The Tamil Nadu government has clarified that, for farm loan applications under the Kisan Credit Card (KCC) scheme, only the CIBIL statement will be reviewed for eligibility. This decision clarifies that the CIBIL score, typically used to assess creditworthiness, will not be a criterion. Understanding the use of the CIBIL statement, the distinction between the statement and score, and the implications of this policy is crucial for farmers.
The decision to focus exclusively on the CIBIL statement rather than the CIBIL score has several key advantages for farmers:
By using the CIBIL statement, the government ensures that farmers are not penalised for factors outside of their control, such as defaults caused by crop failure or other natural disasters. Since these issues can impact a farmer’s ability to repay loans, basing the loan decision on the CIBIL statement (which only reflects loan history) rather than the credit score ensures fairness.
One of the key reasons for checking the CIBIL statement is to ensure that farmers do not receive duplicate loans from multiple institutions. The government aims to prevent over-lending and to ensure that farmers can manage their debt within the established limits of the KCC scheme.
This process eliminates the need for a detailed creditworthiness analysis based on a credit score. Instead, by simply reviewing the existing loans, the verification process becomes more straightforward, making it easier for farmers to receive approval for loans.
The Kisan Credit Card (KCC) scheme was introduced to provide farmers with easy access to credit for agricultural activities. It aims to provide short-term loans to farmers to meet their various financial needs, such as purchasing seeds, fertilisers, pesticides, and even meeting the expenses of harvests. Under this scheme, farmers can avail of loans at lower interest rates for the purchase of agricultural inputs and equipment.
The maximum loan amount available under the KCC scheme is ₹3 Lakhs, which can be used for crop cultivation and other farming-related expenses. The scheme is designed to provide financial support to farmers, allowing them to manage their cash flows and ensure that they can continue their farming activities without financial strain.
A CIBIL statement provides a detailed record of a person’s credit history, including existing loans, balances, repayment history, and any defaults. Generated by TransUnion CIBIL, it helps financial institutions verify outstanding loans. Unlike the CIBIL score, which rates creditworthiness, the CIBIL statement focuses on loan history and repayment behavior.
While both the CIBIL statement and the CIBIL score are used in evaluating a borrower’s credit history, they serve different purposes.
Here are the details:
| Feature | CIBIL Score | CIBIL Statement |
|---|---|---|
| Definition |
A three-digit number (300–900) representing an individual’s creditworthiness. |
A detailed report of all existing loans and repayment history of a borrower. |
| Purpose |
Indicates the likelihood of timely loan repayment; used by lenders to assess credit risk. |
Provides a complete record of borrowing activity, showing loans taken, repayments made, and any defaults. |
| Creditworthiness |
Rates overall creditworthiness of the borrower. |
Does not rate creditworthiness; focuses on actual loan history. |
| Use in KCC Loans |
Not used for loan eligibility under the Kisan Credit Card scheme. |
Used to verify existing loans and ensure total loans do not exceed ₹3 Lakhs. |
| Information Provided |
Single numeric value summarising credit risk. |
Detailed information on loan types, outstanding balances, repayment schedule, and defaults. |
Under the new guidelines, the Tamil Nadu government will review the CIBIL statement to check whether a farmer has already taken loans under the KCC scheme from other banks. This process helps ensure that the total loan amount does not exceed the ₹3 Lakhs limit set for KCC loans.
This step is important because it prevents the issuance of duplicate loans across different financial institutions, which could result in a farmer being over-leveraged and unable to repay the total amount. By checking the CIBIL statement, the government ensures that the loans provided under the KCC scheme remain within the prescribed limits.
Banks and financial institutions also rely on the CIBIL statement to verify the accuracy of loan information provided by the borrower. This helps maintain transparency and accountability in the loan disbursal process.
Farmers applying for loans under the Kisan Credit Card (KCC) scheme need to be aware of the following key points:
Only the CIBIL statement is required for loan eligibility verification, not the CIBIL score
The CIBIL statement helps track whether the farmer has any existing loans under the KCC scheme and ensures that the maximum loan limit of ₹3 Lakhs is not exceeded
No minimum credit score is required for loan approval, making the process more accessible for first-time borrowers
The focus is on existing loans and repayment history, rather than the credit rating, ensuring that farmers are not penalised for factors like crop failure