India is a land of farmers. There was a time, even long after independence that more than seventy per cent of the population’s primary occupation was farming and the ratio is still higher as compared to many developed and developing nations of the world. However, today the farming lot is not really the affluent lot in the country and is struggling for bread and butter due to the payouts being low.
Farmers, known as Kisan in Hindi, often require money to cultivate their land and do agro based activities. Kisan Credit Card, also known as KCC, is an effort by government to support farmers while providing timely and adequate credit under a single window. The credit facility is designed while keeping in mind the agricultural and related activities and the repayment of loans has to be in accordance of the benefits that the farmers reap after the harvest.
The KCC scheme was first announced in the budget session of 1998-99, when the then finance minister Yashwant Sinha brought it under the NABARD to provide easy and hassle free credit to the farmers. The scheme aimed at providing farmers with sufficient credit so that they may buy basic agricultural components like seeds, pesticides, fertilizers and produce cash out of their harvest.
One of the major benefits of Kisan Credit Cards is that the process of providing credit to the farmers is quite simple and hassle-free. The larger proportion of farmers in India is poor and illiterate and thus they could not afford to run after the traditional form of loans in banks. A KCC becomes relevant due to the fact that the process is simple and custom made for farmers, poor and illiterate and thus can offer prompt credit facilities to the needy farmers.
Another prominent benefit of KCC is that the farmer does not need to reapply for the loan every year he needs it. The process of credit is ongoing and once the account of a farmer is opened and a credit card issued, they can keep using it with every harvest season, provided they pay their repayments in time.
The repayment process followed under the scheme is quite easy and affordable since the repayment of the loan starts only after the harvest period and thus farmers have ample time to sell their produce and repay the borrowing. Also, the card holder can use their facility from any branch in India, be it rural or urban area.
Any RRB, commercial or cooperative bank can issue a Kisan Credit Card to the farmers. The banks implementing this scheme have flexibility of customizing the scheme as per the location and need of the area.
Through KCC, one of the prominent benefits it offers to the rural branches is that they do not have to undertake the paper process of every farmer every time they come for a loan. The same KCC can be used by a farmer until death and thus it is a kind of renewal and reimplementation of loan for the rural bank branches.