RBI Issues Kisan Credit Card Directions for Rural Cooperative Banks

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

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:

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

The framework seeks to enhance access to agricultural credit while strengthening monitoring and oversight of credit utilisation.

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, Rural Cooperative Banks may sanction credit limits ranging from:

₹10,000 to ₹50,000

based on the assessment of the borrower’s credit requirements.

The objective is to ensure that credit limits align with farmers’ actual needs rather than being based on rigid parameters.

3. Credit Assessment Based on Agricultural Requirements

The credit limit is required to be determined with reference to:

3.1. Crop Cultivation Needs

• Type of crops cultivated;
• Cropping pattern; and
• Working capital requirements for agricultural operations.

3.2. Post-Harvest Requirements

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

3.3. Farm-Related Expenses

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

4. Ongoing Monitoring of End Use of Credit

The Directions place specific responsibility on Rural Cooperative Banks to ensure continuous monitoring of the utilisation of credit facilities.

Banks are required to:

• Monitor the end use of credit extended under the KCC Scheme; and
• Ensure that the funds are utilised for the intended agricultural purposes.

This requirement is intended to promote responsible credit use and strengthen credit discipline.

5. Objective of the Directions

The Directions seek to:

• Improve access to institutional credit for farmers;
• Introduce flexibility in determining credit limits;
• Support cultivation and post-harvest financing needs;
• Strengthen monitoring of agricultural credit utilisation; and
• Enhance the effectiveness of the Kisan Credit Card Scheme.

6. Expected Impact

The revised framework is expected to facilitate easier access to agricultural credit for marginal farmers while ensuring that loans are utilised for genuine farming requirements. The enhanced monitoring mechanism is also likely to improve credit quality and support the effective implementation of the KCC Scheme.

7. Key Takeaway

RBI has issued the Rural Cooperative Banks – Kisan Credit Card Scheme Directions, 2026, applicable to loans sanctioned from 01 January 2027. The Directions introduce flexible credit limits of ₹10,000 to ₹50,000 for marginal farmers and require Rural Cooperative Banks to undertake ongoing monitoring of the end use of credit facilities to ensure proper utilisation of funds.

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