Social Reserch Foundation

P: ISSN No. 2394-0344	RNI No. UPBIL/2016/67980	VOL.- IX , ISSUE- V August - 2024
E: ISSN No. 2455-0817	Remarking An Analisation

The Kisan Credit Card Scheme In India: A Progress Review

Paper Id : 19171 Submission Date : 2024-08-07 Acceptance Date : 2024-08-19 Publication Date : 2024-08-21
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DOI:10.5281/zenodo.13358229

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Mohd Hamid
Research Scholar
Department Of Commerce
M.M.H. College
Ghaziabad,Uttar Pradesh, India,

Abhishek Kumar Singh
Assistant Professor
Department Of Commerce
M.M.H. College
Ghaziabad, Uttar Pradesh, India

Inamur Rahaman
Assistant Professor
Department Of Commerce
M.M.H. College
Ghaziabad, Uttar Pradesh, India

Abstract

Modern technology and other input are needed for the development and growth of the agricultural sector, and capital is required for the adoption of modern technology and other input, but since farmers cannot fulfill their own financial need, so credit is greatly needed in the agriculture sector. After realizing the need for credit, the government of India launched the Kisan Credit Card scheme in 1998 on the recommendation of the R.V. Gupta Committee. The present study’s objective was to compute the growth and performance of the KCC scheme in India since its inception. The research assesses the period –wise and institution-wise progress of KCCs. The study’s covered the period from 1998-1999 to 2022-2023. The scheme’s progress was examined using statistical approaches such as Mean, coefficient of variation and Cumulative Growth Rates. During the study, a tendency for variation was discovered in beneficiaries and credit sanctioned under the KCC system. The CGR for beneficiary and credit approved were 20.83% and 28.13%, respectively. The credit sanctioned by Cooperative Banks and RRBs has grown at rates of 25.42% and 49.75%, respectively, while the beneficiary of RRBs has expended at fastest rate, viz., 38.09%, but Commercial Banks were ahead of Cooperative Banks and RRBs in the KCCs issued and credit sanctioned under the scheme.

Keywords

Agriculture credit, Kisan Credit Card, Growth and Performance, KCCs.

Introduction

India’s economy in its developing stages and predominantly based on rural economy. Agriculture is the backbone of rural area and primary source of income for more than 60% people of India. The growth of agriculture has a significant effect on the development of rural area and for the agricultural growth modern technology is required but it’s expensive and unfortunately, neither the farming sector nor the individual farmers are able to cover the costs of these necessities on their own. Credit is therefore necessary for the agricultural, it relies heavily on access to timely and adequate credit. Farmers can originate credit from both institutional and non-institutional sources. Farmer was highly dependent on non-institutional source for credit due to the scarcity of institutional credit, unjustifiable delays, inconvenient procedures and inappropriate lending agency practices but informal sources provide significant hurdles to farmers because it was expensive and do not supply enough credit. After recognizing this need, The Central Government of India, Launched the Kisan Credit Card in 1998 budget statement (Naveen et al., 2020). In order to give farmers access to timely and sufficient credit support from the formal Banking system in a flexible, hassle-free and economical manner, the NABARD designed a model scheme in collaboration of the Reserve Bank of India (RBI) that was circulated to commercial banks, cooperative banks and RRBs in August1998. KCC has streamlined the procedure for taking a bank loan (Nahatkar et al., 2002). Farmers can meet their credit needs for crop cultivation and other as short-term loans for crop marketing and cultivation, post-harvest costs, household expenses for farmers, working capital for maintenance of farm equipment and investment credit for farming and related activity.

Objective of study

The study’s primary objectives were to: (i) review the period wise progress in credit amount sanctioned and number of beneficiaries, (ii) evaluate the KCCs progress at the financial institution level, and (iii) comprehend the trends of the KCC scheme in India.

