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

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