42 percent increase in bad loans under Kisan Credit Card
11-Mar-2025 08:42 PM
42 percent increase in bad loans under Kisan Credit Card
The Kisan Credit Card (KCC) scheme, introduced in 1998, aims to provide farmers with timely credit for agricultural needs. However, recent data indicates a significant increase in non-performing assets (NPAs) within KCC accounts. As of December 2024, bad loans under the KCC scheme reached ₹97,543 crore, up from ₹68,547 crore in March 2021, marking a 42% increase over nearly four years.
Several factors contribute to this rise in NPAs:
Agricultural Challenges: Farmers often face unpredictable challenges such as natural calamities, pest infestations, and diseases, leading to crop failures and reduced income, hindering their ability to repay loans.
Market Volatility: Fluctuations in market prices can result in lower-than-expected returns for farmers, affecting their repayment capacity.
Rising Input Costs: Increasing expenses for seeds, fertilizers, and equipment strain farmers' finances, making timely loan repayment challenging.
Financial Literacy: Limited awareness about effective financial management and loan utilization can lead to suboptimal use of credit, increasing default risks.
Insurance Delays: Delays in insurance claim settlements after crop losses can leave farmers without the necessary funds to meet their loan obligations.
To address these issues, the government has taken steps such as increasing the loan limit under the KCC scheme from ₹3 lakh to ₹5 lakh, as announced in the Union Budget 2025-26. This enhancement aims to better meet the expanding financial needs of farmers.
Despite these challenges, the KCC scheme continues to support a vast number of farmers. As of February 2025, the operative KCC amount crossed ₹10 lakh crore, benefiting approximately 7.72 crore farmers across the country.