Context: The Government will provide Kisan Credit Card (KCC) to 1.5 crore dairy farmers belonging to Milk Unions and Milk producing Companies within the next two months under a special drive.

More on the news:

  • This move is part of the Prime Minister’s Atma Nirbhar Bharat package for Farmers. 
  • The Finance Minister has also recently announced to cover 2.5 crore new farmers under the KCC scheme.
  • The Department of Animal Husbandry and Dairy in association with the Department of Financial Services has already circulated relevant circulars and KCC application format to all State Milk Federation and Milk Unions for implementing the same on a mission mode.

More about the special drive

  • In the initial phase, the target is to cover all farmers who are members of dairy cooperative societies and associated with different Milk Unions and who do not have KCC. 
  • Farmers who already have KCC based on their land ownership, can get their KCC credit limit enhanced, though interest subvention shall be available only to the extent of Rs 3 lakhs.
  • Although the general limit for KCC credit without collateral remains Rs. 1.6 lakh, but the case of farmers whose milk is directly procured by Milk Unions falls under tie-up arrangements between the producers and processing units without any intermediaries, and hence the credit limits without Collateral can be up to Rs.3 lakh.

Significance of the move

  • This move will ensure more credit availability for dairy farmers associated with Milk Unions as well as assuring repayment of loans to banks.
  • It will provide an additional liquidity of Rs.5 lakh crore in the hands of farmers, who are suffering from the recent downturn of the economy due to COVID-19.
  • Also as dairy is among the fastest-growing sectors of the economy with a CAGR of above 6% in the last 5 years, providing short term credit to dairy farmers for meeting their requirements for working capital, marketing, etc. will boost their productivity tremendously.

Kisan Credit Card

Kisan Credit Card - The scheme aims at providing adequate and timely credit support from the banking system under a single window with flexibility.

  • The Kisan Credit Card (KCC) scheme is a credit scheme introduced in August 1998 by Indian banks. 
  • This model scheme was prepared by the National Bank for Agriculture and Rural Development  (NABARD) on the recommendations of R.V.GUPTA committee to provide term loans for agricultural needs.
  • The KCC scheme also provides the facility of ATM enabled RuPay Card, one-time documentation, built-in cost escalation in the limit, and any number of withdrawals within the limit. 
  • The farmers eligible under the KCC scheme include small farmers, marginal farmers, sharecroppers, oral lessee, and tenant farmers. 
  • The Self Help Groups (SHGs) or Joint Liability Groups (JLGs) are also eligible for availing benefits under the said scheme.
  • KCC credit holders are covered under up to ₹50,000 for death and permanent disability, and up to ₹25,000 for other risks.  
  • The premium is borne by both the bank and borrower in a 2:1 ratio. 
  • Participating institutions include all commercial banks, Regional Rural Banks, and state co-operative banks.