Review of Literature

Gopal and Mazhar (2023) conducted a research on the impact of the KCC scheme on the farm economy. Kannauj District of Uttar Pradesh was the area for study. The objective of the study was to demonstrate how KCC affects beneficiaries and non-beneficiaries in terms of knowledge, attitude, annual income and productivity. Data for the study was collected through structured questionnaires from 158 beneficiaries and 158 non-beneficiaries of KCC. The researcher used stratified random sampling techniques for data collection. Statistical tools such as mean, standard deviation, Z-test and T-test were utilized for hypothesis testing and analyzing knowledge, adoption level, annual income and agricultural production. The study revealed that there was a significant difference in knowledge levels about the KCC scheme among beneficiaries and non-beneficiaries. Researchers describe that beneficiaries of KCC have higher annual income and productivity compared to non-beneficiaries. The results show the positive impact of the scheme on farmer’s outcomes. The study mentioned the KCC as an important tool for rural and agricultural development.

Singh and Devi (2023) conducted a study on the performance of Kisan credit cards in India. The study examined the KCC Scheme's performance in India from 2010–11 to 2020–21.The researcher used various reports that were published by NABARD and RBI as data sources. The study was divided into two sections: the first section dealt with period-wise progress, and the second section dealt with agency-wise progress in terms of the number of KCCs issued and credit approved. The mean and CAGR were employed by the researcher to measure the study's outcomes. The study conclude that both period-wise performance and agency-wise performance were showing a positive growth. Study revealed that majority of the loan amount was provided by commercial banks.

Mishra and Chaudhary (2022) carried out a study on the impact of the Kisan credit card on financial inclusion in India. The study’s primary objective was to review KCC implementation progress by different financial bodies in various Indian states in terms of the number of cards issued and credit amounts sanctioned. Another aim was to analyze the effect of KCC on farmers' income, agricultural production and financial inclusion. The RBI report, the NABARD report, and previous studies were used as the research's sources of data. Researchers discovered during the study that KCC promotes the financial inclusion of farmers by giving them access to timely and sufficient loans with flexible withdrawal and repayment. Cooperative banks, RRBs, and commercial banks all play an active role in providing KCCs to farmers. Researcher discovered a positive growth trend in various states. The researcher proposes some recommendations for enhancing KCC's performance, including educating farmers about the program's advantages, reducing paperwork and interest rates, lowering political interference in cooperative banks and launching more village-level campaigns to increase farmers participation.

Periyasamy and Selvakumar (2019) examined the performance of KCCs in Tamil Nadu. The study’s objective was to evaluate constraints faced by farmers, impact of the KCC scheme on agriculture and performance of used resource. In Tamil Nadu district of Nagapattinam, the researcher conducted personal interviews with 120 farmers to obtain primary data. The researcher employed the Cobb-Douglas production function, the legit function, and Garrett’s ranking technique to evaluate the study’s findings. According to the study's findings, beneficiaries had more net revenue per hectare and cultivation costs than non-beneficiaries. Three main crops are covered by the study: groundnuts, sugarcane, and paddy. The researcher propose several suggestion for enhancing KCC performance, including reduce paperwork, ensuring no delay in payment of loans and ensuring the availability of loans on time with reduced transaction costs.

Prakash and Kumar (2016) conducted a study to analyze the performance of the Kisan credit card scheme with the objective of analyzing the impact of the Kisan Credit Card on crop productivity, income and employment with the intention to identify the determinants and constraints in the adoption of the Kisan Credit Card scheme in Krishnagiri district of Tamil Nadu and to suggest suitable measures for enhancing its performance. The primary data was collected from 60 KCC holder and 60 non-KCC holder. Farm business analysis, the Cobb-Douglas production function, the Logit function and Garrett’s ranking technique were used to assess the impact of the KCC scheme on the farm economy. They found that the timely availability of crop loans has a positive impact on cropping patterns, inputs used, productivity and returns. Education has a positive impact on the adoption of KCC. The researcher found some constraints faced by farmers during the study: untimely payment of loans, insufficient credit limits, distance from the bank and distance from the market. They suggest that constraints should be addressed through a reduction in paper work, an increase in the credit limit of crop loans, the provision of ATM flexibility in the use of bank branches and a reduction in the number of withdrawals and repayments. Some other reasons also obstruct the farmers from adopting the KCC, like face difficulty in opening bank accounts, the easy availability of loans from non-institutional sources and the availability of gold loans. The hinder can be mitigated through intensive campaigns for the issue of KCC and appraising the benefits of KCC. This will help to encourage the farmer to adopt KCC and reduce the fear of the farmer becoming a defaulter. Once the farmers acquire the desired skill set, they could be brought under the fold of KCC. NABARD should develop some steps to involve others viz. NGOs to help in the opening of KCC accounts by farmers and connected them to banks.

