[1]

Introduction

The Kisan Credit Card (KCC) scheme is a landmark in the history of rural credit in India. The

mechanism of credit cards has been one of the key products developed to expand the outreach of

banks and simplify the credit delivery system. The announcement relating to the introduction of

Kisan Credit Card scheme was made by the Union Finance Minister during the budget speech for the

year 1998-99. NABARD formulated a Kisan Credit Card scheme for uniform adoption by the banks

so that the farmers may use the card to readily purchase agriculture inputs such as seeds, fertilizers,

pesticides etc. and draw cash for their production needs. The model scheme was circulated to

Commercial Banks, Co-operative Banks and Regional Rural Banks in August 1998. It is appropriate

to study the impact of this scheme since it has completed more than one decade. Hence, the present

study was formulated with the specific objectives to analyze the growth in the number of Kisan

Credit Card users, to analyze cost of credit and the adequacy of credit provided under KCC in

comparison with credit without KCC. Kisan Credit Card Scheme aims at providing adequate and

timely credit support from the banking system to the farmers for their cultivation needs including

purchase of inputs in a flexible, hassle free and cost effective manner. Given the benefits accrued to

the farmers on account of KCC, the initiatives of Orissa State Cooperative Bank (OSCB) were

noteworthy. Incidentally, the Orissa State Cooperative Bank was the first bank in the country to

introduce the Kisan Credit Card scheme immediately after its announcement and ensured

dispensation of entire crop loan in the State of Orissa through the KCC. The OSCB has introduced

the KCC scheme incorporating features similar to that of the KCC schemes of other banks.

[2]

Literature Review

Tiwari Dheeraj (2012): studied on Kisan credit cards to double up as debit cards. He analysed that

the nearly 10 crore farmers who hold Kisan credit cards (KCC) be able to use their card as a deposit

account and a debit card. This helping the governments scale up its financial inclusion plan quickly

without relying on bank accounts alone. KCC, which had been instrumental in faster delivery of

credit to farmers, was like an overdraft account with a bank that had to be operated through a cheque

book or withdrawal slip. The card used only to store the details of the account. It aimed at providing

more financial freedom to farmers who were use this at various points of sales. It was reducing the

need for multiple accounts in the bank. Banks were giving interest credit to farmers with credit

balances in KCCs to encourage them to remit farm sale proceeds into their KCC account. Then,

farmers avail the full credit amount in one goes and end up paying higher interest amount. If it

becomes a debit card, they used it as and when required and pay substantially lower interest burden.

The Kisan credit card scheme, which was administering by Nabard, introduced in August 1998. By

the end of September 2011, 5.12 lakh crore had been lent through KCCs. A task force set up

under Nabard had suggested that the KCC technology-enabled, and the credit limit be fixed for five

year based on the banker's assessment of total credit needs of the farmer for a full year. Currently,

credit limit for three years fixed. Within this limit, banks carve out sub limits to cover short term,

medium term and consumption needs.

Kumar Rajiv (2011): studied on Kisan Credit Cards to all farmers. He analysed that the state

government aims at distribution of 100 percent Kisan Credit Cards (KCC) among the desirous

farmers in the state. The government saw as its main agenda to promote agriculture in the state. The

deputy chief minister said that with regard to issue KCC to the desiring farmers, the state

government had already provided the necessary guidelines to the concerned banks. As an added

incentive to farmers, they were charging with only 3 per cent interest rate against the normal 7 per

cent if they repay their loan within the stipulated timeframe. As regards the progress of KCC

distribution under the district as more than 50,000 KCCs had already been distributed against the

targeted 40,000 farmers prompting it to revise up to 60,000. The good thing, however, was that the

loan recovery rate had been very good under the scheme in the district.

[3]

Sen Sarbajeet (2010): studied on Kisan credit cards likely to become „smart‟. He analysed that

farmers, both big and small, were getting plastic smart cards from banks that had be swiped at

automated teller machines, points of sale and hand-held machines to withdraw cash and pay for

goods and services. The finance ministry had asked the Indian Banks‟ Association to devise a plan in

consultation with banks to convert more than 53 lakh Kisan credit cards in circulation into smart

cards so that they were function as normal credit cards for farmers. Despite being called „credit

cards‟, Kisan credit cards had actually been the traditional passbooks issued by public sector banks

with loan details, using which credit and debit entries periodically updated. A total of 53,13,085

Kisan credit cards had been issued by banks as on March 31, 2010. The smart were loaded with a

pre-sanctioned credit limit for each farmer against which withdrawals can be made through ATMs.

