BTL 913 - KCC – Revised Norms 2026
The Banking Tutor’s Lessons
BTL 913 27-06-2026
KCC – Revised Norms 2026
RBI vide it’s Notification dated 19-06-2026 advised Revised
Norms related to Kisan Credit Card Scheme. The Revised norms are applicable
with effect from 01-01-2027.
In this Lesson I am furnishing important points related to
Revised KCC Scheme.
Loans sanctioned prior to the effective date shall continue
to be governed by the extant guidelines till maturity / next renewal.
“Crop season” means the period up to harvesting and marketing
of the crops raised.
“Short duration crops” shall mean crops with anticipated
duration from sowing to marketing up to twelve months.
“Long duration” crops mean crops which are not short duration
crops. The crop season for long duration crops i.e., anticipated period from
sowing to marketing is more than twelve months and up to eighteen months.
For the purpose of the KCC Scheme, crop seasons shall be
standardized at twelve months for short duration crops and eighteen months for
long duration crops.
“Marginal farmer” means a farmer with landholding of up to
one hectare.
“Small farmer” means a farmer with landholding of more than
one hectare and up to two hectares.
Under the KCC Scheme, banks shall extend credit to eligible
borrowers for their farming and other needs as indicated below in the form of a
composite facility with a tenure of six years:
01. Short term credit requirements for cultivation of crops;
02. Short term credit requirements for allied activities - Animal
Husbandry; Fisheries & Aquaculture; and Other allied activities.
03. Post-harvest / post- production expenses;
04. Consumption requirements of farmer household;
05. Expenses for maintenance of assets related to agriculture
and allied activities, soil testing, real time weather forecasts / other
technological support services and organic / good agricultural practices or
similar relevant certification;
06. Crop insurance, accident insurance, health insurance and
asset insurance;
07. Produce marketing loans; and
08. Investment requirements for agriculture and allied
activities.
The aggregate of components at (1) to (7) above shall form
the short-term credit limit portion of the composite facility and the component
at (8) shall constitute the long term credit limit portion of the facility.
The short-term credit limit fixed for the sixth year together
with the estimated long term credit limit shall be the Composite Maximum
Permissible Limit (CMPL) and is to be treated as the KCC limit.
The short-term component of the KCC limit for the purposes of
crop cultivation and allied activities shall be in the nature of revolving cash
credit facility. There shall be no restriction on the number of debits and
credits.
Fixation of Drawing Limit
(1) The drawing limit for each crop season shall be the sum
total of the following:
a) Scale of Finance (SoF)
b) 10% of (i) above towards post-harvest expenses and
consumption requirements of household
c) 20 % of (i) above towards repairs and maintenance of farm
assets, soil testing, weather advisory and agri-extension service
subscriptions, software and digital advisory platforms fees, drone-based crop
health surveys and spraying services, remote sensing and satellite-based crop
monitoring services, other technological support services, organic / good
agricultural practices certification and similar other services, in the nature
of working capital expenses.
d) Premium for crop insurance, accident insurance, health
insurance and asset insurance, if any.
In case the cropping pattern adopted by the farmer changes
for any subsequent season, the drawing limit shall be reworked by taking into
consideration the crops proposed to be grown.
In situations where the SoF has not been notified by SLTC for
a particular crop season, at the time of the farmer availing the loan, the bank
shall consider applying a 10 % notional hike over the SoF applicable for the
previous season and determine the drawable limit for the ensuing season.
However, in cases where the SoF has been notified but not revised, banks shall
adopt the existing SoF.
In respect of crops not covered in the SoF finalised by the
SLTC / DLTC of the respective State, loans extended shall be outside the KCC
framework.
The KCC credit limit shall be rounded off to the nearest ₹1,000.
At the time of sanction, the maximum permissible limit (MPL)
for the short-term crop loan shall be arrived at on a notional basis by adding
10 per cent to the limit of the previous crop season, from the second crop
season onwards.
In case the drawing limit exceeds the MPL in any crop season
/ year, the MPL shall be reassessed at the time of review.
Collateral Security and Margin
Collateral security and margin requirements for agricultural
loans including loans for allied activities up to ₹2 lakh per borrower is waived. However, voluntary pledge of
gold and silver as collateral for agriculture loans up to the collateral-free
limit will not be considered as a violation of the guidelines on
collateral-free lending to the agriculture sector.
RBI guidelines on collateral free limit pertain only to
secondary collateral and not primary security or assets financed by the loan.
Banks shall decide the collateral security and margin
requirements for loans above ₹2 lakh as per their credit policy and in adherence with RBI
guidelines issued from time to time.
In case of KCC loans against hypothecation of crops / stock
and involving tie-up arrangements for recovery, banks may waive collateral
security for loans up to a limit of ₹3 lakh.
Marginal farmers shall also be eligible for a flexible credit
limit of ₹10,000 to ₹50,000 (as Flexi KCC) as per assessment of the bank without
relating it to the value of the land.
In cases where a borrower avails credit for both crop
cultivation and allied activities under the KCC framework, the additional
component towards consumption requirements (10 %) shall be considered only once
and shall not be reckoned separately for each activity.
The term-loan component shall be repayable within a period of
six years depending on the type of activity / investment, as per the bank’s
credit policy applicable for investment credit. If the nature of investment
involves a tenure longer than six years, the term loan may be treated as a
separate facility outside the KCC framework.
Banks shall pay interest on the minimum credit balance in KCC
cash credit accounts.
Considering the different interest rates and repayment
schedules applicable to various types of credit provided under KCC, the
facility may be divided into sub-limits for short-term cash credit
limit-cum-savings accounts for crop cultivation and allied activities
separately, and long-term loan for agriculture and allied activities. For
operational convenience, these sub-limits shall be maintained as separate loan
accounts under the composite KCC facility.
Obtain a one-time documentation including land record /
tenancy certificate / equivalent certificate as per Bank’s credit policy at the
time of application for fresh loan.
During the tenure of the facility, at the time of each
review, the bank shall obtain declaration from the borrower(s) regarding
proposed activity / activities.
In case of loans to sharecroppers and oral lessees, banks
shall accept certificates provided by local administration / panchayat raj
institutions regarding the cultivation of crops by such borrowers. Where there
are difficulties in getting certification regarding identity and occupational
status of sharecroppers and oral lessees, banks shall accept an affidavit
submitted by such borrowers giving their occupational status (i.e., details of
land tilled / crops grown), for loans up to ₹50,000.
The KCC holder will have the option to avail any type of crop
insurance, asset insurance, accident insurance (including Personal Accident
Insurance Scheme) or health insurance and may pay the premium through the KCC
account. Beneficiaries shall be made aware of the insurance covers available.
Their explicit consent shall be obtained, at the application stage itself if
the premium is to be paid through the KCC account.
In case insurance (crop insurance, asset insurance and
personal accident insurance) is funded under the KCC facility, the same shall
be assigned in favour of the lending bank.
In case the farmer applies for loan against the warehouse
receipt of the produce, the bank shall consider such request as per established
procedure and guidelines. The loan extended to the farmer in such case shall be
linked with the related short term KCC loan, if any, and the outstanding amount
in such loan shall be adjusted at the time of disbursal of the loan secured by
warehouse receipt.
Note – Some examples are provided in the RBI’s Notification
cited for assessment of KCC Limit. It is better to go through the examples for
better understanding.
Sekhar Pariti
+91 9440641014
posted by The Banking Tutor @ June 27, 2026
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