RBI Proposes Major Reforms in Kisan Credit Card Scheme: Benefits for Millions of Farmers

New Delhi, February 13:
Good news for India’s farmers: the Reserve Bank of India (RBI) is preparing significant reforms in the Kisan Credit Card (KCC) scheme. A draft of the new guidelines has been released, and stakeholders—including regulated institutions and the public—can submit suggestions until March 6, 2026. The changes aim to expand the scheme’s reach, simplify operations, and address evolving agricultural needs.

Key Proposed Changes

• Extended Validity: The KCC’s validity may be increased to six years, aligning the loan tenure with crop cycles. Short-duration crops will follow a 12-month cycle, while long-duration crops will follow an 18-month cycle.
• Standardized Loan Repayment: The draft proposes uniformity in loan approval and repayment schedules across crop seasons.
• Crop-Wise Withdrawal Limits: Farmers may be allowed to withdraw loans based on the estimated cost of each crop, ensuring sufficient credit for actual farming needs.
• Inclusion of Technical Costs: Expenses for soil testing, real-time weather forecasts, and certification of organic or advanced farming practices may be included under eligible costs, capped within the 20% additional component currently approved for maintenance and repair of agricultural assets.

Financial Benefits

• The loan limit under KCC is proposed to increase from ₹3 lakh to ₹5 lakh, as announced in the Union Budget 2026 by Finance Minister Nirmala Sitharaman.
• Interest on crop loans up to ₹3 lakh remains at 7%, with a 3% subsidy for timely repayment, reducing the effective interest rate to 4%.
• The reforms are expected to provide farmers with easier access to credit, better alignment with farming cycles, and support for modern agricultural practices.

These reforms, announced by RBI Governor Sanjay Malhotra in February’s monetary policy statement, mark a significant step toward empowering farmers with enhanced financial flexibility and modern tools for sustainable agriculture.