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March 2017
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BRAND: Indian Kisan Credit Card Scheme: An Analytical Study

In the latest volume of the BRAND, Dharmendra Mehta, Hitendra Trivedi, and Naveen K Mehta will not only explain the key features and assess the role and contribution of Kisan credit card scheme but also they will show us how to effectively implement this scheme.

Kisan Credit Card
Kisan Credit Card

Most of Indians are living in rural environments, and their survival is conditioned by climatic factors which influence the agriculture. The Indian economy is massively affected by the outcome of agricultural actions. Hence, the economic stability of India is determined by two elements: the Mansoon and the credit. As the Mansoon cannot be controlled by human forces, credit allowance for agricultural purposes was first highly disregarded by the banks. Although, bills such as food security suggest that agriculture will remain the main strategy for the progress of India on the economic and sociologic level.

According to Werner (2000) another problem generated by the liberalisation processes showed up: banks were expected to register the investments to market, causing banks to become more reluctant to take risks. In 2009 Jamunarani has recorded that more than 14 million Kisan Credit Cards were emitted within the Indian borders.  This scheme was put into action in all the states and union territories by 27 public sector banks (PSBs), 373 district central co-operative banks (DCCBs) and 196 Regional Rural Banks (RRBs). Amir Samantara, Barik (2010), Uppal and Juneja (2012), Rajamohan and Subha (2014) confirm the beneficial outcomes of the implementation of the new strategy.

The Kisan Credit Card Scheme appeared in 1998-99 and it was intended for farmers, enabling them to buy necessary agricultural assets to plant, fertilise and plough their plots. This scheme was not only implemented by Commercial Banks but also by Coop. Banks and RRBs.

Even though the positive aspects seem to outshine the drawbacks, due to the numerous credit allowances, the KCC was given to the farmers only once. This was caused by the high stamp duty, the crop insurance scheme.

The Kisan Credit Card represents a steady help for Indian agriculture. 4.05 lakh cards were issued by the RRBs reached 81.2 % of the annual target. At the same time, cooperatives and commercial banks reached 46.1 %, respectively 56.0% of the annual target. Even so, the banks are working to discover the new and more efficient way to grant the KCC.

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Andreea Toma