Role of Capital and Credit in Agriculture

Capital and credit play a pivotal role in the agricultural sector by addressing the financial needs of farmers and facilitating agricultural growth. Their importance is summarized as follows:

1. Facilitating Investment:
   Capital is essential for purchasing agricultural inputs such as seeds, fertilizers, pesticides, machinery, and irrigation systems. It also supports investments in infrastructure like storage facilities and farm buildings.

2. Enabling Technology Adoption:
   Credit allows farmers to adopt modern technologies and practices, enhancing productivity and reducing dependency on traditional, labor-intensive methods.

3. Smoothing Cash Flow:
   Agriculture often involves high initial costs with delayed returns. Credit ensures farmers can manage operational expenses during the growing season and repay after harvest.

4. Promoting Risk Management:
   Access to credit helps farmers manage risks from unpredictable factors like weather, pests, and market fluctuations by providing resources for insurance and diversification.

5. Encouraging Scale Expansion:
   Credit enables small and marginal farmers to expand their scale of operations, improving overall farm profitability and efficiency.

6. Supporting Rural Development:
   Capital and credit contribute to rural economic development by increasing agricultural productivity, generating employment, and improving living standards.

7. Boosting Food Security:
   Adequate financing supports sustainable farming practices, ensuring sufficient food production to meet growing population demands.

Effective policies and institutions, such as banks, cooperatives, and government schemes like the Kisan Credit Card (KCC), are essential for ensuring the availability of timely and affordable credit to farmers.

Kisan Credit Card (KCC)

• The Government of India introduced Kisan Credit Card scheme by banks during 1998 -99.
• The scheme was designed by NABARD.
• KCC aims at adequate and timely support from the banking system to the farmers for their short-term production
• credit needs in cultivation of crops, purchase of inputs etc in a flexible and cost effective manner.
• Under this scheme, the farmers would be issued a credit card-cum pass book incorporating the name, address, particulars of land holding, borrowing limit, validity period etc. and it will serve both as an identity card as well as facilitates the financial transactions.
• Credit limit on the card may be fixed on the basis of operational holding, cropping pattern and scale of finance as recommended by the District Level Technical committee (DLTC) / State Level Technical committee (SLTC).
• The KCC should normally valid up to 3 years and subject to annual review. The KCC will be considered as a non-performing asset (NPA) if it remains inoperative for a period of two successive crop seasons.
• The Government of India provides interest subvention of 2% and Prompt Repayment Incentive of 3% to the farmers, thus making the credit available at a very subsidized rate of 4% per annum.

Objective / Purpose

1. The Kisan Credit Card scheme aims at providing adequate and timely credit support from the banking system under a single window with the flexible and simplified procedures to the farmers.
2. To meet the short term credit requirements for the cultivation of crops;
3. Post-harvest expenses
4. Produce marketing loan
5. Consumption requirements of farmer household;
6. Working capital for maintenance of farm assets and activities allied to agriculture;
7. Investment credit requirement for agriculture and allied activities

Eligibility

• Farmers – individual/joint borrowers who are owner cultivators;
• Tenant farmers, oral lessees & share croppers;
• Self Help Groups (SHGs) or Joint Liability Groups (JLGs) of farmers including tenant farmers, share croppers etc.

Application Procedure

 Online Procedure

• Visit the website of the bank you wish to apply for the kisan credit card scheme.
• From the list of options, choose the Kisan Credit Card.
• On clicking the option of ‘Apply’, the website will redirect you to the application page.
• Fill the form with the required details and click on ‘Submit’.
• On doing so, an application reference number will be sent. If you are eligible, the bank will get back to you for the further process within 3-4 working days.

Offline applications

• can be done by visiting the branch of the bank of your choice or by downloading the application form from the website of the bank as well.
• The applicant can visit the branch and begin the application process with the help of the bank representative.

Documents Requirements

•  Application Form.
• Two Passport Size Photographs.
• ID proof such as Driving License / Aadhar Card / Voter Identity Card / Passport.
• Proof of landholding duly certified by the revenue authorities.
• Cropping pattern (Crops grown) with acreage.
• Security documents for loan limit above Rs.1.60 lakhs / Rs.3.00 lakhs, as applicable.
• Any other document as per sanction.