What changed
RBI issued the Reserve Bank of India [Rural Co-operative Banks - Kisan Credit Card (KCC) Scheme] Directions, 2026, under Sections 21 and 35A of the Banking Regulation Act, 1949. These directions apply to loans sanctioned under the KCC Scheme from January 1, 2027, while existing loans continue under previous guidelines until maturity or renewal. The directions standardize crop seasons at 12 months for short-duration crops and 18 months for long-duration crops, and define marginal farmers as those with up to one hectare and small farmers as those with more than one hectare and up to two hectares.
What it means for you
Rural Co-operative Banks must align their KCC lending with the new composite facility framework, which bundles short-term credit for crops and allied activities into a single six-year tenure product. This simplifies procedures for farmers but requires banks to update their loan systems, documentation, and training to comply with the standardized crop season definitions and borrower classifications. Banks should prepare for the January 1, 2027 effective date by reviewing current KCC portfolios and transitioning new loans to the new framework.
What you must do
- Review and update KCC loan policies and systems to align with the six-year composite facility tenure and standardized crop seasons (12 months for short-duration, 18 months for long-duration crops).
- Train staff on the new definitions of marginal and small farmers and the expanded list of eligible allied activities, including animal husbandry, fisheries, and aquaculture.
- Ensure that all KCC loans sanctioned from January 1, 2027 comply with the new directions, while existing loans continue under previous guidelines until maturity or renewal.
- Update customer documentation and disclosure materials to reflect the simplified, composite nature of the KCC facility.
Who it affects
State Co-operative Banks (StCBs), Central Co-operative Banks (CCBs)
When do the new KCC Directions take effect?
The directions apply to loans sanctioned under the KCC Scheme from January 1, 2027. Loans sanctioned before that date continue under existing guidelines until maturity or next renewal.
What is the tenure of the composite KCC facility under the new directions?
The composite facility has a tenure of six years, covering short-term credit for crop cultivation, allied activities, post-harvest expenses, consumption, maintenance, insurance, marketing loans, and investment requirements.
How are crop seasons defined in the new directions?
Short-duration crops have a standardized crop season of 12 months, while long-duration crops have a standardized season of 18 months, from sowing to marketing.