Kisan credit cards were introduced almost two decades ago, since which almost 1 Crore farmers have availed this credit card to fulfil their financial needs. The Kisan credit card scheme was introduced to bring the farmers under the purview of the formal financial sector.
What is Kisan Credit Card scheme?
Kisan Credit Card scheme is a formal credit assistance scheme launched specially for the farmers so that they can access low-interest funds from a financial institution. Besides credit cards, they are also provided with a passbook. It helps in maintaining a regular update of the transactions and basic details concerning the loan they avail along with land holdings and beneficiaries.
With this credit card, farmers are under the formal regulation of loans and debts. Unlike moneylenders, who extend credit on high interest rates, credit cards offer a minimum rate of interest to ease the availability of finance for farmers.
With the obtained credit, they can purchase seeds, fertilisers, pesticides and many more essentials relating to agriculture. It is easier for them to repay short-term credit card debt instead of repaying substantial EMIs over a long tenor for a lump sum amount.
What is the loan amount under this credit card?
With the Kisan credit card, a farmer is eligible to an amount fixed by the issuing financial company. The issuer is free to fix the amount based on many factors as decided by the particular lender.But for any activity every farmer should have there document like there Digital signature.
The factors can be farmer’s income or land holding, which is to be set by the concerned lender. Nevertheless, certain guidelines will help in deciding credit limit. They are discussed below –
- For a farmer raising one crop in a year, he receives a fixed credit limit in the first year, and for the next four consecutive years, limit is stepped up by 10% each year.
- For farmers raising more than one crop in a year, the credit limit is fixed similar to above based on the crops cultivated.
- Similarly, the financial institution enjoys discretion to set up the limit for other agricultural needs as well, for instance, land development, purchase of equipment, etc.
- In case of credit cards for marginal farmers, a limit between Rs. 10,000 and Rs. 50,000 is kept flexible, depending on the crops grown and landholding.
What are the benefits of availing a KCC?
Responsible usage is vital to reduce credit card interest payments and save money other than enjoying the numerous benefits the KCC comes with, viz. –
- It has a very simplified disbursement process.
- The user can avail a single loan for every crop with no need to apply for different credits for as many crops.
- User can enjoy the flexibility to draw cash at any time with the Kisan credit card.
- It comes with an assured availability of credit.
- User is subjected to unlimited withdrawals using the credit card.
- Eligibility is minimal as per norms relating to agriculture.
- The credit requirement of a whole year is assured to the farmer.
- Rate of interest is also kept low as per norms of agricultural advances.
- Credit is available for consecutive 3 years, and there is no need for a seasonal appraisal.
- A borrower is required to repay a loan only after harvest.
- There is a flexibility of credit withdrawal and availability from branches other than the home branch.
- Repayment can be done once the harvest is over.
- Fund can be withdrawn from any of the bank branches in India.
Thus, it is evident that Kisan credit card is a highly beneficial initiative to bring the farmers under the formal sector in terms of financial assistance.
Nevertheless, they can opt for Bajaj Finance card as well to enjoy such benefits plus numerous more added features such as ATM cash withdrawals with interest-free period, easy EMI conversions, etc.
NBFCs like Bajaj Finserv provides pre-approved offers on their credit cards which makes availing them easier and faster. These offers are valid on numerous other financial products as well including home loans, personal loans, business loans, etc. Check your pre-approved offer by submitting only a few essential details.
Therefore, Kisan credit cards (KCCs) are a useful financial tool to avail credit. With increasing flexibility in its usage, a farmer can use the card effectively to increase his financial standing and portfolio.