According to a recent press release, the Reserve Bank of India has confirmed that the credit offered to farmers through the Kisan credit card would be treated as direct finance for agriculture under priority sector lending. Reserve Bank of India has announced that lending money through Kisan Credit card is only allowed for agriculture purposes.
Reports said that the scheme is likely to pave way for achieving their target for direct lending to agriculture. According to this scheme, the banks have to provide 14.5 per cent through direct lending of their total advances, but the fixed target is to achieve the lending of 18 per cent of their total advances.
According to RBI regulations, working capital and term loans for financing production and investment requirements for agriculture and allied activities are considered as direct finance to agriculture under priority sector.
Kisan Credit Cards were started by the Government of India, RBI, and NABARD in the year 1998-99 to help farmers’ access timely and adequate credit. The Kisan Credit Care helps farmers get loan without going through the credit screening processes repeatedly.