Overview of Kisan Credit Card (KCC) Trends
The number of Kisan Credit Card (KCC) accounts in public sector banks has decreased by 1.8% year-on-year to 22.5 million in FY25. Despite this decline, the outstanding loan amount experienced a slight increase of 2.2%, reaching ₹41,300 crore.
Reasons for Decline in KCC Accounts
- Structural Shifts in Rural Lending: Improved farmers' incomes and a shift towards co-operative banks, NBFCs, or input-linked credit options such as fertiliser cards have contributed to reduced drawdowns from public sector banks (PSBs).
- Non-Operative Accounts: Many KCC accounts from the 2000s remained dormant or underutilized, prompting rationalization efforts advised by the RBI and the finance ministry to clean up portfolios and reduce compliance overheads.
- Improved Scrutiny: KCC saturation mapping, geo-tagging, and Aadhaar seeding have enhanced scrutiny, eliminating duplicate and ineligible accounts.
- Migration to Other Loan Schemes: Some farmers have shifted to purpose-specific loans under PM-KISAN or the Agri Infrastructure Fund.
- Technology Integration Delays: Incomplete digital documents or portal mismatches at bank branches have slowed account renewals.
- Settlement of Small-Ticket NPAs: Many small-ticket non-performing assets, impacted by debt waivers, have been settled through one-time compromises leading to account closures.
Government and Bank Initiatives
- Despite the decline in new KCC accounts, the scheme remains a crucial instrument for providing crop loans, with most eligible farmers already covered.
- The scheme, initiated in 1998, offers short-term crop loans at a benchmark rate of 9% for agricultural activities.
- In the FY26 budget, the Finance Ministry increased the loan limit for KCC holders from ₹3 lakh to ₹5 lakh, facilitating loans for 77 million farmers, fishermen, and dairy farmers.
- The government provides a 3% prompt repayment incentive to encourage the timely repayment of outstanding amounts in operative accounts.
