India’s farmers may soon see big changes in how they access crop loans.
In a notification dated February 6, the Reserve Bank of India (RBI) said it plans to revise the rules of the Kisan Credit Card (KCC) scheme.
The goal is to modernize this 30-year-old system and make it better suited to today’s agricultural needs.
The KCC was originally created to give farmers timely and affordable loans for farming activities.
Now, the RBI wants to update it to match changing ground realities.
What Is the Current Interest Rate?
Under the Kisan Credit Card scheme, farmers get loans at a concessional rate.
The Government of India provides:
2% interest subsidy
3% prompt repayment incentive
This brings the effective interest rate down to just 4% per year for farmers who repay on time.
Over the years, the scheme has also been expanded to cover investment loans for agriculture and even some non-agricultural activities.
It was first expanded in 2004 and reviewed again in 2012 to simplify processes and introduce electronic Kisan Credit Cards.
Four Major Changes Proposed by RBI
The RBI has suggested four key reforms that could significantly impact farmers.
Standard Crop Loan Rules
Loan approval and repayment procedures may soon be standardized across banks.
Crops will be classified based on their maturity period:
Short-term crops: up to 12 months
Long-term crops: up to 18 months
This step aims to reduce confusion and differences in loan practices across states and banks.
Longer Loan Tenure
The total tenure of Kisan Credit Cards may be extended to six years.
This is especially helpful for farmers growing long-duration crops. A longer repayment period could reduce financial stress and make repayment easier.
Loan Limits Based on Crop Needs
KCC loan limits may now be fixed according to the specific crop being cultivated.
This means farmers could receive credit that better matches their actual farming costs.
The move is expected to solve the problem of inadequate loan amounts and improve working capital availability.
Focus on Technology and Sustainable Farming
The RBI has also proposed expanding the list of eligible expenses under the additional 20% component of the loan.
Farmers may now use funds for:
Soil testing
Real-time weather forecasting tools
Organic certification
Good agricultural practices certification
This change promotes modern technology and sustainable farming methods.
RBI Seeks Public Feedback
The RBI has shared these draft guidelines with commercial banks, regional rural banks, and other financial institutions.
It has also invited feedback from farmers and stakeholders.
Suggestions can be submitted on or before March 6, 2026, through the “Connect2Regulate” app on the RBI website or via email.
If implemented, these reforms could reshape how crop loans work in India — making credit more practical, flexible, and farmer-friendly.
