Kisan Credit Card — Modified Interest Subvention Scheme

The bank lends at 7% a year (the government pays the bank 1.5% to make that possible); repaying on time brings it to 4%. The ₹3 lakh limit is per farmer across all KCC accounts (para 3(ii)). The incentive is lost if you repay after one year. Small and marginal farmers keep the subvention for up to six more months after harvest on a loan against a WDRA warehouse receipt (para 2(iv)). These rates are from the RBI circular for FY 2025-26; the Union Budget 2026-27 notes describe the same terms (₹3 lakh at 7%, 3% more for prompt repayment), but we have not yet seen the RBI circular for FY 2026-27.

“An additional interest subvention of 3% per annum will be provided to such of those farmers repaying in time, i.e., from the date of disbursement/drawl/renewal of the loan/s upto the actual date of repayment/tenure/due date or upto the due date fixed by the banks for repayment of such loan/s, whichever is earlier, subject to a maximum period of one year from the date of disbursement.”

If you have both a crop loan and an allied loan, the crop loan is counted first and the overall limit stays ₹3 lakh (para 2(iii) and its illustrations) — use the ₹3 lakh rule instead.

“Interest subvention and prompt repayment incentive benefits on short term crop loans and short term loans for allied activities will be available on an overall limit of ₹3 lakh per annum subject to a maximum sub-limit of ₹2 lakh per farmer in respect of those farmers involved only in activities related to animal husbandry, dairy, fisheries, bee keeping etc.”

The 1.5% is paid to the bank, not to you; what you get is the 7% rate. It applies at public sector banks, rural and semi-urban branches of private banks, small finance banks and computerised PACS ceded with a scheduled commercial bank (para 2(i)). Repay on time for a further 3% (the prompt-repayment rule). These are the FY 2025-26 terms; the Union Budget 2026-27 notes describe the same.

“In order to provide short term crop loans and short term loans for allied activities including animal husbandry, dairy, fisheries, bee keeping etc. upto an overall limit of ₹3 lakh to farmers through KCC at concessional interest rate during the year 2025-26, it has been decided to provide interest subvention to lending institutions … Lending rate to farmers 7% — Rate of Interest Subvention to Lending Institutions 1.50%”

“In order to discourage distress sale by farmers and to encourage them to store their produce in warehouses, the benefit of interest subvention under KCC will be available to small and marginal farmers for a further period of upto six months post the harvest of the crop against negotiable warehouse receipts on the produce stored in warehouses accredited with Warehousing Development Regulatory Authority (WDRA), at the same rate as applicable to the crop loan from the date of pledge.”

Whether a calamity counts as severe is decided by a High Level Committee on the recommendation of the Inter-Ministerial Central Team and the Sub Committee of the National Executive Committee (para 2(vi)). From the second year after an ordinary calamity, the restructured loan carries the normal rate (para 2(v)).

“(v) To provide relief to farmers affected by natural calamities, the applicable rate of interest subvention for that year will be made available to banks for the first year on the restructured loan amount. … (vi) However, to provide relief to farmers affected due to severe natural calamities, the applicable rate of interest subvention for that year will be made available to banks for first three years/entire period (subject to a maximum of five years) on the restructured loan amount. Further, in all such cases, the benefit of prompt repayment incentive @3% per annum shall also be provided to the affected farmers.”