Bista, et al., (2012) evaluated the progress of the Kisan Credit Card in Bihar. The objective of the study was to assess the KCC scheme’s impact on the farm economy, analyze constraints faced by KCC beneficiaries and non-beneficiaries, and identify factors influencing adoption of the KCC scheme through the investigation of financial institution wise viz., commercial banks, RRBs, and cooperative banks, in terms of the parameters of total loan amount, number of KCC holders, and amount per card. Data was gathered from secondary as well as primary sources. Secondary sources were NABARD, RBI, GOB, GOI, etc. The primary data was collected from 120 participants in the Samastipur district of Bihar. The variables used for the study were land size, education, farming experience, age, cooperative society membership, etc. During the study, Garrett’s ranking technique was used to rank constraints faced by farmers, the Cobb Douglas production function was used to assess resource use efficiency, and factors affecting KCC adoption were identified using the Logit model. Researchers found that KCC has a significant impact on agriculture operations and the income of farmers, leading to higher gross income for beneficiaries across various crops. Simplifying the process of opening bank accounts and increasing awareness about the scheme's benefits are crucial for expanding its reach. The performance of the KCC scheme varies across regions and financial institutions, with the Eastern and North-Eastern regions lagging behind. Issues such as low credit amounts per account in Bihar may deter farmers from adopting the scheme. The KCC scheme has generated increased demand for inputs, impacting human labour utilization and creating job opportunities in rural areas. However, farmers face challenges such as lengthy paperwork, insufficient credit limits, and high interest rates, hindering the scheme's effectiveness. Factors like land size, educational level, and farming experience positively influence farmers' decisions to adopt the KCC scheme. Strengthening cooperative institutions and reducing transaction costs for formal finance sources are essential for enhancing the scheme's impact on the farm economy in Bihar.

Methodology

The present study was based on secondary data that has been published in various reports issued by the RBI and NABARD and gathered from previous research. A study was carried out to analyse the scheme in terms of credit amount sanctioned and number of cards issued. The study was conducted from 1998-99 to 2022-23. The progress of scheme was evaluated as both periodically and institutionally. The performance of banking institutions was evaluated as Commercial Banks. Cooperative Banks and RRBs. To evaluate the KCC scheme’s performance, the Mean, Coefficient of Variation and CGR were employed.

Analysis

The present study examined the progress of KCC scheme in India over a 25-year period, from 1998-1999 to 2022-2023, in the terms of the number of cards issued and credit amount sanctioned under the Scheme. Subsequently, two distinct section of the study have been created. The first section of the study addressed period wise performance, while the second section addressed agency –wise performance under the scheme.

Frist section: period-wise Progress of Kisan Credit Card Scheme

The Indian government introduced the KCC scheme in 1998-1999 and it was implemented in the same year. Since then, the scheme has grown rapidly and as of March 2023, 73547 thousand credit cards have been issued nationwide by different banking institutions. The period-wise progress has been analysed based on the number of cards issued and credit amount sanctioned under the scheme.

The KCC scheme’s development over a 25 year period has shown in the table. With the exception of a few years, the figures throughout the period demonstrate a growing pattern in the terms of the number of cards issued and the amount of credit sanctioned. Between 1998-1999 and 2004-2005, there was a growth in the number of cards issued, from 784 thousand to 9680 thousand. The number of KCCs issued declined somewhat in 2005-06, reaching 8012 thousand, after that, a normal growth trends was observed, but the KCCs in the Table witnessed a sharp upliftment in 2016-17 (71474 thousand), which decreased again to 65279 thousand in 2019-20 but again rise to 73547 thousand in 2022-23.

Similarly, the approved credit amount under the scheme exhibited an increasing trends, rising from 2310 crore to 88264 crore in 1998-99 to 2007-08. The credit amount fell to 53085 crore in 2008-09. Following that, the amount approved under the program showed a growing trend through 2015-16, but in 2016-17, credit approved witnessed a sharp upliftment 372740 crore and it continued to rise annually and reached 885921 crore in to 2022-23.

Figure 1: Performance of number of KCCs issued in India.

Figure 2: Performance of credit amount sanctioned under KCCs in India.

