RBI's Proposed Changes in Farm Loan Norms
The Reserve Bank of India (RBI) has introduced proposals to enhance the eligibility for farm loans by including technology-related expenses and streamlined procedures for agricultural loans.
Inclusion of Technology Innovations
- The RBI proposes to include expenses for:
- Soil testing
- Real-time weather forecasts
- Organic and good agricultural practices certification
- These expenses will fall under the 20% additional component allowed for repairs and maintenance of farm assets.
Waiver of Collateral for Agricultural Loans
- Banks may waive collateral security and margin requirements for agricultural and allied activity loans up to ₹2 lakh per borrower.
Revised Kisan Credit Card (KCC) Norms
- RBI aims to expand coverage and streamline KCC operations.
- Standardization of crop seasons:
- Short-duration crops: 12 months
- Long-duration crops: 18 months
- KCC tenure extended to 6 years for longer-duration crops to align with crop seasons.
- Drawing limits under KCC aligned with the scale of finance for each crop season.
Provisions for Marginal Farmers
- Flexible credit limits between ₹10,000 to ₹50,000 based on landholding and crop type for marginal farmers.
- Definition of farmers:
- Marginal farmer: Landholding up to one hectare.
- Small farmer: Landholding more than one hectare and up to two hectares.
Interest Rates and Feedback
- Interest for long-duration crop loans will be charged annually.
- For short-term loans to small and marginal farmers, total interest should not exceed the principal amount.
- Feedback on these draft norms can be submitted by 6 March 2026.
