RBI takes up project to digitise farm loan delivery under KCC scheme

The Reserve Bank of India has embarked upon a project to digitise farm loan delivery under Kisan Credit Card (KCC) scheme to make it time and cost effective for borrowers.

The central bank will run a pilot project for end-to-end digitalisation of KCC lending from September in select districts of Madhya Pradesh and Tamil Nadu with Union Bank of India and Federal Bank, respectively.

Considering the challenges associated with rural lending, digitalisation of various aspects of rural finance is an important objective of RBI’s fintech initiatives.


"This pilot project on digitalisation of KCC lending is expected to play a pivotal role in facilitating credit flow to the unserved and underserved rural population by making the credit process faster and more efficient. When fully implemented, this has the potential to transform the rural credit delivery system of the country," RBI said.

At present, the process for getting such finance requires customers to visit a bank branch along with the proof of land ownership and other documents. Sometimes, the customer may be required to visit the bank branch multiple times.

"The turnaround time from loan application to disbursement has also been rather high, ranging from two to four weeks," RBI observed.

Rural lending encompasses a range of financial services offered to rural customers, including farmers, at all income levels, RBI said. Rural credit is closely related to inclusive economic growth, as it caters to the requirements of agriculture and allied activities, ancillary industries and small businesses.