Kisan Credit Card: The Central Government runs various welfare schemes to benefit farmers. These include the PM Kisan scheme, under which farmers receive ₹6,000 annually. Additionally, schemes like the Kisan Credit Card (KCC) provide financial assistance to help farmers avoid moneylenders.
Through the KCC scheme, farmers can procure essential agricultural inputs. They can obtain low-interest loans for activities such as sowing, purchasing fertilisers, seeds, and pesticides, irrigation, and other farming-related tasks. The benefits of the KCC extend beyond crop farming to include activities like animal husbandry and fisheries.
What is the interest rate on the Kisan Credit Card?
The standard annual interest rate for agricultural loans under the Kisan Credit Card is 7%. However, the effective interest rate for eligible farmers is lower due to government interest subvention and incentives for timely repayment. The government provides an interest subvention of 1.5%. Furthermore, farmers who repay their loans on time receive an additional 3% repayment incentive.
Effectively, this means a 1.5% interest subvention and a 3% incentive for timely repayment are applied to the base rate of 7%, resulting in a total annual benefit of up to 4%.
What is the KCC loan limit?
Loans under the KCC scheme are granted based on the farmer’s requirements and eligibility. According to the guidelines, the maximum loan limit under KCC is set at ₹5 lakh. However, the actual loan amount a farmer receives depends on factors such as their crops, landholding, agricultural activities, and the bank’s specific regulations.
Loans available without collateral
A key feature of the KCC scheme is that, subject to specific rules, farmers can obtain loans up to a certain limit without providing any guarantee or collateral. According to reports, this limit could be raised from ₹1.60 lakh to ₹2 lakh. This means that eligible farmers do not necessarily have to pledge land or other property as collateral. However, loan approval is subject to bank verification and applicable regulations.
KCC loans are also available for these activities
The Kisan Credit Card (KCC) is not limited solely to crop-growing farmers. Farmers engaged in animal husbandry and fisheries can also receive assistance to meet their capital requirements through this scheme. This means farmers can utilise the KCC for activities such as dairy farming, livestock rearing, or fish farming alongside crop cultivation.
Why timely loan repayment is important
Timely repayment can be highly beneficial for farmers who have availed of KCC loans. If a farmer repays the loan within the stipulated timeframe and meets all conditions, they become eligible for an interest subvention (rebate) of up to 3%. This effectively reduces the farmer’s financial burden. Therefore, it is essential to carefully read all terms and conditions when taking out the loan.
Who can apply for a KCC?
The KCC loan is primarily designed for farming and allied activities. Cultivating farmers, tenant farmers (in certain cases), and other eligible categories associated with agriculture can avail of the benefits under the scheme’s rules. To process the application, the bank verifies the farmer’s eligibility, agricultural details, and necessary documents.
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