KCC Rules: The RBI has made several major changes for those taking loans using Kisan Credit Cards. From a new definition of crop season to unsecured loans up to ₹2 lakh, how will the new rules affect farmers’ pockets and the loan process? Find out.

Under the new KCC rules, banks will not be able to ask for any kind of guarantee on KCC loans up to ₹2 lakh.
KCC Rules: The Reserve Bank of India (RBI) has made some major changes to the rules of the Kisan Credit Card (KCC) scheme. The new rules will come into effect on January 1, 2027. Their purpose is to provide farmers with timely and easy access to credit for farming and related activities. These rules will apply to commercial banks, small finance banks, regional rural banks (RRBs), and rural cooperative banks.

Until now, different banks had different crop yields, leading to differences in loan repayment deadlines. The RBI has introduced new rules to address this.

Now, the crop season will be considered 12 months for short-duration crops, while for long-duration crops, it will be 18 months.

According to the RBI, the crop season refers to the entire period from sowing to harvesting and sale. This will make it easier for both farmers and banks to determine loan repayment periods.

No guarantee for loans up to ₹2 lakh

Under the new rules, banks will not be able to require any collateral or 'line-height:normal'>There is no problem in pledging gold and silver.

The RBI has clarified that if a farmer voluntarily pledges gold or silver to obtain an agricultural loan, it will not be considered a violation of the collateral-free loan rules. This means that this can be done with the consent of both the bank and the farmer.

What will be the rules for loans above ₹2 lakh?

If a farmer takes out a KCC loan of more than ₹2 lakh, the collateral and 'line-height:normal'>Discount can also be available on loans up to ₹3 lakh

If KCC loans are given based on crops or stock, farmers may receive additional relief. In such cases, banks may waive the guarantee requirement for loans up to ₹3 lakh. This could make it easier for farmers to obtain larger loans. Banks will make this decision based on their own regulations.

The loan limit will be reviewed from time to time.

The RBI has directed banks to regularly review short-term credit limits granted for agriculture and related activities. If necessary, farmer loan limits can be increased or renewed. This process will be based on the bank’s own policy.

Demand to increase collateral-free loan limit not accepted

During the consultation process, several stakeholders requested a further increase in the unsecured loan limit under the KCC. However, the RBI declined to accept this proposal. The central bank stated that the limit for unsecured agricultural loans has already been increased through December 2024, so no further changes are needed at this time.

What will change for farmers?

These new rules will make the loan process more clear and simple. Confusion regarding crop seasons will be reduced, small farmers will find it easier to obtain unsecured loans, and banks will also implement uniform rules. This will hopefully ensure farmers receive the capital they need for farming in a timely manner.

PC: Money Control