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Through the last three years, the total volume of Kisan Credit Cards dropped by almost 56%. The Union ministry of farmers welfare could not resist this sharp dip although the scheme’s sanctioned amount was appreciated by 5 times.

Several states like West Bengal, Tripura, and Assam, witnessed the most drastic effects with almost 80% decline in the number of new cards issued. In this discussion, we will attempt to figure out the reasons behind this alarming scenario. Also, we will gain a brief knowledge of the Kisan Credit Card.

What is the PM Kisan Credit Card scheme?

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

  • Seeds
  • Fertilisers
  • Pesticides

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

During the interim Union Budget (2019), the Indian government introduced the PM Kisan Samman Nidhi Scheme, a separate plan that will further boost the effects of this KCC scheme. Under the Kisan Samman Nidhi Yojana, farmers get Rs 6,000 each year credited to their registered bank account if they meet certain eligibility criteria.

What were the reasons that resulted in a sharp dip of new KCC registration?

After a thorough investigation, the government-designated officials pointed out these 5 reasons behind the depletion of Kisan Credit Card issuance:

  1. Defaults have increased in number

While using a credit card many farmers failed to maintain a healthy repayment record. This in turn affected their credit score and they fell out of the KCC eligibility list.

However, most of the time, we should not blame the farmers for slower repayments. Often it is seen farming families suffer from heavy monsoons, crop damage, existing loans that they had to take to deal with an unavoidable situation, etc. Failing to cope with them simultaneously leads to high default rates.

  1. Financial guidelines have been changed

Credit card issuance has got affected owing to many new regulations introduced by NABARD in the last 3 years. Again, such propositions got approval from all the authority points to tackle critical market conditions.

Also, in past years the payable loan amounts touched the roof consistently for consecutive quarterly cycles which made NABARD tighten their policy structure. Meanwhile, a few private financing platforms cropped up in rural settings, necessitating outright revision of guidelines to ensure sustainability.

  1. Crop production went down in many places

As discussed earlier, many farmers are already suffering from existing debts. On top of that as farmers from many regions have reported lower crop production through and through, naturally one can expect a decreased willingness towards applying for a Kisan Credit Card.

  1. Some formalities hinder the application process

The Indian government has vouched to offer the KCC facilities only to those who raised a request against their own agricultural land. This is the preliminary condition you should comply with while applying for a Kisan Credit Card.

Therefore, if you fit into this class, you must first arrange for the ownership proof which often causes hesitation among farmers. Again, quite importantly the whole repayable sum needs to be produced at a time during March end which turns out to be a problem for many.

  1. NBFCs and different MFIs now offer better alternatives

It is one of the most reasonable arguments that support the incidence of low issuance of Kisan Credit Cards. Many microfinance agencies these days offer short-term loans to farmers with flexible repayment windows. Also, they have actively captured many rural markets with beneficial small-group loans. Due to their 24×7 customer support and seamless loan processing, these companies are gradually gaining the trust of farming families.

How to apply for the PM Kisan Credit Card online?

You must look for eligibility criteria on your financial institution’s official website before moving on to the detailed application process.

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

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

By executing these steps, you complete your registration and receive a reference number. Keep this handy for the future. Also, the officials get back to you within the following 3-4 days to further proceed with your application.

As you have understood the reasons that led to the declination of Kisan Credit Card registrants, now you can adopt all needful measures to avoid the trap. If used in moderation, this credit instrument can help farmers successfully meet agro liabilities without attracting unnecessary debt.

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