RBI revises Kisan Credit Card rules
What's the story
The Reserve Bank of India (RBI) has announced major changes to the Kisan Credit Card (KCC) Scheme. The new guidelines, which will come into effect from January 1, 2027, are aimed at standardizing crop seasons, simplifying agricultural lending norms, and improving access to timely farm credit. The revised framework will be applicable for commercial banks, small finance banks, regional rural banks, and rural co-operative banks.
Objective
Adequate and timely credit support to borrowers
The RBI has said that the revised guidelines are aimed at providing "adequate and timely credit support" to borrowers engaged in agriculture and allied activities. The central bank wants to do this through a simplified and standardized credit delivery mechanism. One of the major changes is standardizing crop seasons for loan sanctioning and repayment purposes, with short-duration crops set at 12 months and long-duration ones at 18 months.
Alignment
Aligning KCC scheme with IRAC norms
The standardization of crop seasons under the revised KCC Scheme aligns it with the RBI's Income Recognition and Asset Classification (IRAC) norms. This is expected to bring greater uniformity across banks in determining repayment schedules. The final guidelines were issued after stakeholder and public consultation on draft directions issued on February 12, 2026. Suggestions received during this process were examined before suitable modifications were made in the final framework.
Rejection
Collateral-free lending limit not to be increased further
The RBI has rejected calls for a further increase in the collateral-free lending limit under the KCC scheme. The central bank noted that the limit was already enhanced in December 2024. According to the revised rules, banks are required to waive collateral security and margin requirements for agricultural and allied activity loans up to ₹2 lakh per borrower.
Clarification
Voluntary pledging of gold or silver as collateral permitted
The RBI has clarified that voluntary pledging of gold or silver as collateral for agriculture loans within the collateral-free threshold will not be treated as a violation of collateral-free lending norms. For loans exceeding ₹2 lakh, banks will determine collateral and margin requirements based on their internal credit policies and prevailing RBI guidelines. In KCC loans backed by hypothecation of crops or stock with tie-up arrangements for recovery, banks may waive collateral requirements for loans up to ₹3 lakh.