BUDGET
Govt to up Kisan Credit Card limit to INR 500,000 from INR 300,000
This story was originally published at 14:36 IST on 1 February 2025
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--BUDGET: To up Kisan credit card loan limit to INR 500,000 from INR 300,000
NEW DELHI – The Budget for 2025-26 (Apr-Mar) proposed to increase the credit limit for Kisan Credit Card to INR 500,000 from the existing INR 300,000. Kisan Credit Cards facilitate short-term loans for 77 million farmers, fishermen, and dairy farmers, Finance Minister Nirmala Sitharaman said in her Budget speech on Saturday.
A proposal in this regard was first sent to the finance ministry for approval last year, Informist had reported. The rationale, as explained by an official from the agriculture ministry after the proposal was sent, was to increase the availability of credit to farmers to help them with financing at a time when input costs had steadily risen.
According to the scheme, farmers can only get additional credit after they pay back the loan taken. The higher limit will reduce their dependence on informal credit lenders.
The Kisan credit card scheme was introduced in 1998 to provide farmers with formal, timely, and short-term loans for agricultural inputs. Under this, a farmer can currently avail of a loan of up to 100,000 rupees against a landholding of 1 acre, with an upper limit of 300,000 rupees. The interest on loans up to 300,000 rupees is 7%, and subsidies are provided on interest rates for those who return the principal amount within a year.
State Bank of India, the country's largest lender, had an agricultural loan portfolio of INR 3.02 trillion in FY24, up almost 18% from INR 2.56 trillion in the previous fiscal year. The total outstanding amount under the Kisan Credit Card scheme saw a 10.9% rise at INR 5.74 trillion in FY24, up from 5.18 trln rupees in 2022-23, according to data from the Reserve Bank of India's 2023-24 annual report.
The government has allocated INR 226 bln in the FY26 Budget for the scheme. The amount allocated is the same as that of last year. End
Reported by Pallavi Singhal
Edited by Akul Nishant Akhoury
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