Current · Source: Reserve Bank of India · RBI/2012-13/162 · issued 07 Aug 2012 · ~2 min read
Quick answerRBI has modified the KCC scheme: repayment period is now based on crop harvesting/marketing, not a fixed 12-month limit. Also, crop insurance is mandatory, and other insurance options require farmer consent at application stage.
The rule, in the simplest words
Banks can now set the repayment period for short-term KCC withdrawals based on the crop's harvesting and marketing period, not a fixed 12-month limit.
Crop insurance is now mandatory for all KCC accounts.
Farmers must give consent at the application stage for optional insurance covers like assets, PAIS, and health insurance.
How it plays out — a real example
An agri & priority-sector lending officer in Indore, Mr. Kumar, is working with a farmer, Mr. Singh, to set up a KCC account. Mr. Kumar explains to Mr. Singh that the repayment period will be based on the crop's harvesting and marketing period, and that crop insurance is mandatory. Mr. Singh agrees and gives his consent for the optional insurance covers. Mr. Kumar then helps Mr. Singh set up the account and explains the different delivery channels available for drawing the limit.
What changed
The repayment period for short-term KCC withdrawals is no longer fixed at 12 months; banks can now set it based on the crop's harvesting and marketing period. Additionally, crop insurance is now mandatory, and the requirement for farmer consent on optional insurance covers (assets, PAIS, health) has been explicitly stated at the application stage.
What it means for you
Banks gain flexibility to align KCC repayment schedules with actual crop cycles, reducing the risk of defaults due to mismatched timelines. The mandatory crop insurance requirement ensures better risk coverage for lenders, while the consent clause for optional insurance ensures farmer awareness.
What you must do
Update KCC loan processing systems to allow variable repayment periods based on crop harvesting and marketing timelines.
Ensure crop insurance is made mandatory for all KCC accounts and integrate premium payment processes.
Revise application forms to include explicit consent options for optional insurance covers (assets, PAIS, health).
Who it affects
All scheduled commercial banks (excluding RRBs) offering KCC loans, Farmers availing Kisan Credit Card facilities, Bank operations teams handling agricultural credit, Insurance companies providing crop and other insurance products
❓ Common questions
What is the key change in the repayment period for KCC?
Previously, each withdrawal had to be repaid within 12 months. Now, banks can set the repayment period based on the anticipated harvesting and marketing period for the specific crop.
Is crop insurance now mandatory under the revised KCC scheme?
Yes, crop insurance is mandatory. Other insurance covers like assets, PAIS, and health are optional, and farmer consent must be obtained at the application stage.
Do banks need to change their KCC application forms?
Yes, banks should update application forms to include a section for farmer consent on optional insurance covers, as per the modified instructions.
📜 Read the original circular — full text as issued by RBI
6.1. The short term component of the KCC limit is in the nature of revolving cash credit facility. There should be no restriction in number of debits and credits. However, each installment of the drawable limit drawn in a particular year will have to be repaid within 12 months. The drawing limit for the current season/year could be allowed to be drawn using any of the following delivery channels :
a. Operations through branch
b. Operations using Cheque facility
c. Withdrawal through ATM / Debit cards
d. Operations through Business Correspondents and ultra thin branches
e. Operation through PoS available in Sugar Mills/ Contract farming companies, etc., especially for tie-up advances
f. Operations through PoS available with input dealers
g. Mobile based transfer transactions at agricultural input dealers and mandies.
Note : (e), (f) & (g) to be introduced as early as possible so as to reduce transaction costs of both the bank as well as the farmer.
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2012-13/162 · issued 07 Aug 2012. The plain-English explanation above is BankPulse’s own independent summary.
Update KCC loan processing systems to allow variable repayment periods based on crop harvesting and marketing timelines.
Revise application forms to include explicit consent options for optional insurance covers (assets, PAIS, health).
📜 Compliance
Ensure crop insurance is made mandatory for all KCC accounts and integrate premium payment processes.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (All scheduled commercial banks (excluding RRBs) offering KCC loans, Farmers availing Kisan Credit Card facilities, Bank operations teams handling agricultural credit, Insurance companies providing crop and other insurance products), your first concrete step on “Revised Kisan Credit Card Scheme – Key Changes” is: “Update KCC loan processing systems to allow variable repayment periods based on crop harvesting and marketing timelines.” (RBI issued this 07 Aug 2012).
Action required: Update KCC loan processing systems to allow variable repayment periods based on crop harvesting and marketing timelines.
Action required: Ensure crop insurance is made mandatory for all KCC accounts and integrate premium payment processes.
Action required: Revise application forms to include explicit consent options for optional insurance covers (assets, PAIS, health).
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=7499&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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