RBI Issues KCC Directions for Regional Rural Banks

The Reserve Bank of India (RBI) has issued the RBI (Regional Rural Banks – Kisan Credit Card Scheme) Directions, 2026, to provide a revised framework for loans sanctioned under the Kisan Credit Card (KCC) Scheme by Regional Rural Banks (RRBs).

The Directions will apply to loans sanctioned under the KCC Scheme with effect from 01 January 2027.

1. Applicability of the Directions

The Directions are applicable to:

• Regional Rural Banks (RRBs); and
• Loans sanctioned under the Kisan Credit Card Scheme on or after 01-01-2027.

The framework aims to improve farmers’ access to institutional credit while ensuring greater flexibility in credit assessment.

2. Flexible Credit Limits for Marginal Farmers

A key feature of the Directions is the introduction of flexible credit limits for marginal farmers.

Under the revised framework, banks may sanction credit limits ranging from:

₹10,000 to ₹50,000

based on their assessment of the borrower’s requirements.

3. Credit Limits No Longer Linked to Land Value

The Directions provide that the credit limit for marginal farmers shall be determined without linking it to the value of land holdings.

This marks a significant shift from traditional collateral or land-value-based assessment methods and is intended to improve credit accessibility for small and marginal farmers.

4. Credit Assessment Based on Farming Requirements

The credit limit under the KCC Scheme is required to be determined based on factors such as:

4.1.  Crop Cultivation Requirements

• Nature of crops grown;
• Cropping pattern; and
• Working capital needs for cultivation.

4.2.  Post-Harvest Credit Needs

• Warehouse storage-related credit requirements; and
• Other post-harvest financing needs.

4.3. Farm-Related Expenses

• Agricultural input costs;
• Farm maintenance expenses; and
• Other eligible farming-related expenditures.

5. Objective of the Directions

The revised Directions seek to:

• Enhance access to institutional credit for farmers;
• Provide greater flexibility in credit assessment;
• Reduce dependence on land-value-based lending;
• Address crop-specific and post-harvest financing needs; and
• Strengthen the effectiveness of the Kisan Credit Card Scheme.

6. Expected Impact

The introduction of flexible credit limits and the removal of land-value linkage are expected to improve credit inclusion for marginal farmers, particularly those with limited landholdings. The framework is also likely to facilitate timely access to credit for cultivation, storage and other agricultural requirements.

7. Key Takeaway

RBI has issued the Regional Rural Banks – Kisan Credit Card Scheme Directions, 2026, effective for loans sanctioned on or after 01 January 2027. The Directions introduce flexible credit limits of ₹10,000 to ₹50,000 for marginal farmers, with limits to be determined based on crop cultivation, post-harvest storage requirements, and other farm-related expenses, rather than the value of landholdings.

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