To provide benefits of softer agricultural loans to landless farmers, NABARD has initiated pilots in selected districts of Andhra Pradesh and Odisha aimed at providing benefits of kisan credit cards (KCCs) through RBI’s central bank digital currency (CBDC).
State Bank of India is currently running pilots in Krishna, west Godavari, and east Godavari districts of Andhra Pradesh and Cuttack and Puri districts in Odisha, where digital currency is being used for supporting tenant farmers for usage for purchasing feriliser, seeds and seeds through identified vendors.
It ensured non-diversion of agri-credit and genuine farmers get the benefits.
“Through these pilots we are trying to see whether something can be given to tenant farmers, independent of landlords,” Ajay Sood, deputy MD, NABARD, told FE.
By end of FY25, 501 tenant farmers in Odisha, have benefited with a total sanctioned amount of Rs 2.73 crore, of which Rs 1.13 crore has been disbursed.
In Andhra Pradesh, 218 tenant farmers have benefitted with a total amount sanctioned of Rs 1.86 crore, of which, Rs 78.58 lakh has been disbursed. “This marks the first loan use-case for credit, utilizing CBDC,” according to an official note
Currently around 30-40% of the gross cropped area in the country is cultivated by farmers who do not hold the land and KCCs loans are provided to farmers with land holding.
While the government attempted to form join liability groups to extend agri-credit to landless farmers, officials said Banks still face challenges to proof that tenant farmers are the real cultivators.
“There is still a substantial gap in supporting landless farmers which primarily stems from factors such as lack of land ownership, low financial literacy, hesitancy of banks in the absence of clarity on end-use of credit, if provided,” according to an official note.
At present, there are 77.1 million operational KCC holders who have landholdings. This includes 1.24 lakh and 44.4 lakh KCCs issued to fisheries and animal husbandry activities, respectively.
Under the modified interest subvention scheme (MISS), farmers holding Kisan Credit Cards (KCCs) are provided loans of up to Rs 3 lakh at 7% interest per annum to meet working capital requirements. However, for FY26, the government has hiked the agri-credit limit to Rs 5 lakh annually.
The scheme provides additional interest subvention of 3% for prompt repayment, reducing the effective rate of interest to 4%.
Officials said KCC is a banking product which provides farmers with timely and affordable credit for purchasing agricultural inputs including seeds, fertilizers, and pesticides, as well as for meeting cash requirements related to crop production and allied activities.
In 2019, the KCC scheme was extended to cover the working capital requirements of allied activities – animal husbandry, dairy and fisheries.
In FY25, over Rs 28.98 lakh crore credit was disbursed through commercial banks, cooperatives and regional rural banks out of which around 60% was towards short term crop loans and rest was towards investment loans in agriculture and allied sector.