Empowering farmers with Digital KCC

Farmer standing in a rice field with a tablet.

Agriculture has always been an integral part of India. With more than 60 percent of rural Indian households depending on agriculture, it also provides employment to half of the country. As a country, we are greatly dependent on this sector to provide us with the means of sustenance.

Over the decade, many educated youth have come up with innovative ideas and startup models to bring technology and innovation for the growth in the agricultural sector.

The government on the other hand has also come up with schemes to provide financial assistance to farmers. One such scheme is the KCC(Kisan Credit Card), which allows farmers extended credit and safety from “Shylocks”. However, it is a 24-year-old scheme, which is ripe for a refresh with algorithms that dynamically help lending institutions become proactive in loan recovery and increasing revenue yields for farmers. 

It is a national prerogative with the NITI Aayog and the Prime Minister’s office setting the agenda for a digitised agri-economy. It begins with the refresh of the KCC and find out how givfin.com can change farming. 

Kisan Credit Card 

Realising the need of the hour, the KCC scheme was launched in 1998 and was prepared by NABARD. The scheme was launched for farmers to provide them with short term formal credit. With KCC, farmers are exempted from paying higher rates of interest of regular loans offered by banks. The interest rate here lies between 2 percent to 4 percent and the loans can be repaid depending on the harvesting period of their crops for which the loan has been taken. 

This card was introduced with the primary motive to ensure credit requirements for farmers in agriculture, fisheries and animal husbandry. KCC was launched to help them with short term loans and to provide them credit to purchase equipment as well as bear other expenses.

Farmers can now avail loans for different agricultural purchases like seeds, fertilizers, pesticides, and can even draw money for immediate production needs. 

The scheme had been adopted by several regional and co-operative banks. This scheme was further revised in 2012, to simplify the process and facilitate the distribution of Electronic Kisan Credit Cards.

Why was KCC needed?

KCC is said to rescue farmers who face credit crunch during pre-harvest and post harvest. 

Timely sanction of credit enables them to start the process of farming in a crop season. Most crops go bad because of non availability of credit on time, pausing this cycle and hence making them prone to damage.

Farmers have been dependent on non institutional money lenders for loans, who initially lure them to lend money but later charge a high rate of interest. This leads them into debts and later leads them into selling their assets (farming and non-farming), which gets them into personal trouble. 

With KCC, farmers now have access to a formal source of credit. The scheme has brought awareness about the lending malpractices being followed by ages.  A farmer can now take loans for any kind of farming needs. The scheme also provides insurance to farmers in cases of illness or death.

Why givfin matters?

The covid pandemic made us realise how technology must have played a huge role in distributing credit to farmers. It was during these times that farmers suffered the most due to non-availability of credit. 

Research shows that only 20 percent of farmers under PM Kisan have had access to formal credit. KCC had been issued to only 2.18 crore families out of 10.5 families covered under the scheme. This tells us that small, marginal and landless farmers continued to struggle throughout the pandemic. This forced them to borrow money from informal sources at a higher interest burden.

Today, the reach of technology is growing rapidly. Nearly 90 percent of rural India has access to the internet with over 68 percent using a smartphone. But when everything around a person was going through the process of digitisation the farming sector, and its lending institutions, lagged behind. Therefore farmers continued to borrow from “Shylocks” or unscrupulous money-lenders. 

Now, this is where givfin.com provides lending institutions the means to help farmers. With the givfin platform banks can reach the remotest of villages without any technical hurdles. Its technology is available at the gram panchayat level, which allows farmers to access loans through self-help groups and joint liability groups. With its powerful algorithms sitting in a kiosk at the Gram Panchayat office, givfin aims at providing digital solutions to rural banking problems. The solutions here are tailor made for rural India and are developed with leading Indian banks. Thus, reaching rural India with ease and leading to no paperwork. 

The technology enables banks to look into the credit history of the farming community and thereby ensuring the efficiency of the loan. The algorithms here help lenders verify and evaluate their credibility before sanctioning the amount. It also allows lending institutions to track and trace the loan. 

They can recover, in many cases, almost fifty percent of the loan amount instead of writing it off. With data lending institutions can work with the farmer to provide him succor even in case of default. Perhaps, giving the farmer additional time to repay the loan because they have data of the cropping pattern and the revenue cycle of the farmer. In short this is an additional enhancement to the KCC, which provides extension regardless of what data says. 
India is on the path towards complete digitisation. It is the future and it’s not far away with givfin.com.