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Is kisan credit card collateral free?

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kisan credit card

The Kisan credit card scheme was launched by the Reserve bank of India with the National Bank for  rural and agricultural development in 1988. The big landlords and moneylenders exploited the small  and marginal farmers with huge interest rates on loans. This often led the small farmers into debt  traps due to the absence of an alternative loan source to meet their agricultural needs. 

After the introduction of the KCC, farmers can reach out to the national banks and  cooperative banks to meet their loan requirements. The KCC scheme has short-term credit limits for  crops and term loans. It helps farmers with a loan at a low-interest rate. Banks also provide  insurance cover under personal accidental insurance up to Rs 50,000 for permanent disability and  death and Rs 25,000 for other risks. 

Security requirement in Kisan credit card: 

One of the significant advantages of the Kisan credit card is that RBI has waived off security  requirements up to a specific limit. As per the official Reserve bank of India website, farmers can avail  of collateral-free loans up to Rs 1 lakh. 

RBI security requirement details: 

  • Hypothecation of crops: For the KCC limit up to ₹ 1.00 lakh, banks are to waive  margin/security requirements. 
  • With tie-up for recovery: Banks may consider sanctioning loans on hypothecation of crops  up to card limit of ₹ 3.00 lakh without insisting on collateral security. 
  • Collateral security: Collateral security may be obtained at the discretion of the Bank for loan  limits above ₹ 1.00 lakh in case of non-tie-up and above ₹ 3.00 lakh in case of tie-up  advances. 
  • In states where banks have the facility of online creation of charge on the land records, the  same shall be ensured. 

Now let us discuss the security requirement as per some of the top banks on Kisan credit  cards: 

SBI Kisan credit card security requirement: 

  • Primary: Hypothecation of Crops grown / assets created out of Bank finance. 
  • Collateral: Equitable mortgage / registered mortgage of land / immovable property as applicable of  the value of 100 % loan. 

However, No collateral requirement up to a limit of Rs. 1.60 lakh and Rs.3.00 lakh in case of tie-up Bank of Baroda security requirement:

For Loans up to 1.60 Lakhs 

  • DP Note 
  • Hypothecation of crops is grown/assets created out of the Bank’s finance. 

For loans above 1.60 Lakh 

• DP Note 

• Hypothecation of crops is grown/assets created out of the Bank’s finance. • Equitable Mortgage / Registered Mortgage of land or Third-Party Guarantee 

Central Bank of India security requirement: 

  • Primary: hypothecation of crops, poultry birds, and dairy animals created out of Bank’s finance. 
  • Collateral: No collateral requirement up to a limit of Rs. 1.6Lakhs and up to Rs.3 lakhs in case of  tie-ups. Above the limit, collateral security is required. 

Union Bank of India security requirement: 

• Up to Rs.1.00 lac- Hypothecation of crops 

• Mortgage of land and/or third-party guarantee in addition to hypothecated crops/assets. 

• In states where banks have the facility of online creation of charge on the land records, the  same shall be ensured. 

Documents required to apply for a Kisan credit card: 

To sum up, Kisan credit card is a very attractive scheme by the Reserve bank of India. However,  farmers need to apply for the KCC with some mandatory documents to avail of this benefit. So, to  apply, you need to know the given documents to be eligible. 

• Identity proof such as your Adhar card or voter id card 

• Address proof such as your Adhar card, pan card, or driving license. 

• Duty filled in and signed in the application form. 

• Your land documents. 

• A passport size photograph 

Additionally, before applying to any bank for a Kisan credit card, you need to compare their benefits  and then apply for a Kisan credit card at the Bank that suits your requirement.

Summing up: 

After reading this blog, you know the security requirement asked in the case of the Kisan credit  card. You also got to know the mandatory document required to apply for a Kisan credit card.  However, if you are looking for an agriculture loan and are eligible to apply, you should check and  compare various banks to know the best credit cards in India that fits your requirement.

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