Parameter

Details

Objective

Revised guidelines

Kisan Credit Card Scheme (CCAGR):

Objective: The Kisan credit card scheme aims at providing adequate and timely credit support from the banking system under a single window with flexible and simplified procedure to the farmers for their cultivation and other needs as indicated below:

1. To meet the short term credit requirements for cultivation of crops;
2. Post-harvest expenses;
3. Produce marketing loan;
4. Consumption requirements of farmer household;
5. Working capital for maintenance of farm assets and activities to allied agriculture;
6. Investment credit requirement for agriculture and allied activities.

Note: The aggregate of components ‘a’ to ‘e’ above will form the short term credit limit portion and the aggregate of components under ‘f’ will form the long term credit limit portion.

v  In case of composite KCC, which includes credit facility for Agriculture and allied activities or augmentation of credit limit on the existing KCC (Agriculture) due to add on requirement for allied activities, no separate KCC should be issued.

Eligibility

v  Farmers – Individual/ Joint borrowers who are owner cultivators; Tenant farmers, oral lessees & Share croppers;

v  Self Help Groups (SHGs) or Joint Liability Groups (JLGs) of farmers including tenant farmers, share croppers etc.

Fixation of Credit limit/ Loan amount

The credit limit under the Kisan Credit Card may be fixed as under:

Ø  All farmers other than Marginal Farmers:

     i.        Raising single crop in a year:

a)    For 1^st year:

Scale of finance (SOF) X area cultivated  +10% of limit towards post-harvest/household/consumption needs + 20% of limit towards repairs and maintenance expenses of farm assets + crop insurance and/ or accidental insurance including PAIS, health insurance and asset insurance.

b)    For 2^nd and subsequent years:

First year limit for crop cultivation purpose arrived at as above + 10% of the limit towards cost escalation/increase in scale of finance for every successive year + limit towards first year limit estimated term loan for the tenure of UGC, i.e, five years.

    ii.        For farmers raising more than one crop in a year:

The limit is to be fixed as above depending upon the crops cultivated as per proposed cropping pattern for the first year and additional 10% of the limit towards cost escalation/increase in scale of finance for every successive year.  In case the cropping pattern adopted by the farmer is changed in the subsequent year, the limit may be re-worked.

Term Loan Investments:

v  It includes investments towards land development, minor irrigation, purchase of farm equipment and allied agricultural activities.

v  Assessment of Term Loan (TL) will be based on the unit cost of the asset/s proposed to be acquired by the farmer and repayment capacity.

v  The long term loan limit is to be based on the proposed investments during the five year period and the bank’s perception on the repaying capacity of the farmer.

Maximum Permissible Limit:

v  The short term loan limit arrived for the 5^th year + the estimated long term loan requirement to be treated as Maximum Permissible UGC limit, i.e.,  Kisan Credit Card limit.

v  It is to be ensured that at any point of time the total liability should be within the drawing limit for the concerned year.

v  Wherever the card limit/liability so arrived warrants additional security, the banks may take suitable collateral.

Ø  For Marginal Farmers: 

A flexible limit of Rs 10000/- to Rs. 50000/- to be provided based on the land holding and crops grown which may include:

Post-harvest warehouse storage related credit needs.

Other farm expenses, consumption needs etc.

Small term loan investments like purchase of farm equipment, establishing mini dairy/backyard poultry.

The above limit to be assessed by Branch Manager without relating it to the value of land.

Disbursement

v  The short term component of the UGC limit is in the nature of revolving cash credit facility without any restriction in number of debits/credits.  The drawing limit can be drawn using any of the following delivery channels.

ü  Operations through Branch.

ü  Operations using cheque facility.

ü  Withdrawal through ATM/Debit cards.

ü  Operations through Business correspondents and other banking outlets.

ü  Operations through PoS available in sugar mills/contract farming companies etc., especially for tie-up advances.

ü  Operations through PoS available with input dealers.

ü  Mobile based transfer transactions at agricultural input dealers and mandies.

v  The long term loan for investment purposes may be disbursed in one instalment if the loan is for purchase of tractor, pump set and animals etc.,

v  If the loan is for any development activity, the same may be disbursed in instalments depending on progress of work (e.g. Land development, digging of an open well etc.)

Issue of Electronic Kisan Credit Cards

Till a composite card is issued with appropriate software, two separate cards may be issued for CC limit and term loan transactions with two separate accounts.

