RBI Unveils Draft Kisan Credit Card Rules for 2026, Integrating e-Rupee and UPI for Farm Credit
The Reserve Bank of India (RBI) has proposed comprehensive revisions to the Kisan Credit Card (KCC) framework, aiming to modernize agricultural financing with digital innovations and enhanced protections for farmers. The draft Commercial Banks–Kisan Credit Card Scheme Directions, 2026 seeks to broaden access, increase flexibility, and strengthen safeguards, particularly for small and marginal farmers across India.
Digital Transformation: e-Rupee and UPI Integration
Under the new draft guidelines, the RBI plans to allow KCC credit delivery through Central Bank Digital Currency (CBDC), commonly known as e-Rupee. This initiative includes programmability features, enabling funds to be restricted for specific agricultural purposes such as purchasing seeds, fertilizers, or equipment. This move ensures that credit is utilized efficiently and directly benefits farm productivity.
Additionally, the RBI has mandated that banks facilitate KCC operations via Unified Payments Interface (UPI) and other digital channels. This upgrade will permit real-time payments at mandis and input suppliers, streamlining transactions and reducing delays. This represents a significant shift from previous guidelines that primarily emphasized smart cards or debit cards, marking a leap towards a more digitized and accessible agricultural credit system.
Enhanced Borrower Protections and Collateral Flexibility
To safeguard small and marginal farmers, the draft introduces a borrower-protection clause that caps interest on short-term loans at the principal amount. This measure aims to prevent debt traps and ensure affordability for vulnerable farming communities.
Furthermore, the proposed rules expand collateral options by allowing borrowers to voluntarily pledge gold or silver for loans below Rs 2 lakh, without breaching collateral-free norms. This revision offers greater flexibility compared to earlier guidelines, which capped collateral-free agricultural loans at Rs 1.6 lakh with limited relaxations, potentially enabling more farmers to secure necessary funds.
Redefined KCC Structure and Tenure
The draft defines the KCC as a composite facility with a tenure of six years, encompassing:
- Short-term crop loans for seasonal needs
- Credit for allied agricultural activities
- Funds for consumption requirements
- Long-term investment credit for infrastructure and equipment
This holistic approach is designed to address the diverse financial needs of farmers, promoting sustainability and growth in the agricultural sector. The RBI's proposals are part of ongoing efforts to align India's farm credit system with global digital trends while prioritizing farmer welfare and financial inclusion.
