Kisan Credit Card Interest Rate

Kisan Credit Card Interest Rate

The Kisan Credit Card loan scheme was launched by the Government of India in 1998 in order to meet the needs of marginal and small farmers. The KCC loan scheme was structured by the National Bank for Agriculture and Rural Development on the suggestion of the R.V. Gupta Committee in order to meet the agricultural needs of farmers. 

The scheme helps farmers to get loans, and safeguards them against moneylenders who charge extremely high rates of interest on loans. Under the KCC loan scheme, farmers can get loans at a very low rate of interest. In addition, upon prompt payment, they are given interest subventions. Moreover, the Kisan Credit Card loan interest as charged by many banks in India is 7% per annum. You are permitted to receive a 2% interest subvention on a loan amount of ₹3 Lakhs. 

Kisan Credit Card Interest Rate of Top Banks

The Kisan Credit Card interest rate varies based on the loan amount and the bank that issues the credit card. Check out the table below to get an idea of the KCC interest rates of some of the top banks in India. 

The interest on Kisan Credit Cards can be as low as 2% per annum, and can go all the way up to 15-17% per annum. The interest rates for a KCC as levied by some of the top banks in the country are mentioned below. 

1. State Bank of India (SBI) Kisan Credit Card

When it comes to Kisan Credit Card loans, it is worth mentioning that the State Bank of India is one of the largest issuers of KCC loans. 7% per annum is the Kisan Credit Card interest rate charged by the State Bank of India on an amount lower than ₹3 Lakhs.

2. Punjab National Bank (PNB) Kisan Credit Card

Punjab National Bank is also one of the major public sector banks that offers Kisan Credit Card loans. It is quite easy to apply for a KCC loan via Punjab National Bank. A minimum KCC loan interest rate of 7% per annum is charged by the bank to farmers. 

3. HDFC Bank Kisan Credit Card

HDFC Bank, a major private bank, is also offering a Kisan Credit Card loan scheme to farmers. One can receive a minimum Kisan Credit Card interest rate of 9% per annum by availing a KCC loan from HDFC Bank.

4. Axis Bank Kisan Credit Card

A competitive KCC loan interest rate is offered by Axis Bank, as it provides interest subventions: you can get a Kisan Credit Card interest rate of up to 8.85% per annum. 

5. Indian Overseas Bank Kisan Credit Card

The  Kisan Credit Card interest rate for loans from IOB of up to ₹3 Lakhs is 7% per annum. This is only in case of loans with a tenure of 1 year from the sanction date or the renewal date.

A KCC loan interest rate subsidy of 3% per annum is available from the government of India for farmers who make prompt repayments. In the case of loans above ₹3 Lakhs, the interest rate is variable. Currently, it is equal to the one-year MCLR (Marginal Cost of Funds Based Lending Rate) plus 2.50%.

Factors Affecting the Kisan Credit Card Interest Rate

There are quite a few factors that can ultimately affect the KCC interest rate that’s applicable to you. Here’s a quick look at some of the most important ones.  

1. Amount of Loan 

The KCC loan amount is one of the biggest factors influencing the interest rate on Kisan Credit Cards. KCC holders get to enjoy a low-interest rate starting from 7% per annum on loans of up to ₹3 Lakhs. For loan amounts above ₹3 Lakhs, the interest rates are higher and vary based on the issuing bank. 

2. Interest Subsidy

For a loan amount of up to ₹3 Lakhs, some banks offer an interest subsidy as per the Reserve Bank of India (RBI) scheme. This interest subsidy allows KCC holders to get a relief of 2% to 3% per annum on their loan, which can help lower the effective interest rate. 

3. Additional Subsidy

In some cases, banks go on to offer an extra interest subsidy of 3%, over and above the subsidy available under the RBI scheme. This is generally available to individuals who have a track record of prompt repayment.

4. Simple Interest

In the case of timely bill payment and settlement of existing dues, banks calculate the finance charges using simple interest. Under this method, the interest is only calculated on the principal borrowed amount.

5. Compound Interest

If there's a delay in timely payment, banks may levy compound interest on the outstanding amount. Under this method, the interest continues to be levied on both the unpaid principal and interest component until the amount is repaid. This can effectively increase the interest on Kisan Credit Cards significantly.