According to the study, the average number of KCCs issued was 26342 thousand and the average Loan amount approved was to 245973 crore. C.V. was 106.45 % for the total number of cards issued and 128.64% for the Loan amount approved under the KCC scheme. The CAGR of the number of cards issued was 20.83%, while the CAGR of the credit amount sanctioned was 28.13%.

Second Section: Agency-wise Progress of KCC Scheme in India

The Kisan Credit Card scheme has carried out by Commercial Banks, Cooperative Banks and Regional Rural Banks throughout the nation (Kaur & Dhaliwal, 2018). The progress made by these organizations in terms of the number of cards issued under the KCC scheme from 1998-99 to 2022-23 shown below.

Table 2: Agency-wise Progress of Kisan Credit Card Scheme in India

Year	No. of Kisan credit card Issued (In '000)
Year	Cooperative Banks	Proportion in total (%)	RRBs	Proportion in total (%)	Commercial Banks	Proportion in total (%)	Total
1998-99	155	19.77	6	0.77	622	79.34	784
1999-00	3595	70.02	173	3.37	1366	26.61	5134
2000-01	5614	64.89	648	7.49	2390	27.62	8652
2001-02	5436	58.20	834	8.93	3071	32.88	9341
2002-03	4579	55.55	964	11.69	2700	32.76	8243
2003-04	4878	52.75	1274	13.78	3094	33.46	9247
2004-05	3556	36.74	1729	17.86	4396	45.41	9680
2005-06	2598	32.43	1249	15.59	4165	51.98	8012
2006-07	2298	27.00	1406	16.52	4808	56.49	8511
2007-08	2091	24.69	1772	20.92	4606	54.38	8470
2008-09	1344	15.64	1415	16.47	5834	67.90	8592
2009-10	1743	19.35	1950	21.65	5313	58.99	9006
2010-11	2812	27.65	1774	17.45	5582	54.89	10169
2011-12	2961	25.18	1995	16.96	6804	57.86	11760
2012-13	2691	20.73	2048	15.78	8243	63.50	12982
2013-14	3176	22.84	2179	15.67	8549	61.49	13904
2014-15	3061	23.67	1549	11.98	8324	64.36	12934
2015-16	1519	12.47	2237	18.36	8429	69.18	12185
2016-17	35883	50.20	12271	17.17	23320	32.63	71474
2017-18	33495	48.39	12193	17.62	23528	33.99	69216
2018-19	30414	45.87	12253	18.48	23633	35.65	66300
2019-20	28938	44.33	12197	18.68	24145	36.99	65280
2020-21	30183	40.92	12891	17.47	30696	41.61	73770
2021-22	31131	43.63	13348	18.71	26870	37.66	71349
2022-23	31389	42.68	13868	18.86	28290	38.47	73547
Mean	11021.6		4568.92		10751.12		26341.68
C.V.	120.01		114.39		92.04		106.45
CAGR(%)	24.77		38.09		17.24		20.83

Source: RBI and NABARD.

As previously mentioned, the table 2, indicated that KCCs issued by Commercial Banks, RRBs and Cooperative Banks exhibited growth tendencies with yearly fluctuations. The number of cards issued by Cooperative banks grown from 155 thousand in 1998-99 to 31389 in 2022-23. From 1998-99 to 2022-23, the number of KCC cards issued by RRBs went from 06 thousand to 13868 thousand, whereas the number of KCC cards issued by Commercial Banks increased from 622 thousand to 28290 thousand.

In India, the Cooperative Banks had the largest Mean number of cards issued under the KCC scheme (11021.6), followed by the Commercial Banks (10751.12) and RRBs (4568.92). The average value of all cards issued was 26341.68 thousand. The data also revealed a CAGR of 24.77% for KCC cards granted by Cooperative Banks. The Commercial Banks granted 17.24% of KCCs, compared to the RRBs’ 38.09% CAGR. The proportion in total KCC cards issued by Commercial Banks, RRBs and Cooperative Banks is also shown in the Table 2. However, throughout the scheme from 1998-99 to 2022-23, the C.V. for KCCs issued in Cooperative Banks was 120.01%, the highest followed by RRBs with a variance of 114.39% and Commercial Banks with a variation of 92.04%.

The Credit amount approved under the KCC scheme has shown in the Table 3.

