Kisan Credit Card set for overhaul; 4 big changes that could impact farmers’ access to credit

Kisan Credit Card: The Reserve Bank of India (RBI) has proposed a comprehensive revamp of the Kisan Credit Card (KCC) scheme, introducing several changes aimed at expanding coverage, improving credit adequacy and streamlining operations for farmers. In its Statement on Developmental and Regulatory Policies dated February 6, 2026, the central bank said it will issue revised guidelines that consolidate existing instructions related to agriculture and allied activities while addressing emerging requirements in the farm sector.

The draft guidelines, released for public consultation, are intended to modernise the nearly three-decade-old KCC framework, which was originally launched to ensure timely and adequate credit to farmers for agricultural operations. Under the existing structure, farmers receive a highly subsidised loan, with the Government of India providing an interest subvention of 2% and a prompt repayment incentive of 3%, effectively bringing the interest rate down to 4% per annum.

Over the years, the KCC scheme has been expanded to include investment credit for allied and non-farm activities. It was extended in 2004 and subsequently reviewed in 2012 to simplify procedures and enable the issuance of Electronic Kisan Credit Cards. While the scheme provides broad operational guidelines, banks are allowed flexibility to tailor implementation based on institutional and location-specific requirements.

Four major changes proposed

One of the most significant changes proposed by the RBI is the standardisation of crop seasons to bring uniformity in loan sanction and repayment schedules. Under the draft norms, crops have been categorised by duration—short-duration crops with a cycle of up to 12 months and long-duration crops with a cycle of up to 18 months. This move is expected to reduce inconsistencies across banks and states.

Second, to better align loan tenure with crop cycles, particularly for long-duration crops, the RBI has proposed extending the overall tenure of the Kisan Credit Card to six years. This is aimed at ensuring smoother repayment schedules and reducing repayment stress for farmers engaged in crops that take longer to mature.

Third, the draft directions seek to ensure that farmers receive credit that more accurately reflects the actual cost of cultivation. Drawing limits under the KCC will now be aligned with the officially prescribed scale of finance for each crop season. This change is expected to address issues of under-financing and improve the adequacy of working capital available to farmers.

The fourth major change focuses on technology adoption and sustainable farming practices. The RBI has proposed expanding the list of eligible expenses under the additional 20% component earmarked for repairs and maintenance of farm assets. This will now include costs related to technological interventions such as soil testing, real-time weather forecasts, and certification for organic or good agricultural practices, enabling farmers to invest in productivity-enhancing tools.

Public consultation and next steps

The RBI has issued draft Master Directions for Commercial Banks, Regional Rural Banks and Rural Co-operative Banks and has invited feedback from regulated entities, farmers and other stakeholders. Comments can be submitted on or before March 6, 2026, either through the ‘Connect 2 Regulate’ section on the RBI website or via email, with the subject line clearly indicating feedback on the relevant draft directions.

Once finalised, the revised KCC norms are expected to play a key role in strengthening agricultural credit delivery and supporting the evolving needs of India’s farming community.