Officials said the IBA also studied the security features that need to be incorporated in the smart

cards so that they were not misusing by anyone. “If rural people had been able to punch in 10 digits

while making calls on mobile phones, there was no problem in punching in the four-digit personal

identification numbers in ATMs”. The card was help in storing land records and determining the

eligibility and fresh limits for farmers more easily. There were ATMs of banking in rural areas.

According to a recent RBI study, while regional rural banks often place a cap of about Rs 1,00,000

as credit limit on KCCs, commercial banks give liberal limits to farmers on the basis of their

credibility or if they provide adequate security.

Kumar Ravi (2009): studied on Kisan Credit Card (KCC) to be provided to every farmer in Jammu

and Kashmir. He analysed that in a bid to enhance agricultural activities, the Jammu and Kashmir

government announced provision of Kisan Credit Card (KCC) to every farmer in the state. The

scheme launched to make available financial support to the farming community, the minister said

while distributing the cards among 1,000 farmers. The Minister said the scheme was benefit the

farmers by boosting agriculture activities and helping them to meet timely the short term credit and

loans for the produce of marketing. They had been to synchronies ourselves with latest Agri–Horti

techniques utilised across the globe for making the agriculture as profitable activity”. He said the

government made a comprehensive plan to tap ground water resources for irrigation facilities to the

J&K.

[4]

Sharma Ankit (2008): studied on Kisan Credit Card Allowing easy credit access to farmers. He

analysed that non availability of timely credit had been a major drawback for the agricultural sector

of India. As a part of these efforts, agricultural credit cards got introduced in the agricultural lending

system. The KCC scheme formulated by Government of India (GOI) after consultation with Reserve

Bank of India (RBI) and National Bank for Agricultural and Rural Development (NABARD). The

Union Budget of 1998-99 announced the idea to develop a model scheme for issuing Kisan Credit

Cards to farmers. The scheme circulated to commercial banks by RBI and cooperative banks

by NABARD. The major objective behind setting up of the scheme was to allowing for adequate and

timely support to farmers in agricultural activities by banks in a cost effective manner. The card had

been designed with the aim to provide benefits to farmers. A credit cum passbook also provided with

KCC to the farmer. The card had a repayment period of 12 months. The validity of the card lies for 3

years. Personal Accident Insurance up to Rs.50,000 offered to the card holder under Personal

Accident Insurance Scheme (PAIS).

Singh Harpreet (2007): studied on an analytical study of Kisan Credit Card Scheme in Punjab. He

analysed that the procedure, adequacy and efficiency of credit extended under the Kisan Credit Card

Scheme (KCCS) had been studied by selecting rural branches of Punjab and Sind Bank in the

Ludhiana zone (Punjab). It had been found that KCCS had enabled the timely and adequate credit to

the farmers. The KCC-farms had been observed to be performing better than non-KCC farms. About

73 per cent KCC beneficiaries had been found exploring other sources of credit also. Besides

exploring co-operatives, 30.8 per cent of the small and 29.0 per cent of the medium KCC-

beneficiaries had been noted to be in the grip of money-lenders. Regarding simplification of

procedures for extending credit under KCCS, the study had been suggested issuing of land-

passbooks, which accepted as a valid title for the purpose of land mortgaging.

[5]

Rao Prabhakara (2006): studied on Can Bank‟s Kisan credit card scheme. He analysed that Canara

Bank launched its new technology-enabled revised Kisan Credit Card Scheme (KCC Scheme). The

credit card was giving to farmers for meeting comprehensive needs of their farm and household

expenses also. The National Payment Corporation of India (NPCI) had been developed the debit

cards for Kisan credit card borrowers under its brand name of 'RuPay' cards. The credit facility of

Kisan Credit Card enabled through debit cards were helping farmers not only avail the loan from the

bank but also was providing the convenience of drawing cash from ATMs of Canara Bank as well as

others. The card also was facilitating the farmers to buy agriculture inputs like seeds, pesticides from

the dealers (who were member establishments) by swiping the cards. The programmes well-attended

and 100 debit (Rupay) cards distributed to the farmers, on the first day itself, the bank said. Canara

Bank had been planned to cover all its KCC farmers under the new scheme.

