RBI Issues Comprehensive KCC Scheme Directions 2026 for Small Finance Banks: All You Need to Know

The Reserve Bank of India has unveiled a landmark regulatory framework specifically designed for Small Finance Banks (SFBs) governing the Kisan Credit Card (KCC) Scheme. Issued vide circular RBI/FIDD/2026-27/403 IDD.CO.FSD.BC.No.05/05.05.010/2026-27 dated June 19, 2026, these Directions — formally titled the Reserve Bank of India [Small Finance Banks – Kisan Credit Card (KCC) Scheme] Directions, 2026 — consolidate and modernize the existing patchwork of guidelines into a single, unified framework. Exercising authority under Section 21 and Section 35A of the Banking Regulation Act, 1949, the RBI has crafted a comprehensive structure that ensures timely, adequate, and simplified credit access for farming communities across India.

Chapter I: Preliminary Provisions

Legal Basis and Commencement

The Directions have been issued in exercise of statutory powers under Section 21 and Section 35A of the Banking Regulation Act, 1949, on the grounds that such action is necessary and expedient in public interest and in furtherance of sound banking policy.

Key Date: These Directions take effect for all KCC loans sanctioned on or after January 1, 2027. All loans sanctioned before this date shall continue to be regulated under pre-existing guidelines until their maturity or the next scheduled renewal, whichever is applicable.

Applicability

The Directions apply exclusively to Small Finance Banks (SFBs), collectively and individually referred to as "banks" throughout the framework.

Core Definitions

The Directions establish the following foundational definitions critical to implementation:

• Crop Season: The period extending from the point of sowing up to and including the harvesting and marketing of crops.
• Short Duration Crops: Crops with an anticipated lifecycle from sowing to marketing of up to 12 months.
• Long Duration Crops: Crops whose anticipated period from sowing to marketing exceeds 12 months and extends up to 18 months.
• Marginal Farmer: A farmer holding land of up to one hectare.
• Small Farmer: A farmer holding land of more than one hectare and up to two hectares.

For standardization purposes under the KCC Scheme, crop seasons are fixed at 12 months for short duration crops and 18 months for long duration crops.

Any term used but not defined under these Directions shall carry the meaning assigned to it under the Reserve Bank of India Act, 1934, or the Banking Regulation Act, 1949, as applicable.

Chapter II: Credit — Purpose, Tenure, and Limit

Composite KCC Facility: Purpose and Six-Year Tenure

The KCC Scheme operates as a composite credit facility with a tenure of six years. Banks are required to extend credit covering the following needs of eligible agricultural borrowers:

1. Short-term crop cultivation working capital
2. Working capital for allied activities, including:
   • Animal Husbandry — covering rearing of dairy cattle, buffalo, camel, yak, mithun, goat, sheep, pig, rabbit, poultry, and similar livestock
   • Fisheries & Aquaculture — encompassing fish culture, composite/integrated fish culture, polyculture, raceways fish culture, sea cage culture, cage/pen culture in reservoirs, wetland fisheries, ornamental fish farming, fish angling, fish seed rearing, saline water aquaculture (shrimp/fish), shrimp culture, prawn culture, pearl culture, crab culture, seaweed cultivation, aquaponics, bio-floc fish farming, bivalve culture, brackish water culture, and all production-related activities in inland/marine fisheries
   • Other Allied Activities — including sericulture, lac culture, beekeeping, and similar pursuits
3. Post-harvest and post-production expenses
4. Household consumption requirements of the farming family
5. Asset maintenance, soil testing, real-time weather forecasting, digital advisory platforms, drone-based crop health surveys, remote sensing and satellite-based crop monitoring, other technological support services, and organic/good agricultural practices certification
6. Insurance — crop, accident, health, and asset insurance
7. Produce marketing loans
8. Long-term investment credit for agriculture and allied activities

Structural Note: Components (1) through (7) together constitute the short-term credit limit portion of the composite facility. Component (8) forms the long-term credit limit portion. The sum of the sixth-year short-term limit and the estimated long-term credit limit together constitute the Composite Maximum Permissible Limit (CMPL), which represents the overall KCC limit.

The short-term component shall operate as a revolving cash credit facility with no restriction on the frequency of debits or credits.

Working Capital for Crop Cultivation

Eligibility

The following categories of persons are eligible for crop cultivation working capital under the KCC Scheme:

• Individual or joint owner-cultivators
• Tenant farmers, oral lessees, and sharecroppers
• Self-Help Groups (SHGs) and Joint Liability Groups (JLGs) comprising any of the above

Drawing Limit Fixation

The drawing limit for each crop season is computed as follows:

Key operational provisions include:

• If the assessee's cropping pattern changes in a subsequent season, the drawing limit shall be recalculated accordingly.
• Where SoF has not been revised by the SLTC, banks shall apply a notional 10% hike over the previous season's SoF.
• Crops not covered under the SoF notified by SLTC/DLTC shall fall outside the KCC framework, though banks are expected to pursue their inclusion.
• The KCC credit limit shall be rounded off to the nearest ₹1,000.
• From the second crop season onwards, the Maximum Permissible Limit (MPL) shall be arrived at by adding 10% to the preceding season's limit on a notional basis; if the actual drawing limit exceeds the MPL in any season, the MPL shall be reassessed at the time of review.

Flexi KCC for Marginal Farmers