The Reserve Bank of India (RBI) on Friday revised the Kisan Credit Card (KCC) framework, unifying the definition of crop seasons and aligning it with banking asset classification norms in a move aimed at bringing greater uniformity in farm loan sanctions and repayment schedules.The revised guidelines, which will come into effect from January 2027, seek to simplify the provision of credit to farmers and borrowers involved in agriculture and allied activities through a simplified and unified framework, PTI reported.The RBI said the new directions are aimed at ensuring “adequate and timely credit support from the banking system under the KCC scheme to meet the working capital and investment credit needs of borrowers involved in agriculture and allied activities, through a structured facility requiring simple and standard procedures”.One of the major changes relates to the definition of crop seasons, which has been modified to comply with the Income Recognition and Asset Classification (IRAC) standards.“For the purpose of the KCC scheme, crop seasons shall be standardized to twelve months for short-duration crops and eighteen months for long-duration crops,” the central bank said.The crop season refers to the period from planting of crops to their harvesting and marketing.
The revised framework comes after public consultations on draft guidelines issued by the Reserve Bank of India in February this year.Regarding collateral requirements, the central bank rejected proposals seeking to raise the threshold for collateral-free lending, noting that the threshold was only recently revised in December 2024.Under the new directions, banks will continue to waive additional collateral and margin requirements for agricultural loans, including those for allied activities, up to Rs 2 lakh per borrower.“However, voluntary pledging of gold and silver as collateral for agricultural loans up to the collateral-free limit will not be considered a violation of the guidelines on collateral-free lending to the agriculture sector,” the RBI said.For loans above Rs 2 lakh, banks will determine collateral and margin requirements as per their credit policies and RBI guidelines.The central bank has also provided additional flexibility for KCC loans backed by crop or inventory mortgages that involve payback linkage arrangements.
In such cases, banks may waive additional collateral requirements for loans up to Rs 3 lakh.The RBI also directed banks to periodically review and renew short-term credit limits for crop cultivation and allied activities in line with their internal credit policies.The Kisan Credit Card Scheme remains the primary institutional credit mechanism for farmers, providing working capital and investment support for crop farming, dairying, fisheries and other agricultural allied activities.