RBI’s 2026 KCC Directions for Rural Co-operative Banks: Scope, Structure & Compliance Guide

The Reserve Bank of India has notified the Reserve Bank of India [Rural Co-operative Banks – Kisan Credit Card (KCC) Scheme] Directions, 2026, laying down an entirely updated regulatory framework for Kisan Credit Card operations of Rural Co-operative Banks (RCBs). These Directions overhaul how RCBs must assess, sanction, price, secure, document and monitor KCC limits for agriculture and allied activities.

The Directions will be applicable only to KCC facilities sanctioned on or after 1 January 2027. Existing KCC limits sanctioned before this date will continue under the prevailing instructions until their original maturity or next renewal, whichever is earlier.

The Directions have been framed by RBI exercising its powers under Section 21, Section 35A read with section 56 of the Banking Regulation Act, 1949, along with all other enabling provisions. RBI has explicitly recorded that these Directions are being issued in public interest and in the interest of sound banking policy.

1.1 Banks to Which the Directions Apply

The Directions cover Rural Co-operative Banks (RCBs), which, for this framework, include:

  • State Co-operative Banks (StCBs)
  • Central Co-operative Banks (CCBs)

The meaning of these terms is to be taken as defined in the National Bank for Agriculture and Rural Development Act, 1981. Collectively, they are referred to as “banks”, and individually as “bank” within the Directions.

1.2 Objective of the New Framework

The stated intent is to create a standardised, simple and composite KCC facility that:

  • Ensures adequate and timely credit to assessee-borrowers engaged in agriculture and allied sectors
  • Combines working capital and investment credit into a single KCC framework
  • Covers production, post-harvest, consumption, risk-mitigation and investment needs comprehensively
  • Operates on a six-year tenure with clearly defined methods of limit assessment and review

2. Key Definitions Relevant to KCC Operations

The Directions clarify core terms used throughout:

  • “Crop season” – extends from sowing up to harvesting and marketing of the crop.
  • “Short duration crops” – crops where the expected cycle from sowing to marketing is up to 12 months.
  • “Long duration crops” – crops where the sowing to marketing cycle exceeds 12 months but is not more than 18 months.
  • For KCC assessment purposes, RBI has standardised:
    • Short duration crop season at 12 months
    • Long duration crop season at 18 months
  • “Marginal farmer” – assessee with landholding up to one hectare.
  • “Small farmer” – assessee with landholding more than one hectare and up to two hectares.

All other expressions not defined in these Directions but defined in the Reserve Bank of India Act, 1934 or Banking Regulation Act, 1949 will take meanings from those laws.

3. Structure of the KCC Facility: Purpose, Tenure and Limits

3.1 Composite Six-Year KCC Facility

Banks must provide KCC as a composite facility with an overall tenure of six years, consisting of:

  1. Short-term credit for:

    • Crop cultivation
    • Allied activities
    • Post-harvest/post-production expenses
    • Household consumption of the farmer family
    • Maintenance of agriculture and allied assets
    • Technology-related services (soil testing, weather advisory, digital agri services, etc.)
    • Premiums for crop, accident, health and asset insurance
    • Produce marketing loans

  2. Long-term investment credit for agriculture and allied activities

The short-term components (1–7) together form the short-term credit limit, while the investment component (8) constitutes the long-term credit limit.

3.2 Composite Maximum Permissible Limit (CMPL)

  • The short-term limit assessed for the sixth year, added to the estimated long-term investment credit, will constitute the Composite Maximum Permissible Limit (CMPL).
  • This CMPL will be treated as the sanctioned KCC limit for documentation purposes.
  • The short-term portion operates as a revolving cash credit with no cap on number of withdrawals and repayments.

Note: RBI has provided detailed numerical illustrations in Annex I (for both short and long duration crops) to demonstrate the CMPL computation methodology.

4. Working Capital for Crop Cultivation

4.1 Eligible Borrowers

The following categories are eligible for KCC working capital for crop cultivation:

  • Individual or joint farmers who are owner cultivators
  • Tenant farmers, oral lessees and sharecroppers
  • Self-Help Groups (SHGs) and Joint Liability Groups (JLGs) comprising farmers/cultivators, including tenant farmers, oral lessees and sharecroppers

4.2 Method for Fixing Drawing Limit for Each Crop Season

For every crop season, the drawing limit is to be computed as:

  1. Base production credit:

    • Scale of Finance (SoF) per acre for each crop, as notified by the State Level Technical Committee (SLTC) or District Level Technical Committee (DLTC), multiplied by area under cultivation.

  2. Post-harvest and consumption component:

    • 10% of the production credit amount in (1) to cover:
      • Post-harvest needs, and
      • Household consumption of the assessee’s family.