KISAN CREDIT CARD -- A FEW POINTS

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KISAN CREDIT CARD – A FEW POINTS

Objective a) Kisan Credit Card Scheme aims at providing need based and timely credit support to the farmers for their cultivation needs as well as non-farm activities and cost effective manner. b) To bring about flexibility and operational freedom in credit utilisation. Eligibility a) Under the scheme, Branches may issue Kisan Credit Cards to the farmers who are otherwise eligible for sanction of short term credit for crop production, allied activities and other non-farm activities. b) The farmers should come from the operational area of the Branch. Issue of cards  a) The farmers under the scheme will be issued a credit card-cum-passbook incorporating the name, address, particulars of land holding, borrowing limit / sub-limits, validity period, etc. to facilitate recording of the transactions on an on-going basis. The passbook, among others, would provide for a passport size photograph of the beneficiary. b) The beneficiary farmer should produce the passbook while operating the account. Technical Feasibility a) Suitability of soil, climate and availability of adequate irrigation facilities. b) Suitability of the produce for storage. c) Suitability of the storage unit Financial Viability The expected incremental income should be adequate to repay the advance leaving sufficient balance for farmer’s domestic needs. Quantum of Finance and margin ·         For production / short term purposes - Loan amount will depend upon the type of crop, area under cultivation and scale of finance. ·         Short term working capital - For ancillary activities and minor investment of medium term nature. ·         Short term credit for consumption / domestic needs to the extent of upto 25 percent of gross estimated income of the farmer and maximum Rs.50,000/=. ·         Finance against storage receipts / produce marketing may be considered maximum upto 50 percent of the price of the produce prevailing at the time of storage / sanction of loan. Limits / advances upto Rs.10 lakhs per farmer can be extended for a maximum period of 12 months. However, the amount of finance to the extent of net of loan may be made available to the farmer. Note: i) While fixing the limit, the Branch may take into account the entire production credit requirements of the farmer for the full year, including the credit requirements of the farmer for the ancillary activities related to crop production such as maintenance of agricultural machinery / implements, electricity charges, etc. ii) The credit limit could also provide for allied activities and non-farm credit needs of the borrowers. iii) The credit limit under the card may be fixed on the basis of the operational land holding, cropping pattern and scale of finance as recommended by the District Level Technical Committee (DLTC) / State Level Technical Committee (SLTC). Wherever the DLTC / SLTC have not recommended scale of finance for any crop or in the opinion of the Branches, has recommended lower than the required amount, the Branches may fix appropriate scale of finance for the crop after due approval by the Zonal Office. iv) For fixation of credit card limit, operational land holdings will include the leased-in land and exclude leased out land. v) Branches may at their discretion fix appropriate sub-limits within the overall credit limit sanctioned, taking into account the seasonality in credit requirements.  Type of Facilities (a) Revolving Cash Credit – Annual Review. The farmer should be allowed for any number of drawals and repayment within the limit. (b) The review may result in continuation of the facility, enhancement of the limit or cancellation of the limit / withdrawal of the facility, depending upon the performance of the borrower. (c) The aggregate of credits into the account during the 12 months period should atleast be equal to the maximum outstanding in the account. (d) No drawal in the account should remain outstanding for more than 12 months in case of normal crops and 18 months in case of sugarcane and banana crops. (e) In case of reschedulement of the period of repayment on account of natural calamities affecting the farmer, the period for reckoning the status of operations as satisfactory or otherwise would get extended together with the extended amount of limit. When the proposed extension is beyond one crop season, the aggregate of debits for which extension is granted should be transferred to a separate term loan account with stipulation for repayment in instalments as per existing guidelines. (f) As a measure of incentive for card holders with good performance, the Branches may at the time of review, enhance the credit limit suitably to take care of increase in cost of inputs / labour, change in cropping pattern, etc. Security Kisan Credit Card Rate of Interest (a) On Debit Balance : As advised by Head Office from time to time (b) On Credit Balance : Rate of interest payable will be as per Savings Bank interest rate and follow the Savings Bank Rules except opening a separate account. Other Operational Guidelines (a) Where finance is considered only for a specific crop, say sugarcane through tie-up with a sugar factory and farmer has obtained finance for other crops from other Bank / Co-operative society, such farmer can be financed for sugarcane crop provided dues certificate is submitted and there are no overdues. In such cases, other financing Bank / Co-operative society should be advised of the liabilities with us. (b) Wherever crop insurance is available, coverage needs to be obtained. (c) In case of default, the special facilities under the scheme should be immediately withdrawn and the limit should be treated as normal crop finance which would broadly mean – ·         Withdrawal of cheque book facility (if issued). ·         Future disbursement on regularisation of account against bills / receipts. ·         Cash disbursement only to the extent of cash component. ·         Withdrawal of card. Application Of Prudential Norms (a) Kisan Credit Card facility being in the nature of cash credit accommodation for agricultural purposes, the prudential norms as applicable to such facilities would apply to the KCC accounts. (b) In other words, the credit card account would be deemed to be a Non-Performing Asset (NPA) if it remains out of order for a period of two crop seasons / one crop season (as the case may be, depending on the duration of the crops) after the repayment due date. (c) The crop seasons after the due date should refer to only those two consecutive crop seasons in which the farmer usually undertakes crop production. (d) An account will be treated as out of order in the following circumstances: ·         There are no credits in the account continuously for two crop seasons as on the date of balance sheet, or ·         The credits in the account are not sufficient even to cover the interest debited in respect of the account for two crop seasons, or ·         The outstanding remains continuously in excess of the limit for two crop seasons as on the date of balance sheet.

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