The Reserve Bank of India (RBI) has issued the final guidelines for the Kisan Credit Card (KCC) scheme.
The new rules include several suggestions received from banks and stakeholders during the consultation process.
In a major relief for farmers and banks, the RBI has postponed the implementation of the revised framework.
The new KCC guidelines will now come into effect from January 1, 2027.
Existing KCC Loans Will Continue Under Old Rules
The RBI has clarified that Kisan Credit Card loans sanctioned before January 1, 2027, will continue to follow the existing guidelines until they mature or come up for renewal.
According to the central bank, this decision was taken considering the operational and implementation challenges that banks may face at the ground level.
The revised guidelines will also not apply to overseas branches of Indian banks.
What Are the Key Changes in the New KCC Rules?
The RBI has accepted several important suggestions while finalising the guidelines.
One major change is the inclusion of District Level Technical Committee (DLTC) Scale of Finance references.
The guidelines also include an indicative list of technology-related investments that can be financed under the KCC scheme.
In addition, Flexi KCC benefits will now be available for allied agricultural activities, and KCC credit limits will be rounded off to the nearest ₹1,000 for easier implementation.
Important Clarification on Scale of Finance
The RBI has also clarified how banks should calculate credit limits when the Scale of Finance is not revised in a particular year.
In such cases, banks must continue using the existing Scale of Finance instead of automatically increasing the drawing limit by 10%.
For those unfamiliar, the Scale of Finance refers to the estimated cost required to cultivate a specific crop on a particular area of land during one crop season.
Flexi KCC to Benefit Small and Marginal Farmers
The revised guidelines provide additional flexibility to small and marginal farmers through Flexi KCC.
Under this facility, eligible farmers can receive a flexible credit limit ranging from ₹10,000 to ₹50,000 based on the bank’s assessment, regardless of the value of their land.
The credit limit can be determined based on factors such as crop cultivation, post-harvest storage needs, farming expenses, household consumption requirements, and investments in agriculture and allied activities.
Long-Term Investment Loans Kept Separate
The RBI has also agreed to keep long-term investment loans outside the KCC framework if their tenure exceeds six years.
Banks will be allowed to maintain separate loan accounts for working capital requirements and long-term investment purposes, making loan management easier for both lenders and borrowers.
What Suggestions Did RBI Reject?
While several recommendations were accepted, the RBI rejected some major demands.
The central bank refused requests to:
Increase the collateral-free loan limit
Raise the Flexi KCC limit
Allow lending beyond the prescribed Scale of Finance
Simplify the drawing limit calculation method
Permit KCC renewal based only on interest payments
According to the RBI, such changes could increase credit risk, weaken financial discipline and lead to excessive borrowing.
Insurance Premium Can Be Deducted Only with Consent
The RBI has made it clear that banks must obtain the farmer’s explicit consent before deducting any insurance premium from a KCC account.
The regulator also rejected suggestions related to free life and health insurance for KCC holders, stating that such decisions fall under the policy domain of the Government of India.
At the same time, farmers will continue to have the option of operating their KCC accounts through multiple channels, including cash withdrawals.
What Does This Mean for Farmers?
The new guidelines aim to make the Kisan Credit Card scheme more transparent and flexible while maintaining financial discipline.
Since the revised rules will be implemented only from January 1, 2027, existing KCC borrowers do not need to worry about any immediate changes.
However, the new framework is expected to bring greater clarity and improved credit management for farmers in the coming years.
