RBI Revises Kisan Credit Card Norms, Standardises Crop Season Definition

• The RBI has fixed crop seasons under the KCC scheme at 12 months for short-duration crops and 18 months for long-duration crops.

• Collateral-free loans up to ₹2 lakh per borrower remain unchanged, while tie-up loans against crops or stock may get collateral waiver up to ₹3 lakh.

• The revised directions are meant to simplify credit support for agriculture and allied activities under the KCC framework.

The Reserve Bank on Friday revised the Kisan Credit Card (KCC) Scheme, standardising the definition of crop seasons to ensure uniformity in sanctioning of loans and repayment schedules.

The Reserve Bank of India [Commercial Banks - Kisan Credit Card (KCC) Scheme] Directions, 2026, will be applicable from January next year.

RBI said the directions are being issued with a view to laying down the framework for adequate and timely credit support from the banking system under the KCC Scheme to meet the working capital and investment credit needs of borrowers engaged in agriculture and allied activities, through a composite facility that requires simple and standard procedures.

The definition of crop seasons has been modified to align with the Income Recognition and Asset Classification (IRAC) norms.

"For the purpose of the KCC Scheme, crop seasons shall be standardised at twelve months for short duration crops and eighteen months for long duration crops," the directions said.

'Crop season' means the period from the raising of crops to their harvesting and marketing.

In February, the central bank had issued draft directions on Revised Kisan Credit Card (KCC) Scheme for feedback from the public and stakeholders.

The RBI rejected suggestions to increase the collateral-free limit, noting that it was recently enhanced in December 2024 and that no further increase is envisaged at this stage.

On collateral security and margin, the RBI said banks should waive collateral security and margin requirements for agricultural loans, including those for allied activities, up to ₹2 lakh per borrower.

"However, voluntary pledge of gold and silver as collateral for agriculture loans up to the collateral-free limit will not be considered as a violation of the guidelines on collateral-free lending to the agriculture sector," it said.

Also, banks should decide the collateral security and margin requirements for loans above ₹2 lakh as per their credit policy and in adherence with RBI guidelines issued from time to time.

In case of KCC loans against the hypothecation of crops/stock and involving tie-up arrangements for recovery, banks may waive collateral security for loans up to ₹3 lakh, the latest norms said.

It also said banks should undertake review and renewal of the short-term limits for crop cultivation and allied activities as per their credit policy.