RBI Proposes Major Revamp of Kisan Credit Card to Expand and Modernise Farm Credit
The Reserve Bank of India has proposed a comprehensive overhaul of the Kisan Credit Card (KCC) scheme to improve farmers’ access to timely and adequate credit. Announced in the Statement on Developmental and Regulatory Policies on February 6, 2026, the draft guidelines aim to consolidate existing instructions, address emerging needs in agriculture, and modernise the nearly 30-year-old framework. Currently, KCC loans are highly subsidised, with the Government of India offering interest subvention and repayment incentives that reduce the effective interest rate to about 4% per annum.
Among the four major changes proposed, the RBI plans to standardise crop seasons by categorising crops into short-duration (up to 12 months) and long-duration (up to 18 months), bringing uniformity in loan sanction and repayment schedules. To better align credit with crop cycles, especially for long-duration crops, the overall KCC tenure may be extended to six years. Another key reform links drawing limits to the officially prescribed scale of finance, ensuring farmers receive credit that more accurately reflects the real cost of cultivation and addresses long-standing issues of under-financing.
The fourth proposal focuses on technology adoption and sustainability in farming. The RBI has suggested expanding the additional 20% credit component for farm asset repairs and maintenance to include expenses such as soil testing, weather-based advisory services, and certification for organic or good agricultural practices. Draft master directions have been released for public consultation, with feedback invited from banks, farmers and stakeholders until March 6, 2026. Once finalised, the revised norms are expected to strengthen agricultural credit delivery and support evolving farm practices across the country.
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