Kumar Sonali (2005): studied on Kisan credit cards fail to attract farmers. He analysed that Jammu

and Kashmir Government report pointed out that till 2004-end, not more than 74,301 cards issued in

the state involving a disbursement of Rs 283.7 crore. “The banks to be blamed for the slow delivery

of credit to farmers.” Agriculture department officials said many factors together responsible for the

scheme failing to attract farmers. Officials also added that one of the main reasons behind farmers

showing little interest in KCC that the latter‟s rate of interest almost same as that of other loans.

“The KCC scheme stipulates that the rate of interest had what the Central Advances Department

(CAD) fixed. Officials said the KCC scheme had begun picking up pace in the last few years. “The

response to the credit card scheme had been poor when it launched. In 2005-06, as many as 11261

credit cards issued. Also the National Bank for Agriculture and Rural Development (NABARD) was

pushing the banks to give extensive coverage to the credit card scheme.

[6]

Bansal Pwan (2004): studied on Kisan Credit Card. He analysed that the government said that

Farmers, who took agriculture loans through the Kisan Credit Card, covered under the Rs 60,000-

crore loan waiver scheme. Minister of state for finance Pawan Kumar Bansal said, the loan-waiver

scheme had been applicable to production credit and short-term inventory credit taken on the Kisan

Credit Card. Over 7 crore Kisan Credit Cards had been issued to farmers. The aim of the

Government had been to extend the Kisan Credit Card to all eligible farmers in the country. “All

categories of farmers eligible for a Kisan Credit Card from the co-operative banks, regional rural

banks and commercial banks throughout the country.”

Singla Naresh (2003): studied on efforts to improve the lot of farmers. He analysed that as part of

its efforts to improve the lot of farmers, Jammu and Kashmir State Cooperative Bank (JKSCB) had

been issued about 66,500 Kisan Credit Cards. Cooperative Banks of the State had been issued

around 66,500 Kisan Credit Cards to farming community of the State. The total deposits of

Cooperative Bank, which had been a network of 265 branches, reached Rs 2508.87 crore. Lauding

the efforts of JKSCB for increasing profits by 40 percent, the Minister advised all cooperative banks

in the State to switch over to the core Banking Platform by end of the current financial year. The

minister also stressed on the need to improve the credit-deposit ratio of the banks so as to reach the

national benchmark. The government was taking up a special drive to expand the Kisan Credit Card

(KCC) cover among farmers. Rs 11,535 crore of the state's entitlement of Rs 33,000 crore under

KCC had been disbursed and the drive was aimed at disbursing the remaining Rs 21,465 crore. KCC

had been a credit limit of Rs 50,000 for individual farmers and carries an interest rate of 7 per cent.

Timely payment entitles the debtor to a 3 per cent rebate.

[7]

BIBLIOGRAPHY

http://articles.economictimes.indiatimes.com/2012-01-09/news/30607547_1_kisan-credit

debit-kcc

http://articles.timesofindia.indiatimes.com/2011-12-24/patna/30554576_1_kccs-paddy-

farmers

http://www.deccanherald.com/content/260850/canbanks-kisan-credit-card-scheme.html

http://www.financialexpress.com/news/kisan-credit-card-borrowers-to-come-under-loan-

waiver/285945/

http://www.indianexpress.com/news/kisan-credit-cards-fail-to-attract-farmers-jk-govt-

report/428585/0

http://www.indianjournals.com/ijor.aspx?target=ijor:aerr&volume=17&issue=2&article=msc

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http://www.inflibnet.ac.in/ojs/index.php/KJAS/article/viewFile/787/750

http://www.moneylife.in/article/canara-bank-launches-technology-enabled-kisan-credit-card-

scheme/26717.html

http://post.jagran.com/Kisan-Credit-Card-KCC-to-be-provided-to-every-farmer-in-Jammu-

and Kashmir-1343819086

http://www.rupeetimes.com/article/credit_cards/kisan_credit_card_allowing_easy_credit_acc

ess_to_farmers_4964.html

http://www.uyirvani.com/forums/topic/82841-superhit-old-bollywood-songs-from-1960s-to-

2000-