Budget 2025: Kisan credit card limit raised to ₹5 lakh to boost farmer credit access

As Finance Minister Nirmala Sitharaman said, the Kisan Credit Card (KCC) interest subsidy program has been heightened, with the loan limit increased from ₹3 lakh to ₹5 lakh. This is announced during the presentation of the seventh successive Union Budget 2025.

The move is aimed at providing support to the 7.7 crore farmers, fishers, and dairy producers who are beneficiaries of this program.

What is a Kisan Credit Card?

The Kisan Credit Card-KCC- is a government scheme introduced in 1998 for smooth disbursement of loans to farmers. Available at around 4% interest, it is a short-term, reasonably-priced loan for the purposes of agriculture. This program allows farmers easy access to financing while attaining financial independence.

Key features of the Kisan Credit Card scheme

• Loan limits and terms: Under the new interest subsidy program, farmers can now borrow money of up to ₹5 lakh. An earlier scheme had specified a maximum term of 5 years with the ceiling amount being 3 lakh.
• Eligibility: The applicants have to be tenant farmers, owner-cultivators, sharecroppers, or members of joint liability or self-help organizations engaged in farming or other producer activities like fishing or animal husbandry.
• Collateral-free loan: Loans amounting to ₹2 lakh or less will in future not require collateral. The RBI has taken one of those steps in favor of making credit easy for farmers.

Enhanced support for urea production

The government has given importance to ensuring self-sufficiency in urea by revamping the Kisan Credit Card scheme itself. The setting up of a new urea plant in Namrup, Assam, and the revival of three shut-down urea plants in the eastern region are attempts on the part of the government in the direction of increasing the supply of urea. The factory will have an annual capacity of 12.7 lakh metric tonnes, thus increasing the production of urea in the country.

How the Kisan Credit Card works

The Kisan Credit Card works like a magnetic-stripe card with a Personal Identification Number (PIN) and an International Identification Number (ISO IIN). It can be used on any ATM or micro ATM of any bank. To make it more secure and user-friendly, depending on the bank, it may have biometric authentication through the Aadhaar platform.

Convenient transactions for farmers

Farmers can now directly sell their farm produce at mandis, procurement centres, and another place using this card as a means of payment to input traders, with the incentive that they'll be able to post sales proceeds in their accounts. This will facilitate the transactions of farmers better and make them more efficient in marketing.

In conclusion, farmers will have greater access to resources and inputs such as urea, because of the increase in the loan limit under the Kisan Credit Card scheme and the underlying efforts of the government. These steps reflect on the government's continuity, demonstrating a commitment to serve the farmers' interests and boost rural development.