The Reserve Bank of India has advised banks to ensure that all short term crop loans eligible for interest subvention and prompt repayment incentive benefit are extended only through the Kisan Credit Card (KCC) with effect from April 1, 2020.

Further, the existing short term crop loans which are not extended through KCC will need to be converted to KCC loans by March 31, 2020.

Accordingly, reimbursement of interest subvention for short term crop loans through non-KCC accounts will not be considered beyond March 31, 2020, the RBI said in a circular.

To provide short term crop loans up to Rs 3 lakhs to farmers at an interest rate of 7 per cent, the government offers interest subvention of 2 per cent to the lending institutions. It also provides an additional interest subvention of 3 per cent to such of those farmers paying in time. This also implies that the farmers paying promptly get short term crop loans at 4 per cent.

The KCC scheme aims to provide adequate and timely credit support from the banking system under a single window with a flexible and simplified procedure to the farmers for their cultivation and other needs.

The scheme is designed to meet expenses relating to post-harvest; produce marketing; consumption requirements of farmer household; working capital for maintenance of farm assets and activities allied to agriculture; investment credit requirement for agriculture and allied activities.

The beneficiaries under the KCC scheme are issued a Smart card / Debit card (Biometric smart card compatible for use in the ATMs/Handheld Swipe Machines and capable of storing adequate information on farmers identity, assets, land holdings and credit profile etc).

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