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Kisan Credit Card: Innovating Indian Agricultural Credit Market

This seminar presents the Kisan Credit Card (KCC) scheme, its progress, features, and benefits in the Indian agricultural credit market. It discusses the differences between CLS and KCCS, implementation aspects, and policy implications.

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Kisan Credit Card: Innovating Indian Agricultural Credit Market

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  1. Welcome

  2. Seminar I on KISAN CREDIT CARD – FINANCIAL INNOVATION IN INDIAN AGRICULTURAL CREDIT MARKET Presented By JAINUDDIN MULLA Dept. of Agril. Economics UAS, Raichur

  3. Introduction Progress of KCC Scheme Competition comparisons of KCCS Case Studies policy implication and Conclusion Sequence of Presentation Objective of KCC Scheme Salient features and benefits of KCC Scheme Differences between CLS and KCCS Implementation aspects of KCCS

  4. INTRODUCTION

  5. Contd… Milestones of agricultural credit in India • First phase • Social control of banks(1968) • Nationalization of Banks- (1969 and 1980) • Introduction of Lead Bank Scheme(1969) • Formation of Regional Rural Banks(1975) • Establishment of NABARD (1982) • Introduction of Service Area Concept(1989)

  6. Second phase • Financial sector reforms (1991) • Launch of concept of micro finance • Scheme of linkage of SHGs with banks (1992) • Creation of rural infrastructure development fund (RIDF)– 1995-96 with NABARD

  7. Kisan credit card scheme • The Reserve Bank of India (RBI) has set up one man high level committee of R.V. Gupta in December 1997. The committee submitted its report in April 1998. • Based On the recommendations of R.V. Gupta committee, NABARD introduced Kisan credit card (KCC) scheme in August 1998 • RBI directed to all scheduled commercial banks and NABARD directed to all regional rural banks (RRBs) and Co-operative banks

  8. OBJECTIVES • To meet the short term credit requirements for cultivation of crops • Post harvest expenses • Produce Marketing loan • Consumption requirements of farmer household • To meet the needs of Working capital • To meet Investment credit

  9. SALIENT FEATURES OF KCC SCHEME

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  13. Personal Accident Insurance Scheme • A Personal Accident Insurance Scheme (PAIS) is attached with KCC, which covers risk of KCC holders against accidental death or permanent disability upto a maximum amount of Rs.50,000 and Rs.25,000, respectively, resulting from accidents caused by external, violent and visible means. • The insurance premium payable on personal accident insurance coverage to KCC holders will be Rs.15 for a one year policy and Rs.75 for five years. • The premium payable to the insurance company is shared between the KCC issuing bank and the KCC holder in the ratio of 2:1.

  14. Benefits of KCC Scheme FOR BANKS • Reduction in work load for branch staff • Minimum paper work and simplification of documentation for drawal of funds from the bank. • Reduction in transaction cost to the banks • Improvement in recycling of funds and better recovery of loans • Better Banker - Client relationships

  15. FOR FARMERS • Access to adequate and timely credit to farmers • Flexibility to draw cash and buy inputs • Assured availability of credit at any time enabling reduced interest burden for the farmers • Minimum paper work and simplification of documentation for drawing of credit from the banks • Sanction of the facility for 5 years subjected to annual review and satisfactory operations and provision for enhancement • Flexibility of drawing credit from a branch other than the issuing branch at the discretion of the bank

  16. Differences between CLS and KCCS

  17. Implementation Aspects of the KCC Scheme

  18. Implementation Aspects of the KCC Scheme • Introduction of the KCC Scheme • Eligibility Norms • Credit Limit • Fixation of Credit Limit • Restriction on Maximum Limit • Credit Limit for working capital and consumption purpose • Drawal Facilities • Repayments and NPA Norms under KCC • Coverage of KCC under PAIS and NAIS

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