Recently it was proposed to banks by the finance ministry that the credit limit on collateral free credit under KCC should be increased in a bid to hike the agricultural credit.
The rate of interest as well as collateral needed and margin amount is decided by banks as per norms set by RBI. Rate of interest is subject to change from time to time depending upon the notification from the authorities.
Advantages of KCC to the farmer:
1.Availability of adequate as well as timely credit facility.
2.It offers farmers not only access to credit but also the discretion to decide upon the utilization of credit.
3.Since repayment is fixed on annual basis, therefore credit requirement of the farmer is taken care of for the entire year.
4.Opportunity to make unlimited withdrawals and repayments within the set credit limit.
5.Personal accident cover offered is an added advantage to farmers.
Pitfalls in the scheme:
1.Lack of awareness and education amongst farmers to understand the positive aspects of the scheme.
2.Adequate credit requirements of the farmers has been found not met as envisaged in the plan.
3.The documentation process for the scheme has been found to be a cause of concern for farmers sometimes.