Wednesday, August 22, 2007

Rural Banking Intitiaves - Kisan Credit Card


Banking service is an among the essential services needed by rural consumers. Traditionally it is the village money lender who has been fulfilling this role . The interest rate charged by the money lender would be very high leading to chronic indebtedness of villagers. Credit at reasonable rates of interest is essential for the village economy to grow and enable them to join the Indian growth story. Farmers have their specific credit needs which are tied-up with their farming cycle and festivals and functions.

Over the years many initiatives have been started by banks and other institution's in which Micro Credit has been one which has received a lot of public attention.This post would not focus on micro finance , but would rather focus on the initiatives taken by public sector and private banks in mainstream banking. One initiative which created a lot of news a few years back was the introduction of low cost ATMs, but it's scaling-up is taking more time than anticipated. Both IITB and IIT M had developed their prototypes, with the idea of providing connectivity through existing ICT initiative replacing cards by using biometric identification. Maybe the idea needs time before it can be scaled up.

One of the initiatives is considered to be a success is the Kisan Credit Card launched in 1998-99. In the initial five years of the programme itself the close to 435 million cards were issued with credit disbursals of Rs 1,11,459 Crore.The main feature of KCC that it was initially meant for timely short term credit needs of farmers and the credit delivery mechanism was simplified and made flexible . The farmers were provided crop loan, later on the scope was extended to term loans for agriculture and allied activities and a reasonable component to meet the consumption needs. Though the KCC has the word card in it, but it was essentially a passbook given to the villagers like as is the case with normal bank accounts.

The latest in rural banking is the smart cards.........

1 comments:

Nahom said...


Banking service is an among the essential services needed by rural consumers. Traditionally it is the village money lender who has been fulfilling this role . The interest rate charged by the money lender would be very high leading to chronic indebtedness of villagers. Credit at reasonable rates of interest is essential for the village economy to grow and enable them to join the Indian growth story. Farmers have their specific credit needs which are tied-up with their farming cycle and festivals and functions.

Over the years many initiatives have been started by banks and other institution's in which Micro Credit has been one which has received a lot of public attention.This post would not focus on micro finance , but would rather focus on the initiatives taken by public sector and private banks in mainstream banking. One initiative which created a lot of news a few years back was the introduction of low cost ATMs, but it's scaling-up is taking more time than anticipated. Both IITB and IIT M had developed their prototypes, with the idea of providing connectivity through existing ICT initiative replacing cards by using biometric identification. Maybe the idea needs time before it can be scaled up.

One of the initiatives is considered to be a success is the Kisan Credit Card launched in 1998-99. In the initial five years of the programme itself the close to 435 million cards were issued with credit disbursals of Rs 1,11,459 Crore.The main feature of KCC that it was initially meant for timely short term credit needs of farmers and the credit delivery mechanism was simplified and made flexible . The farmers were provided crop loan, later on the scope was extended to term loans for agriculture and allied activities and a reasonable component to meet the consumption needs. Though the KCC has the word card in it, but it was essentially a passbook given to the villagers like as is the case with normal bank accounts.

The latest in rural banking is the smart cards.........

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