RBI for inclusion of farm-linked technology innovations as loans

Draft KCC norms seek to include tech innovation costs in farm loans and waive collateral for agricultural credit up to Rs 2 lakh per borrower

The Reserve Bank of India (RBI) has proposed to include expenses related to technology innovations like soil testing, real-time weather forecasts, and organic/good agricultural practices certification, to be eligible for farm loans. These will be covered within the 20 per cent additional component currently allowed towards repairs and maintenance of farm assets.

 

It has been proposed that banks should waive collateral security and margin requirements for agricultural loans, including loans for allied activities up to ₹2 lakh per borrower.

 

The regulator, on Thursday, released revised draft norms on Kisan Credit Card scheme with an aim to expand coverage, streamline operational aspects and address emerging requirements in the agriculture sector.

   

In a move to bring uniformity in loan sanction and repayment schedules, crop seasons have been standardised in terms of months—short-duration crops (12 months) and long-duration crops (18 months).

 

“To ensure proper dovetailing of loan tenure with crop seasons, especially for the longer duration crops, the tenure of KCC has been extended to 6 years,” the draft norms said.

 

Moreover, to ensure that farmers receive adequate credit based on actual cost of cultivation, drawing limits under KCC have been aligned with the scale of finance for each crop season.

 

According to the draft norms, in case of marginal farmers, a flexible limit of ₹10,000 to ₹50,000 should be provided (as Flexi KCC) based on the land holding and crops grown for their working capital and investment-related credit needs as per the assessment of the bank.

 

A marginal farmer refers to a farmer with landholding of up to one hectare and a small farmer is the one with landholding of more than one hectare and up to two hectares.

 

As far as loans for long-duration crops are concerned, banks shall charge interest at annual rests. For short-term loans to small and marginal farmers, the total interest debited to an account should not exceed the principal amount, the draft said.

 

Feedback on the revised norms can be submitted by 6 March 2026.