RBI Plans Major KCC Revamp; Higher Credit Limits and Extended Tenure Ahead

The Reserve Bank of India has proposed a revamp of the Kisan Credit Card (KCC) framework to streamline how farm loans are assessed, sanctioned and utilised.  

The central bank has completed a scheme review and will soon issue consolidated guidelines for banks covering agriculture and allied activities, according to a news report. 

The proposed reset is aimed at bringing uniformity in credit norms, aligning loan limits with actual farm costs, and expanding the permitted end-use of KCC funds. 

Revised Credit Norms and Loan Structure 

RBI plans to merge existing scattered KCC instructions into a single consolidated guideline framework. A uniform definition of crop seasons is proposed so that loan assessment and repayment timelines are standardised across regions. 

The validity of a KCC facility may be extended to 6 years, giving borrowers a longer operating cycle. Drawing limits are proposed to be directly linked to the officially approved Scale of Finance for each crop season. 

The scope of eligible spending may also be widened to include technology-led farm investments. This includes modern equipment and agri-tech interventions, allowing credit to better support productivity upgrades. 

Interest Support and Scheme Scale 

Interest benefits under the Modified Interest Subvention Scheme will continue alongside the new framework. Short-term crop loans through KCC remain available at 7% interest with government support to lenders. 

Farmers who repay on time get an additional 3% prompt repayment incentive, reducing the effective rate to 4% per year. The subsidised loan limit has been raised from ₹3 lakh to ₹5 lakh in the latest Budget. 

The Kisan Rin Portal is being used to digitally manage subvention claims and monitoring. As of March 2024, there were about 7.75 crore KCC accounts with outstanding credit near ₹9.81 lakh crore, indicating the scheme’s wide reach. 

Read More: RBI Measures to Boost Financial Inclusion MSME Credit and REIT Financing! 

Conclusion 

The proposed KCC changes aim to standardise rules, extend tenure and widen credit usage while continuing interest support, reshaping how farm working capital is structured. 

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