Context

• The Indian Banking Association (IBA) has issued advisory guidelines requesting banks to waive off the processing, documentation, inspection, ledger folio charges and all other service charges for Kisan Credit Card (KCC) /crop loans upto 3 Rs lakh.
• Ministry of Agriculture has launched a campaign for enhanced registration of Kisan Credit Cards to those who have remained untouched by it so far.

About

• The IBA advisory comes amidst reports that some of scheduled commercial banks are collecting service charges which are at a bit higher, irrespective of whether the loan is sanctioned or not.
• This often acts as a deterrent for the farmers to approach the banks for loans.

What is KCC?

• Scheme was introduced in 1998 to facilitate and make accessible credit availability to the farmers.
• It is issued on the basis of the land holdings so that the farmer can avail credit for purchase of agriculture input such as Seeds, Fertilizers, Pesticides and other production needs.
• GOI provides interest subvention of 2% and Prompt Repayment Incentive of 3% to the farmers, thus making the credit available at a very subsidized rate of 4% per annum.
• There are around 6.95 crore active KCCs as per latest estimates ,

Why Campaign is needed?

• There are still a large number of farmers who do not have access to institutional credit either because they have not been issued a KCC or the KCC issued earlier inactive due to various reasons other than NPA.
• The reasons for this gap in coverage include levy of various recurring and non-recurring charges related to processing/ documentation/ledger folio/inspection by the banks, cumbersome procedure adopted by certain banks for sanctioning the credit limits and perceived difficulty in completing the required documentation.
• Farmers involved in activities related to animal husbandry & fisheries but not possessing any KCC, will be eligible for issue of a fresh KCC with credit limit upto Rs. two lakhs with applicability of interest subvention/prompt repayment incentive.

The Campaign

This campaign will be launched through the Financial Institutions including Commercial Banks, Cooperative Banks and Regional Rural Banks in collaboration with the State Governments. Following steps would be the part of the campaign

• The KCC will be issued in a time bound manner from the branch where the farmer is already having an account. In case the eligible farmer is not having any bank account, the same shall be immediately opened in any of the nearby branch of his/her choice within the block.
• The camps for collection of applications will be organized bank wise or village wise
• For village wise camps, the field level development and revenue functionaries would be present on the pre designated dates in the concerned village to facilitate filling up forms and providing the necessary documents related to land records.
• If the camps are organized branch wise, the field level functionaries would bring eligible farmers to the concerned bank branches on the designated dates and will ensure issue of required land related documentation to the farmers.
• Farmers can avail the option of directly submitting the completed application form with necessary supporting documents to the bank branch for issue of KCC.
• Since the credit availed to KCC will be eligible for interest subvention support of Govt. of India, the details of Aadhar Card Number of the applicants shall also be captured.

Significance

Issuing of KCCs in large numbers have helped in increasing the agriculture credit which has contributed significantly in not only fulfilling the objective of food security for our country but also increasing the farmers income.