Non-performing assets (NPAs) among Kisan credit card (KCC) accounts across various banking sectors havs seen a consistent decline over the last few years, indicating a deepening of the credit culture and increased credit discipline in the agriculture sector, according to an official note.
Referring to data from RBI and Nabard, the agriculture ministry has stated that NPAs under KCCs accounts for the commercial banks have declined from 15.1% in FY22 to 14.16% by December 31, 2024.
Correspondingly, NPAs in the KCC accounts of regional rural banks and cooperative banks have declined from 9.5% and 6.9% in FY22 to 7.1% and 6.5% respectively by FY24, it stated.
Through KCCs farmers get timely and affordable credit for purchasing agricultural inputs such as seeds, fertilizers, and pesticides, as well as for meeting cash requirements related to crop production and allied activities.
“Though the absolute NPA amount in KCC accounts has shown increase over the years, there has also been a commensurate increase in the overall agriculture credit extended under KCC accounts over these years,” according to an agriculture ministry statement in the parliament.
The credit extended to the KCC accounts increased significantly from Rs 9.38 lakh crore at the end of FY22 to Rs 10.05 lakh crore as on December 31, 2024, according to an official note. “This is a reflection of credit deepening in agriculture and reduced dependency on non-institutional credit,” an official said.
At present, there are 77.1 millin operational KCC holders. This includes1.24 lakh and 44.4 lakh KCCs issued to fisheries and animal husbandry activities, respectively.
Institutional credit flow to the agriculture sector by financial institutions has risen nearly three times from Rs 8.5 lakh crore (FY15) to over Rs 28 lakh Crore in 2024-25, mostly attributed to formalisation of the rural credit structure according to bank officials.
The finance ministry has earmarked Rs 16 lakh crore for short-term crop loans and Rs 11.5 lakh crore as term loans, for FY25. Out of these major chunks of loans was to be provided by the Commercial banks (Rs 20.62 lakh crore), or over 75%, of the total credit flow.
“In the last 10 years, the average annual growth in the flow of agricultural credit has been in double digit at 13%,” Shaji KV, chairman of Nabard, had stated earlier.
Under the modified interest subvention scheme (MISS), farmers holding KCCs are provided short-term agri-loans of up to Rs 3 lakh at 7% interest per annum to meet working capital requirements. The scheme provides additional interest subvention of 3% for prompt repayment, reducing the effective rate of interest to 4%.
If the short-term loan is taken for allied activities other than crop husbandry, the loan amount is limited to Rs.2 lakhs only. However, for 2025-26, the government has announced that the agri-credit limit is being enhanced to Rs 5 lakh annually. MISS also includes post-harvest loans against negotiable warehouse receipts (NWRs) for small holders farmers with KCCs.
In 2019 for assisting farmers engaged in allied activities, the scheme was to include animal husbandry, dairying, and fisheries. Banks can provide collateral-free loans up to Rs 1.60 lakh annually
As per the budget estimate, the agriculture has allocated Rs 22,600 crore for FY26, at the same level of revised estimate of FY25 for MISS. In the last 10 years, Rs 1.44 lakh crore worth of interest subsidy has been released on KCC loans, according to an official statement.
