Farmers need money at the right time - to buy seeds and fertiliser before sowing, and protection when a flood or drought destroys the crop. The government helps through three main schemes: the Kisan Credit Card (KCC) for cheap loans, PM-KISAN for direct income support, and the Pradhan Mantri Fasal Bima Yojana (PMFBY) for crop insurance. Exams ask about their launch years, amounts and features. This post explains them in simple words. It ends with 15 previous year questions.
Key Points (Quick Revision)
- The Kisan Credit Card was introduced in 1998, based on the R.V. Gupta Committee, and prepared by NABARD.
- With prompt repayment, short-term crop loans under KCC cost about 4% a year after interest subvention.
- PM-KISAN gives ₹6,000 a year in three instalments of ₹2,000 to eligible farmer families.
- PMFBY was launched in 2016; farmers pay 2% premium for kharif, 1.5% for rabi and 5% for commercial and horticultural crops.
- Enrolment in PMFBY has been voluntary for all farmers since 2020.
1. Why farm credit matters
Farming needs money months before the harvest brings income. Without bank loans, farmers often borrow from moneylenders at very high interest and fall into debt. Cheap and timely institutional credit - from banks, cooperatives and regional rural banks - protects them.
The NABARD, set up in 1982, supports this credit system by refinancing banks and planning rural credit. Banks must also lend a share of their credit to agriculture under priority sector lending.
2. Kisan Credit Card (KCC)
- Introduced in August 1998, on the recommendation of the R.V. Gupta Committee, with a model scheme prepared by NABARD.
- Gives farmers a revolving credit limit for crop needs, post-harvest expenses and allied activities.
- Issued by commercial banks, cooperative banks and regional rural banks.
- Extended to animal husbandry and fisheries farmers in 2018-19.
- Comes with a RuPay debit card for easy withdrawal.
3. Interest subvention on crop loans
Under the Modified Interest Subvention Scheme, short-term crop loans through KCC are given at 7% a year. Farmers who repay on time get a further 3% prompt repayment incentive, so the effective rate falls to about 4%.
This benefit has applied to loans up to ₹3 lakh. The Union Budget 2025-26 announced raising this limit to ₹5 lakh; check the latest notification for how it applies.
4. PM-KISAN
- Launched on 24 February 2019 at Gorakhpur, with effect from 1 December 2018.
- Gives ₹6,000 a year to eligible land-holding farmer families, in three instalments of ₹2,000.
- Money goes directly into bank accounts through Direct Benefit Transfer (DBT).
- It is a central sector scheme, fully funded by the Centre.
- Some groups are excluded, such as income tax payers, institutional landholders and certain professionals and pensioners.
5. Pradhan Mantri Fasal Bima Yojana (PMFBY)
PMFBY was launched in 2016, replacing the earlier National Agricultural Insurance Scheme and its modified version.
| Crop season | Farmer's premium |
|---|---|
| Kharif crops | 2% of sum insured |
| Rabi crops | 1.5% of sum insured |
| Annual commercial and horticultural crops | 5% of sum insured |
- The rest of the premium is shared by the Centre and States (50:50, and 90:10 for North-Eastern and Himalayan States).
- It covers losses from sowing to post-harvest, including prevented sowing and local disasters like hailstorms.
- Since kharif 2020, enrolment is voluntary for all farmers, including those with crop loans.
- Technology such as satellite data and smartphones is used to estimate crop yields.
6. Other support for farmers
| Scheme | Year | What it does |
|---|---|---|
| Agriculture Infrastructure Fund | 2020 | A ₹1 lakh crore financing facility for post-harvest and farm infrastructure |
| Soil Health Card | 2015 | Tells farmers the nutrient status of their soil |
| PM Kisan Maandhan Yojana | 2019 | A pension of ₹3,000 a month after 60 for small and marginal farmers |
| Weather-Based Crop Insurance (RWBCIS) | 2016 | Insurance based on weather data rather than yield |
7. Challenges
- Many tenant farmers and sharecroppers without land records find it hard to get KCC loans and PM-KISAN.
- Delays in insurance claim payments have been a common complaint under crop insurance.
- Farm loan waivers by States can affect repayment discipline and bank lending.
8. Previous year questions
- In which year was the Kisan Credit Card introduced? – 1998
- Which committee recommended the Kisan Credit Card? – R.V. Gupta Committee
- Which institution prepared the model KCC scheme? – NABARD
- In which year was NABARD set up? – 1982
- What is the effective interest rate on KCC crop loans with prompt repayment? – About 4%
- To which sectors was KCC extended in 2018-19? – Animal husbandry and fisheries
- How much does PM-KISAN give a year? – ₹6,000
- In how many instalments is PM-KISAN paid? – Three, of ₹2,000 each
- Where was PM-KISAN launched? – Gorakhpur
- From which date did PM-KISAN take effect? – 1 December 2018
- In which year was PMFBY launched? – 2016
- What premium do farmers pay for kharif crops under PMFBY? – 2%
- What premium do farmers pay for rabi crops under PMFBY? – 1.5%
- Since when has PMFBY enrolment been voluntary for all farmers? – Kharif 2020
- What is the size of the Agriculture Infrastructure Fund? – ₹1 lakh crore
9. How to revise this topic
Start with KCC: 1998, R.V. Gupta Committee, NABARD model scheme, extended to animal husbandry and fisheries in 2018-19.
Next, fix the interest: 7% crop loans, 3% prompt repayment incentive, about 4% effective; limit ₹3 lakh, raised to ₹5 lakh in Budget 2025-26.
Then learn PM-KISAN: 24 February 2019 at Gorakhpur, effective 1 December 2018, ₹6,000 in three instalments, DBT, central sector.
Finally, remember PMFBY: 2016, premiums 2% kharif, 1.5% rabi, 5% commercial; voluntary since kharif 2020.
10. Frequently Asked Questions
What is the Kisan Credit Card?
The Kisan Credit Card, introduced in 1998, gives farmers a revolving credit limit from banks for crop needs and allied activities, at a low interest rate.
What is the interest rate on KCC loans?
Short-term crop loans under KCC are given at 7%, and farmers who repay on time get a 3% incentive, bringing the effective rate to about 4%.
How much money does PM-KISAN give?
PM-KISAN gives ₹6,000 a year to eligible land-holding farmer families, in three instalments of ₹2,000 each, directly into their bank accounts.
What is the premium under PMFBY?
Farmers pay 2% of the sum insured for kharif crops, 1.5% for rabi crops and 5% for annual commercial and horticultural crops. The rest is paid by the Centre and States.
Is PMFBY compulsory?
No. Since kharif 2020, enrolment in PMFBY is voluntary for all farmers, including those who have crop loans.
For more Economy topics in simple language, see our Priority Sector Lending, APMC and e-NAM and MSP, PDS and NFSA posts, or browse the Economy section. Preparing for a bank exam? Start with the NABARD Grade A guide or join the 100 Hour GS Course.