Validity/ Renewal

v  The repayment period may be fixed by banks as per the anticipated harvesting and marketing period for the crops for which the loan has been granted.

v  Card should be normally valid for 5 years subject to annual review.

v  However, in case the period of lease of land is less than 5 years, validity of card may be valid for the period of lease only and eligible loan amount has to be worked out accordingly for shorter duration.

v  The review may result in continuation of the facility, enhancement of the limit or cancellation of the limit/withdrawal of the facility depending on performance of the borrower.

v  Extension/ Rescheduling as per norms can be granted in case of natural calamities.

v  The term loan component will be normally repayable within a period of 5 years depending on the type of activity/ investment as per the existing guidelines applicable for investment credit.

v  It is the discretion of the bank in fixing repayment period of more than 5 years based on the economic life of the asset and type of investment.

Delegated Authority

As per latest circular on Delegated Authority.

Repayment Period

v  The repayment period may be fixed as per anticipated harvesting and marketing period for the crops for which loan is granted.

v  The term loan component will be normally repayable within a period of 5 years depending on the type of activity / investment as per the existing guidelines applicable for investment credit.

v  Financing branch may, at their discretion, provide longer repayment period for term loan depending on the type of investment.

Margin

v  For crop loans, no separate margin since it is in-built in scale of finance.

v  For term loan component, margin will be:

ü  Upto Rs.1.60 lac – NIL

ü  Above Rs.1.60 lac – 10-15%

Security

For Non Tie-up KCC/UGC:

For Tie-up KCC/UGC:

v  In states where banks have the facility of online creation of charge on the land records, the same shall be ensured.

Documentation

v  One time documentation at the time of first availment and thereafter simple declaration (about crops raised/ proposed) with Composite Debit Balance Confirmation (DBC) by farmer from the second year onwards are to be taken.

v  The scheme provides fixation of scale of finance for the first year and subsequent increase for every successive year.  Therefore documentation will be done by the bank only for maximum limit so that there is no need of documentation during the validity of the account.

v  Within the sanctioned limits, drawing power may be fixed each year as per scale of finance.

v  Where the validity period of UGC is 5 years there might be a legal requirement to renew the account by taking a fresh letter from the farmers after every 3 years.  However, no other documents to be obtained from the farmer.

v  Documents should not be filled with 7% ROI even for crop loans up to Rs 3.00 lakh.

v  The security documents should be filled in and obtained on the basis of rate of interest applicable to the entire limit based on our interest rate circular to avoid any problem later on. 

Ø  Documentation at the Fresh Sanction/ Enhancement:

ü  DP Note.

ü  Hypothecation agreement – SD-07.

ü  Deed of Guarantee – SD-08.

ü  Declaration/Undertaking for Agriculture Advance – AD-01.

ü  Interest rate agreement – SD-24.

ü  Mortgage deed – SD-12 (for SM) OR AD-13 (for EM).

ü  Letter of Continuity – AD 09(M)

ü  Letter of General Lien and set off – AD 02(A)

ü  Letter of undertaking from borrower/Guarantor for disclosure to CIBIL.

ü  Any other document stipulated in Sanction advice.

Ø  Documentation at the time of annual review:

ü  A request letter from borrower for renewal of limit with details of crops grown.

ü  Simple DBC – SD 22 (wherever mortgage and guarantee are not obtained – (say for loans up to Rs 1.60 lakh).

ü  Composite DBC – SD 23 (wherever mortgage and guarantee are obtained – (say for loans above Rs 1.60 lakh) 

Other features

v  Interest subvention/incentive for prompt repayment available as per norms.

v  Besides the mandatory Crop Insurance, KCC holders should have the option to take benefit of Asset Insurance, Personal Accident Insurance scheme (PAIS), and Health Insurance.

v  KCC short term sub-limit cum SB accounts to be allowed to enable credit balance in KCC/SB account to fetch interest at SB rate.

Classification of account as NPA

v  The extant prudential norms on income recognition, asset-classification and provisioning will apply for loans granted under the KCC scheme.

v  Charging of interest is to be done uniformly as is applicable to agricultural advances.

Service Charges

v  As per the extant guidelines on service charges.

Other conditions while implementing the revised guidelines of KCC scheme

v  In case the farmer applies for loan against the warehouse receipt of his produce, the bank would consider such requests as per the established procedure and guidelines.  However, when such loans are sanctioned, these should be linkied with the crop loan account, if any, and the crop loan outstanding in the account could be settled at the stage of disbursal of the pledge loan, if the farmer so desires.

Classification

v  Priority Sector:  Agriculture: Farm Credit.