Kisan Credit Card

Fixation of credit limit/Loan amount

1. The deadline for arrival during the first year is as follows: For cultivators who grow just one crop annually: Scale of finance for the crop (as approved by District Level Technical Committee) x Extent of area farmed + 10% of limit towards post-harvest / household/consumption requirements + 20% of limit towards repairs and maintenance expenses of agricultural assets + crop insurance, PAIS & asset insurance.
2. Limit for second and subsequent years: 10% of the first-year limit towards cost escalation/increase in the scale of financing for each of the next five years (the second, third, fourth, and fifth years) as well as the estimated term loan component for the five-year Kisan Credit Card tenure.
3. The above-mentioned limit applies to farmers who raise multiple crops in a given year. The first year’s crops must be grown according to the suggested cropping pattern, and an additional 10% of the limit is allocated to cost increases or increases in the scale of financing for each additional year (the second, third, fourth, and fifth year). It is presumed that the farmer continues to use the same agricultural strategy for the next four years. The cap might be adjusted if the farmer decides to change his or her farming strategy in the next year.
4. Term loans for purchases of farm equipment, small irrigation, land development, and related agricultural operations. Based on the unit cost of the asset or assets the farmer wants to purchase, the allied activities already being carried out on the farm, the bank’s assessment of the farmer’s ability to repay the loan in relation to the total amount owed, including current loan obligations, and other factors, the banks may set the working capital limit and credit quantum for agricultural and related activities.
5. The projected investments during the five-year period and the bank’s assessment of the farmer’s ability to repay the loan determine the long-term loan limit. Maximum Allowable Quantity: The expected long-term loan requirement plus the short-term loan ceiling for the fifth year will be the
6. The Kisan Credit Card Limit is also known as the Maximum Permissible Limit (MPL).

7. Determining Sub-limits for Non-Marginal Farmers:         

   -The interest rates for term loans and short-term loans are different. Moreover, the Interest Subvention Scheme and the Prompt Repayment Incentive Scheme currently include short-term agricultural loans. Furthermore, there are differences between term and short-term loan repayment schedules and customs. Hence, in order to have operational and accounting ease, the card limit is to be divided into distinct sub-limits for short-term cash credit limit cum savings account and term loans.

   Drawing Limit -Amounts for crop production, maintenance and repairs of farm equipment, and consumption may be drawn from the short-term cash credit at the farmer’s convenience. The drawing limit for this type of credit should be established depending on the cropping pattern. The farmer is informed that a revised drawable limit may be set if the district-level committee decides to alter the financing scale for any given year in a way that goes over the 10% theoretical increase that was considered while determining the five-year limit. If these changes call for increasing the card limit itself (fourth or fifth year), that can be done and the farmer will be informed accordingly. Term loan installments may be able to be withdrawn depending on the previous repayment and nature of investment. It is important to guarantee that the entire responsibility remains within the drawing limit of the relevant year at all times.

   -In cases where the card limit or liability so arises that calls for further security, the banks may require appropriate collateral in accordance with their policies.