RBI issues KCC Scheme Directions for Regional Rural Banks effective 1 Jan 2027
Regional Rural Banks must apply the new six-year composite KCC framework — revised limits, collateral thresholds and digital channels — to KCC loans sanctioned from 1 January 2027.
Change
The Reserve Bank of India (RBI) issued the Regional Rural Banks Kisan Credit Card (KCC) Scheme Directions, 2026, applicable to KCC loans sanctioned with effect from 1 January 2027; loans sanctioned earlier remain governed by extant guidelines until maturity or next renewal.
Why it matters
RRBs must structure KCC as a six-year composite facility with a Composite Maximum Permissible Limit (CMPL) combining a short-term revolving cash-credit component and a long-term investment component, fixing drawing limits per the notified Scale of Finance. The Directions require waiver of collateral and margin for agricultural and allied loans up to INR 200,000 per borrower (INR 300,000 under hypothecation tie-up arrangements), permit a Flexi KCC limit of INR 10,000 to 50,000 for marginal farmers, enable specified digital channels including UPI for working capital and CBDC only with explicit account-holder consent, and mandate KCC loan-data submission to NABARD. Failure to apply these requirements is a breach of RBI Directions.
Implications
- — RRB credit origination and product teams must compute and apply the Composite Maximum Permissible Limit (CMPL) and provide the six-year composite KCC facility for loans sanctioned on or after 1 January 2027 — failing to apply the Directions is a breach of RBI Directions.
- — RRB credit policy teams must waive collateral security and margin for agricultural and allied KCC loans up to INR 200,000 per borrower (INR 300,000 under hypothecation tie-up arrangements) and apply bank credit policy above that limit — non-application is a breach of RBI Directions.
- — RRB payments and digital-operations teams must enable KCC account operations through the specified channels (UPI for working capital, debit cards, mobile/internet banking, NEFT, RTGS, CBDC) only after obtaining explicit account-holder consent — processing without documented consent violates the Directions.
- — RRB compliance and reporting teams must submit KCC loan data to NABARD in the prescribed format and apply the referenced prudential income-recognition, asset-classification and provisioning norms to KCC loans — failure to report or apply the prudential norms is non-compliance.
Who is affected
- — Regional Rural Banks' credit origination and product teams
- — Regional Rural Banks' credit policy teams
- — Regional Rural Banks' payments and digital-operations teams
- — Regional Rural Banks' compliance and reporting teams
What to watch
- — 1 January 2027: Directions apply to all KCC loans sanctioned on or after this date; loans sanctioned earlier remain on extant guidelines until maturity or next renewal.