What changed
Previously, working capital and term loans for financing production and investment requirements for agriculture and allied activities were treated as direct finance. This circular explicitly confirms that credit under the Kisan Credit Card, being primarily for agricultural purposes, also qualifies as direct finance for agriculture under priority sector lending.
What it means for you
Banks can now classify all KCC loans as direct agricultural advances, which helps them meet priority sector lending targets for agriculture. This simplifies reporting and encourages more KCC issuance, as it directly supports priority sector compliance.
What you must do
- Reclassify existing KCC loans as direct finance to agriculture in priority sector reporting.
- Ensure new KCC disbursements are tagged correctly under direct agricultural advances.
- Update internal systems and reporting templates to reflect this classification change.
- Train branch staff on the revised classification to avoid misreporting.
Who it affects
All scheduled commercial banks (excluding RRBs), Priority sector lending teams, Agricultural credit departments
Does this circular apply to Regional Rural Banks?
No, the circular explicitly excludes Regional Rural Banks from its scope.
What types of KCC loans are covered?
All credit under the Kisan Credit Card scheme, as it is primarily for agricultural purposes, is treated as direct finance to agriculture.