RBI plans KCC revamp with 6-year tenure and higher loan limits ahead

Draft norms propose standard crop seasons, tech spend cover and loan limits linked to scale of finance under Kisan Credit Card framework

The Reserve Bank of India (RBI) has proposed a revamp of the Kisan Credit Card (KCC) framework that could change how crop loans are assessed, sanctioned and used. The central bank has completed a review of the scheme and plans to issue consolidated, updated guidelines for banks, covering agriculture and allied activities.

 

The proposed changes aim to standardise loan assessment, extend credit tenure and widen the scope of eligible expenses under KCC.

 

What RBI has proposed in the KCC revamp?

According to the RBI’s policy announcement, the revised framework will merge existing KCC instructions into a single set of guidelines. Key proposed changes include:

 

 

·  Uniform crop season definition: A standard approach to defining crop seasons across regions for loan assessment and repayment timelines.

 

·  KCC tenure of six years: The total validity of a KCC facility may be extended to six years, giving borrowers a longer operating window.

 

·  Drawing limit linked to Scale of Finance: Credit limits will be aligned with the officially approved Scale of Finance for each crop season so that sanctioned amounts reflect actual cultivation costs.

 

·  Technology spends allowed: Expenses on technological interventions such as modern farm equipment and agri-tech tools may be formally included as eligible uses.

 

Draft guidelines are expected to be issued shortly for implementation by banks.

 

Interest subsidy structure for KCC loans

Government support on KCC loans continues through the Modified Interest Subvention Scheme (MISS), as detailed in the PIB release.

 

Under MISS:

 

·  Farmers can get short-term crop loans at 7 per cent interest through KCC.

 

·  The government provides 1.5 per cent interest subvention to lending institutions.

 

·  Farmers who repay on time get an additional 3 per cent prompt repayment incentive, reducing the effective interest rate to 4 per cent per year.

 

·  The loan limit under the scheme has been raised from ₹3 lakh to ₹5 lakh in the latest Budget.

 

·  For animal husbandry and fisheries, interest benefit is available on loans up to ₹2 lakh.

 

Kisan Rin Portal and scale of KCC lending

The PIB release also highlights the rollout of the Kisan Rin Portal (KRP), a digital platform to manage and monitor interest subvention and prompt repayment incentive claims from banks. The portal is designed to improve transparency and speed in claim settlement.

 

According to the official data cited in the release:

 

·  By December 31, 2024, about 5.9 crore farmers had been mapped on the Kisan Rin Portal.

 

·  Interest subvention claims worth over Rs 1.08 trillion had been processed through the system.

 

·  As of March 2024, there were around 7.75 crore KCC accounts with outstanding credit of about Rs 9.81 lakh crore.

 

Why this matters?

If implemented, the RBI’s proposed KCC changes would standardise credit norms, tie limits more closely to actual farm costs and allow funding for technology use, while existing interest subsidy support continues under MISS. Together, these define how KCC borrowing will be structured and priced for farmers.