To encourage more farmers to enrol themselves for Kisan Credit Cards (KCC), which help them to access crop loans at subsidised rates, the Modi government has decided to waive off processing fees on the Kisan Credit Card (KCC).

According to a report, along with the processing fees, the govt has also scrapped inspection and ledger folio charges for KCC. The report states that action will be taken against the banks if they are found collecting these charges from farmers. 

Know about Kisan Credit Card

The Kisan Credit Card (KCC) scheme was launched in 1998 with the aim of providing short-term formal credit to farmers.

 It aims at reducing farmers’ dependence on the informal banking sector for credit. Under the KCC scheme, the farmers can avail loan up to Rs 3 lakh. 

(1) Under the scheme, the farmers can take a farm loan without mortgaging their land. The earlier limit, in such cases, was Rs 1 lakh. But, now the RBI has raised the limit for collateral-free agriculture loans to Rs 1.6 lakh from Rs 1 lakh.

(2) Farmers involved in animal husbandry and fishery activities can also avail the benefits of the scheme. They can get loan at an interest rate of 4% up to a limit of Rs 2 lakh per farmer. 

(3) At present 7,02,93,075 farmers in the country have KCCs. 

To bring maximum number of farmers under KCC, the government has started a campaign for saturating farmers with KCCs with the help of banks. The government has also simplified the application process and because of the simplified documentation and screening process, the KCC offers quick and timely credit to farmers.

How to get agricultural loan at the rate of 4 per cent

Normally, farm loans attract an interest rate of 9%. But the government is providing 2% interest subsidy to ensure farmers get short-term farm loan of up to Rs 3 lakh at an effective rate of 7% per annum. An additional incentive of 3% is being given to farmers for prompt repayment of loans within due date, making the effective interest rate 4%.

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