RBI Finalises Kisan Credit Card Norms; Implementation Pushed To Jan 2027

New Delhi, Jun 20 (KNN) The Reserve Bank of India (RBI) on Friday issued the final Kisan Credit Card (KCC) Scheme directions for commercial banks, small finance banks, regional rural banks and rural co-operative banks, after examining stakeholder feedback received on the draft directions issued in February 2026.

The central bank has deferred implementation of the revised framework by six months to January 1, 2027, from the originally proposed July 1, 2026, citing operational and technology-related challenges flagged by stakeholders. KCC loans sanctioned before this date will continue to be governed by the existing guidelines until maturity or the next renewal.

Standardisation of Crop Seasons

A key change under the revised framework is the standardisation of crop season definitions, aligned with the Reserve Bank's Income Recognition and Asset Classification (IRAC) norms. Crop seasons will now be standardised at twelve months for short-duration crops and eighteen months for long-duration crops. 

The RBI said the move is aimed at ensuring adequate and timely credit support to borrowers engaged in agriculture and allied activities through a simplified, composite facility.

Modifications Based on Feedback

The RBI incorporated several changes following stakeholder consultations. These include references to District Level Technical Committees (DLTCs) within the directions, an indicative list of technological interventions, explicit applicability of Flexi KCC to allied activities, and rounding off of KCC credit limits to the nearest Rs 1,000.

The central bank clarified that where the Scale of Finance is notified but not revised for a subsequent year, banks should continue using the existing Scale of Finance, with no automatic increase in drawing limits. It also clarified that term loans exceeding six years in tenure will be treated as separate credit facilities outside the KCC framework, and that banks may maintain separate loan accounts for short-term working-capital and long-term investment components.

Collateral Requirements Unchanged

The RBI declined to raise the collateral-free lending threshold, noting that the limit had been revised as recently as December 2024. Banks will continue to waive collateral and margin requirements for agricultural loans, including allied activities, up to Rs 2 lakh per borrower. 

The central bank clarified that voluntary pledging of gold and silver as collateral within this limit will not be treated as a violation of collateral-free lending guidelines. 

For KCC loans backed by hypothecation of crops or stock with recovery tie-up arrangements, banks may waive collateral requirements for loans up to Rs 3 lakh.

Suggestions Not Accepted

Among the proposals the RBI did not accept were requests to increase the Flexi KCC limit, permit lending beyond the notified Scale of Finance, raise the collateral-free lending limit further, allow renewals based on interest servicing alone, and introduce a single consolidated credit limit in place of separate sub-limits. 

The central bank also noted that issues relating to interest subvention under the Modified Interest Subvention Scheme, credit bureau reporting by cooperative institutions, and KCC portability across banks fell outside the scope of the current directions.

(KNN Bureau)