International Journal in Management & Social Science

India is basically an agrarian economy. According to 2011 census, around 53% of working population are engaged in agriculture. Hence agriculture is regarded as the ‘back bone of Indian Economy'. Agriculture not only provides a source of sustenance, but it is way of life, a tradition and will continue to be a prime factor that drives socio-economic development of the country. Growth of agriculture is necessary to ensure food security, which is the need of the hour. Apart from ensuring food availability and affordability, it also supports the industrial and service sectors too. Hence concentrating on Agriculture ensures all round development of the economy.

In order to sustain the growth in agriculture, credit plays a crucial role. Though, agricultural credit is treated as priority sector by banks and financial institutions, availability and flow of bank credit to agricultural sector is not problem free. There are difficulties in identifying, accessing and dispensing of credit by the banks. In order to address the problems in purveying credit for agriculture, RBI had set up a one man high level committee headed by sri. R V Gupta in 1997 to suggest measures for improving the delivery systems as well as simplification of procedures for agricultural credit. The committee had submitted its report in April 1998. As suggested by the committee, Kisan Credit Card scheme was announced in budget speech of then the Finance Minister Mr. Yashwant Sinha of NDA Government, in 1998–99. He further stated that NABARD will prepare a detailed guidelines for the issue of Kisan Credit Card to farmers on the basis of their land holdings. Accordingly NABARD prepared a model scheme for the issue of Kisan Credit Card and submitted to Government of India. After much discussion, the guidelines were finalized and finally communicated to commercial banks, Regional Rural Banks and cooperative banks. The Kisan Credit Card allows farmers to have cash credit facilities without going through time-consuming bank credit screening processes repeatedly. It is one of the most innovative, widely accepted, highly appreciated banking product. It is beneficial to farmers as it offers hassle free, adequate and timely credit to the farmers for their short-term credit needs during their cultivation for purchase of agricultural inputs such as seeds, fertilizers, pesticides, etc. and also draw cash for their production needs during the cropping season. Repayment can be rescheduled if there is a bad crop season and extensions are offered for up to four years.

This paper attempts to highlight the functioning of Kisan Credit Card, its features, latest developments like Rupay Kisan Credit Card, the growth of it, problems associated with it and possible solutions to over them.