Kisan Credit Card

Kisan Credit Card
Objective
  • Kisan Credit Card Scheme aims at providing need based and timely credit support to the farmers for their cultivation needs as well as non-farm activities and cost effective manner.
  • To bring about flexibility and operational freedom in credit utilisation.
Eligibility
  • Under the scheme, Branches may issue Kisan Credit Cards to the farmers who are otherwise eligible for sanction of short term credit for crop production, allied activities and other non-farm activities.
  • The farmers should come from the operational area of the Branch.
Issue of cards
  • The farmers under the scheme will be issued a credit card-cum-passbook incorporating the name, address, particulars of land holding, borrowing limit / sub-limits, validity period, etc. to facilitate recording of the transactions on an on-going basis. The passbook, among others, would provide for a passport size photograph of the beneficiary.
  • The beneficiary farmer should produce the passbook while operating the account.
Technical Feasibility
  • Suitability of soil, climate and availability of adequate irrigation facilities.
  • Suitability of the produce for storage.
  • Suitability of the storage unit
Financial Viability:
  • The expected incremental income should be adequate to repay the advance leaving sufficient balance for farmer’s domestic needs.

Quantum of Finance and margin:

  • To be used for production or short-term reasons – the amount of loan is dependent on the kind of crop, the area under cultivation and the amount of the loan.
  • Short-term working capital for ancillary purposes and small investments of a long-term nature.
  • Credit for short-term domestic and consumption needs in the amount of 25% of the gross estimated amount of income for the farmers. the maximum Rs.50,000or more.
  • Credit against storage receipts or marketing of the produce may be considered up to 50 percent of the value of the product when the storage was completed or approval of credit. Limits or advances of up to Rs.10 million per farm could be extended up to an maximum of 12 months. But, only financing up to the loan’s value may be available towards the farm.
  • Revolving Cash Credit – Annual Review. The farmer is entitled to draw any number of times and should be able to pay within the maximum amount.
  • The review could lead to the facility remaining in place either by increasing the limit, or even cancellation of the limit/removal of the facilities, contingent on the performance of the borrower.
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  • The total amount of credit to the account in the 12-month period must at a minimum be equivalent to the amount of outstanding on the account.
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  • A withdrawal from the account can be retracted for longer than 12 months for crops that are normal as well as 18 month in the case of banana and sugarcane crops.
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  • In the event of rescheduling the repayment period due to natural disasters that affect the farmer or his operations, the time frame for calculating the operation’s status as satisfactory or otherwise will be extended along with the extended the limit. If the extension sought extends beyond one season of crop the total of debits to be extended for which the extension is granted must be transferred to an account for term loans with the option of repayment in installments in accordance with current guidelines.
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  • To provide a reward for cardholders with excellent performance, the branches could, in the course of reviewing raise the credit limit to be able to handle the increase in input costs / labour, changes in the pattern of cropping, etc.

Security:

(a) (a) Rs.50,000(a) Up to Rs.50,000 D. P. Note the possibility of hypothecation for standing crop

(b) (b) Above Rs.50,000(b) Above Rs.50,000 D. P. Note Hypothecation of standing crops Mortgage of land Collateral security

Note:

(i) In the event that the amount of land mortgaged is sufficient, no additional security is required.
(ii) To finance Government warehouse invoices the mortgage can be exempted.
(iii) Revocation of mortgage on property in deserving circumstances could be considered in accordance with the security rules.
(iv) (iv) RBI rules on security should be strictly observed.

Common Documents:

(a) Demand Promissory Note.
(b) Deed of Composite Hypothecation Agreement (CHA-1).
(c) Letter of Authority (AG-15).
(d) Charges on the land as per Agricultural Credit Act or Equitable mortgage or Legal Mortgage of Land (CHA-4).
(e) Letter of Pledge (OD-159).
(f) (f) Pledge of Storage Receipt duly discharged.
(g) In agreement to pay any advance within 12 month or upon the sale of the product.
(h) The lien of the bank must be sent in writing to storage facility.
(i) In agreement with the godown or cold storage owners to not hand over the items without presenting the storage receipt pledged.
(j) L-515.
(k) L-516 (if required)