Feedback Summary on Draft Kisan Credit Card Directions, 2026

RBI Releases Feedback Summary on Draft Kisan Credit Card (KCC) Directions, 2026

The Reserve Bank of India (RBI) has reviewed comments received on the draft directions for the Kisan Credit Card (KCC) Scheme, which were released on February 12, 2026. Stakeholders were invited to submit their views until March 6, 2026. Based on the feedback, RBI has accepted certain recommendations, clarified others, and retained some provisions without modification.

Implementation Timeline

To provide banks sufficient time for required technology and system changes, the revised KCC Directions will now come into force from January 1, 2027. Existing KCC loans sanctioned before this date will continue under the current guidelines until renewal or maturity.

Definitions and Eligibility

RBI has aligned the definition of crop seasons with prevailing Income Recognition and Asset Classification (IRAC) norms. However, no changes have been made regarding the classification of Small and Marginal Farmers (SMFs), as current Priority Sector Lending (PSL) provisions already address eligibility for allied agricultural activities and landless farmers.

Drawing Limits for Crop Cultivation

Several suggestions regarding calculation of drawing limits were considered:

• District Level Technical Committee (DLTC) Scale of Finance (SoF) references will be incorporated.
• An indicative list of technology-based agricultural services has been added.
• Requests for separate limits for advanced farming technologies were not accepted, as such expenses are already covered within the prescribed limits.
• RBI clarified that where SoF remains unchanged in a subsequent year, drawing limits will not automatically increase by 10%.
• Activities lacking an approved SoF may be financed outside the KCC framework until included in the SoF list.
• Maximum Permissible Limits (MPL) will be reassessed during reviews if drawing limits exceed sanctioned levels due to revised SoF.
• Flexi-KCC provisions have been explicitly extended to allied activities.
• Requests to raise the Flexi-KCC ceiling were declined due to credit risk considerations.
• RBI retained the requirement that financing under KCC should remain based on approved SoF values to ensure standardization and prevent excessive lending.
• KCC limits may now be rounded off to the nearest ₹1,000.

Allied Activities

The regulator clarified that a separate consumption component cannot be provided when both crop and allied activity loans are availed under a composite KCC facility, as this would result in duplication of such benefits.

Repayment Structure

Recognizing the long gestation period of certain agricultural investments, RBI clarified that term loans with repayment periods exceeding six years should be treated as separate facilities outside the KCC framework.

Interest Application

Suggestions to align interest charging with crop cycles, especially for long-duration crops, were not accepted. Existing RBI norms governing agricultural lending interest rates will continue to apply.

Security and Collateral

The proposal to further increase collateral-free lending limits was not accepted, as these limits were revised recently. RBI also clarified that collateral-free provisions relate only to additional security requirements and do not affect primary security or financed assets.

Segregation of Credit Limits

Banks will be permitted to maintain separate accounts for short-term working capital and long-term investment credit. However, RBI rejected suggestions for a single consolidated agricultural credit limit, citing the need for separate monitoring and prudential treatment.

Review and Renewal of KCC Accounts

Renewal based solely on payment of interest was not accepted, as RBI believes it may weaken repayment discipline. Existing repayment requirements under the KCC framework will continue.

Operational and Miscellaneous Matters

RBI declined suggestions to standardize documentation formats across banks, stating that operational processes remain within individual banks’ policies and applicable state laws.

Other clarifications include:

• Affidavit-based lending up to ₹50,000 remains intended primarily for sharecroppers and oral lessees lacking formal land records.
• Loan processing timelines and communication standards remain deregulated operational matters.
• Existing PSL guidelines already prohibit certain charges on priority sector loans up to ₹50,000.
• Borrowers may provide consent at the application stage for insurance premium debits from KCC accounts.
• Requests for free insurance coverage under KCC were considered outside the scope of the Directions.
• Cash withdrawals through KCC accounts will continue to be permitted.
• Issues concerning interest subvention under the Modified Interest Subvention Scheme (MISS) fall under Government policy and are outside RBI’s KCC Directions.
• Asset classification of KCC loans will continue to follow prevailing IRAC norms.

Additional Issues Raised

Several suggestions were considered outside the scope of the Directions, including:

• Credit Information Company (CIC) reporting by Primary Agricultural Credit Societies (PACS) and cooperative institutions.
• KCC portability between banks with mandatory transfer timelines.
• Changes related to the Government’s interest subvention framework.

Regarding grievances, RBI noted that complaints relating to KCC services are already covered under the Integrated Ombudsman Scheme.

Source

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