Table 3: Agency-wise Progress of Kisan Credit Card Scheme in India

Year	Amount Sanctioned (Rs. in crore)
Year	Cooperative Banks	Proportion in total (%)	RRBs	Proportion in total (%)	Commercial Banks	Proportion in total (%)	Total
1998-99	826	35.76	11	0.48	1473	63.77	2310
1999-00	3606	47.77	405	5.37	3537	46.86	7548
2000-01	9412	57.30	1400	8.52	5615	34.18	16427
2001-02	15952	61.69	2382	9.21	7524	29.10	25858
2002-03	15841	60.28	2955	11.25	7481	28.47	26277
2003-04	9855	45.24	2599	11.93	9331	42.83	21785
2004-05	15597	45.62	3833	11.21	14756	43.16	34186
2005-06	20339	42.73	8483	17.82	18779	39.45	47601
2006-07	13141	28.12	7373	15.78	26215	56.10	46729
2007-08	19991	22.65	8743	9.91	59530	67.45	88264
2008-09	8428	15.88	5648	10.64	39009	73.48	53085
2009-10	7606	13.19	10132	17.57	39940	69.25	57678
2010-11	10719	14.76	11468	15.79	50438	69.45	72625
2011-12	10640	11.61	11525	12.57	69515	75.82	91680
2012-13	11925	9.44	13260	10.50	101095	80.06	126280
2013-14	16195	11.93	15846	11.67	103710	76.40	135751
2014-15	10968	8.69	10812	8.56	104496	82.75	126276
2015-16	18325	12.91	12128	8.54	111528	78.55	141981
2016-17	112200	30.10	102420	27.48	158120	42.42	372740
2017-18	124480	18.55	113360	16.90	433120	64.55	670960
2018-19	127436	17.96	127072	17.91	455079	64.13	709587
2019-20	136735	19.62	136695	19.61	423588	60.77	697018
2020-21	146981	19.52	149416	19.84	456736	60.64	753133
2021-22	299282	31.92	162060	17.28	476271	50.80	937612
2022-23	189436	21.38	177999	20.09	518485	58.52	885921
Mean	54236.64		43921		147814.8		245972.5
C.V.	140.66		140.62		124.82		128.64
CAGR(%)	25.42		49.75		27.67		28.13

Source: RBI and NABARD.

In Table 3, KCCs showed a growth in performance of credit sanctioned by Cooperative Banks, Commercial Banks and RRBs with slight variation in some years. In the period of 1998-99 to 2022-23. The loan amount approved by Cooperative Banks and Commercial Banks increased from 826 crore to 189436 crore and 1473 crore to 518485 crore, respectively. While the loan amount approved by RRBs increased from 11 crore to 177999 crore. The highest average loan amount approved by Commercial Banks was 147814.80 crore and then Cooperative Banks and RRBs was 54236.64 crore and 43921 crore, respectively. RRBs has the Highest CAGR as 49.75% and then Commercial and Cooperative Banks has 27.67% and 25.42% CAGR, respectively. The highest coefficient of variation for the amount approved was 140.66% in the Cooperative Banks and followed by RRBs and Commercial Banks as 140.62% and 124.82%, respectively. The table shows that Commercial Banks approved major portion of the credit under KCC scheme. The proportion of the total credit sanctioned by Commercial Banks varied from 28.47% to 82.75% and by RRBs from 0.48% to 27.48%. Similarly, throughout the period, the proportion of total credit sanctioned by Cooperative Banks varied from 8.69% to 61.69%.

Conclusion

During the period of the study, the Kisan Credit Card scheme has experienced significant growth in the terms of the number of cards issued and loan amount approved, both period and agency wise. In terms of the total number of cards issued and the credit amount approved under the Kisan Credit Cards scheme, the CAGR was 20.83% and 28.13%, respectively. For the number of cards issued under the Kisan Credit Card program, the CAGR for Commercial Banks, RRBs and Cooperative Banks were 17.24%, 38.09% and 24.77%, respectively. The CAGR for credit amount approved under the Kisan Credit Card program by Cooperative Banks, RRBs and Commercial Banks were 25.42%, 49.75% and 27.67%, respectively. The study discovered that Commercial Banks sanctioned the majority share of the credit amount.

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