-15 to 2024-25, increasing from ₹8.45 lakh crore to ₹25.48 lakh crore, with small and marginal farmers’ share rising from ₹3.46 lakh crore (41%) to ₹14.39 lakh crore (57%) during this period.[5]

In the Annual Financial Statement(AFS) for 2025-26, Finance Minister Smt Nirmala Sitharaman announced an increase in the KCC interest subvention scheme limit from ₹3 lakh to ₹5 lakh, enhancing farmers’ access to affordable credit and boosting rural economic growth.

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