Reserve Bank of India has asked banks’ to waive collateral security and margin requirements for agricultural loans, including loans for allied activities up to ₹2 lakh per borrower, and ensure ongoing monitoring of the end-use of all agriculture advances, per its latest directions on the Kisan Credit Card (KCC) scheme.
The central bank said voluntary pledge of gold and silver as collateral for agriculture loans up to the collateral-free limit will not be considered as a violation of the guidelines on collateral-free lending to the agriculture sector. Banks have to obtain and retain explicit declaration from the borrower in such cases.
RBI said its “guidelines on collateral-free limit pertain only to secondary collateral and not primary security or assets financed by the loan.” Banks can decide the collateral security and margin requirements for loans above ₹2 lakh as per their credit policy.
In case of KCC loans against hypothecation of crops/ stock and involving tie-up arrangements for recovery, banks may waive collateral security for loans up to a limit of ₹3 lakh.
Considering the different interest rates and repayment schedules applicable to various types of credit provided under KCC, the facility may be divided into sub-limits for short-term cash credit limit-cum-savings accounts for crop cultivation and allied activities separately, and long-term loans for agriculture and allied activities.
At the time of sanction, the maximum permissible limit (MPL) for the short-term crop loan will be arrived at on a notional basis by adding 10 per cent to the limit of the previous crop season, from the second crop season onwards. In case the drawing limit exceeds the MPL in any crop season/ year, the MPL will be reassessed at the time of review.
Marginal farmers will also be eligible for a flexible credit limit of ₹10,000 to ₹50,000 (as Flexi KCC) in line with the assessment of the bank without relating it to the value of the land. The credit limit shall be based on crops grown, post-harvest warehouse storage related credit needs, other farm expenses, consumption needs and investment requirements for agriculture and allied activities.
Published on June 19, 2026
