Know the reasons behind the sharp fall in issuance of KCC to farmers

Over the last three years, the total volume of Kisan Credit Cards has fallen by nearly 56%. The Ministry of Peasant Welfare was unable to withstand this sharp decline even though the amount of the scheme’s sanctions was valued at 5 times.

Some states, such as West Bengal, Tripura and Assam, saw the most drastic impact with nearly 80% reductions in the number of new cards issued. In this discussion, we will try to find out the reason behind this worrying scenario. Apart from that, we will also get brief knowledge about the Kisan Credit Card.

What is the PM Kisan Credit Card scheme?

The Kisan Credit Card or KCC is a centrally supported scheme launched in 1998 to help Indian farmers financially. Under this policy, farmers in every state of India are eligible for a special credit card that will help them buy:

• Seed
• Fertilizer
• Pesticide

Apart from purchasing agricultural related goods, the card also empowers Indian farmers to withdraw short-term credit at affordable interest rates. Farmers can even withdraw cash from ATM kiosks using this credit card. This scheme was initially launched by the National Bank for Agriculture and Rural Development (NABARD) to help farmers manage their agricultural costs in a better way.

During the interim Union Budget (2019), the government of India introduced the PM Kisan Samman Nidhi Scheme, a separate plan which will further enhance the effect of this KCC scheme. Under the Kisan Samman Nidhi Yojana, farmers get Rs 6,000 annually credited to their registered bank accounts if they meet certain eligibility criteria.

What are the reasons for the sharp decline in new KCC registrations?

After careful scrutiny, the government-appointed official revealed 5 reasons behind the reduced issuance of Kisan Credit Cards:

1. Defaults have increased in number

When using credit cards, many farmers fail to maintain healthy payment records. This in turn affects their credit score and they fall off the KCC eligibility list.

Most of the time, though, we shouldn’t blame farmers for slower payments. It is often seen farming families suffering due to heavy monsoon rains, damage to crops, existing loans they have to take out to deal with unavoidable situations etc. Failing to address them simultaneously leads to high default rates.

2. Financial guidelines have been changed

Credit card issuance is affected due to many new regulations introduced by NABARD in the last 3 years. Again, such a proposition has the approval of all authorities to address critical market conditions.

Also, in recent years the number of outstanding loans hit the roof consistently for consecutive quarterly cycles which led NABARD to tighten their policy structure. Meanwhile, several private financing platforms have emerged in rural areas, which require direct revision of guidelines to ensure sustainability.

3. Crop production fell in many places

As discussed earlier, many farmers are already in debt. In addition, as farmers from different regions have reported lower crop production continuously, one can naturally expect a decrease in the desire to apply for a Kisan Credit Card.

4. Several formalities hinder the application process

The Indian government has promised to offer KCC facilities only to those who apply for their own farmland. This is the initial requirement that you must comply with when applying for a Kisan Credit Card.

Therefore, if you fall into this group, you must first arrange proof of ownership which often raises doubts among farmers. Again, what’s really important is that the entire payable amount has to be produced by the end of March which has turned out to be a problem for a lot of people.

5. NBFCs and different MFIs now offer better alternatives

This is one of the most reasonable arguments in support of the low issuance of Kisan Credit Cards. Many microfinance institutions now offer short-term loans to farmers with flexible repayment windows. Also, they have been actively seizing many rural markets with their profitable small group loans. Due to 24×7 customer support and seamless loan processing, these companies have gradually earned the trust of farming families.

How do I apply for a PM Kisan Credit Card online?

You should look up the eligibility criteria on your financial institution’s official website before proceeding to the detailed application process.

Depicted here is the rough application procedure for KCC. You may find a slight deviation when you enter your financier’s website to complete the Kisan Credit Card application.

• Step 1: Navigate to the ‘Cards’ section of the website. Then select the ‘Kisan Credit Card’ option.
• Step 2: Proceed to the next step by clicking ‘Apply’.
• Step 3: Provide correct details while filling the application form.
• Step 4: Press the ‘Submit’ button.

By carrying out these steps, you complete registration and receive a reference number. Keep this handy for the future. In addition, the official will call you back within the next 3-4 days to proceed with your application.

As you have understood the reasons that led to the rejection of the Kisan Credit Card registrant, now you can take all the necessary actions to avoid the pitfalls. Used sparingly, these credit instruments can help farmers successfully meet their agro obligations without incurring unnecessary debt.