When Will 5 Lakh KCC Loans Reach Farmers? Key Details on Budget Promise

In a major boost to India’s farming and allied sectors, the Union government is set to increase the short-term loan limit under the Kisan Credit Card (KCC) scheme to ₹5 lakh, up from the existing ₹3 lakh. The move is aimed at improving access to affordable credit for farmers, fishermen, and dairy operators across the country.

The enhancement was announced by Finance Minister Nirmala Sitharaman in the Union Budget 2025, presented on February 1 last year, as part of the government’s broader strategy to strengthen rural livelihoods and address rising input costs in agriculture.

Revised Limit Under Interest Subvention Scheme

The increased credit ceiling will be implemented under the Modified Interest Subvention Scheme (MISS) and is expected to come into effect from the next financial year. The revision is intended to ensure uninterrupted working capital for agricultural and allied activities.

Currently, KCC holders can avail loans of up to ₹3 lakh at a subsidised interest rate of 4 per cent, provided timely repayment is made. The base interest rate stands at 7 per cent, which is reduced through a 1.5 per cent government subvention and an additional 3 per cent incentive for prompt repayment.

Over 7.75 Crore Beneficiaries to Gain

The proposed increase is expected to benefit around 7.75 crore beneficiaries, as India presently has over 7.71 crore active KCC accounts. On average, approximately ₹1.6 lakh is disbursed per beneficiary, a figure likely to rise significantly following the revision.

Importantly, the KCC scheme continues to offer collateral-free credit, extending its coverage beyond traditional farmers to include fisheries, animal husbandry, and dairy sectors, making institutional credit more accessible to rural entrepreneurs.

Application Process and Eligibility

Eligible farmers can apply for a Kisan Credit Card by visiting their nearest bank branch or through online banking portals. Required documents include Aadhaar, land records, and identity proof. The application process typically takes 15 to 20 days for approval and disbursement.

Boost to Rural Economy

Experts believe the enhanced credit limit will help farmers better manage rising costs related to seeds, fertilizers, machinery, and labour. The move is also expected to encourage investment in modern agricultural practices and productivity-enhancing technologies, thereby strengthening rural economies.

The increase in the KCC loan limit underlines the government’s continued focus on financial inclusion and agricultural resilience, especially at a time when rural households face mounting economic pressures.