Kisan credit card – KCC was launched to save the Indian farmers from the high interest rates charged by the money lenders in the unorganized sector. Farmers can avail a loan as and when they require. The interest charged is also dynamic, meaning if customers make timely payments then they are charged a lower rate of interest. Other details of the credit card are given below.
The main objective of Kisan Credit Card Loan is to provide loans to farmers at a low rate of interest. Before this scheme, farmers relied on money lenders who charged a high rate of interest and were rigid on the due date. This posed a lot of problems to farmers especially when they suffered calamity such as hailstorm, drought, etc.
On the other hand, Kisan credit card loans charge a lower rate of interest, offer flexible repayment schedule. Moreover, crop insurance and collateral-free insurance is also provided to the user.
Details of Kisan Credit Card Loan scheme are:
- The Interest rate offered on the loan may go as low as 2.00%
- Banks will not seek security on loans up to Rs. 1.60 lakh
- Crop insurance coverage against a variety of calamities is given to the users
- Farmer is provided insurance coverage against permanent disability, death, other risks is also provided to the farmer
- The repayment period is decided on the basis of harvesting of crop and its marketing period
- Maximum loan up to Rs. 3.00 lakh can be taken by the card holder
- Farmers that deposit their money in the kisan Credit Card account will get a high rate of interest
- Farmers are charged simple interest rate when they make prompt payment
- Compound interest is charged when cardholders fail to make timely payments
Kisan credit card loan is provided to anyone who is engaged in agriculture, allied activities or other non-farming activities.
Following is the detailed criteria to be eligible for Kisan Credit Card loan:
Minimum Age – 18 years
Maximum Age – 75 years
In case a borrower is a senior citizen (age more than 60 years), a co-borrower is mandatory where the co-borrower should be a legal heir
All farmers – individuals/joint cultivators, owners
Tenant farmers, oral lessees, and sharecroppers, etc.
SHGs or joint liability groups including tenant farmers
The documents that might be required by the bank to process Kisan Credit Card Loan scheme in India are:
Proof of Identity
- PAN Card,
- Aadhaar Card,
- Voter’s ID Card,
- Driving Licence
- any other government approved photo ID
Proof of Address
- Aadhaar Card,
- Utility bills (not more than 3 months old)
- Any other government approved address proof
- Proof of Income Bank statement for the last 3 months,
- Salary slips for the last 3 months,
- Audited financials for the last two years (for self-employed), Form 16, etc.
Kisan Credit Card Loan Application
Visit a bank of choice that is offering Kisan credit card. If the bank allows KCC online application then download it
Fill out the application form and submit it with the loan officer
The loan officer after considering all the factors will set the Kisan credit card loan limit and ask for collateral if the loan amount is over Rs. 1.60 lakh Post processing the farmer will receive their Kisan credit card
Kisan Credit Card Loan Usage
Once the customer gets their credit card they can start using it right away to make cash withdrawals or direct purchases. Some banks also issue cheque book.
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Customer must ensure that they pay back the amount promptly. This will ensure that only simple interest is applied on the loan and not compound interest. If simple interest is applied the farmer will have to pay less compared to compound interest where the payout will be more.