Reserve Bank of India (RBI) waives collateral requirements for agricultural loans up to ₹2 lakh

Key facts

• The Reserve Bank of India (RBI) has directed banks to waive collateral security and margin requirements for agricultural loans, including allied activities, up to ₹2 lakh per borrower under the Kisan Credit Card (KCC) scheme.
• For KCC loans involving hypothecation of crops or stock with tie-up arrangements for recovery, banks may waive collateral security for loans up to a limit of ₹3 lakh.
• Voluntary pledges of gold and silver as collateral for agriculture loans up to the collateral-free limit are not considered violations, provided banks obtain an explicit declaration from the borrower.
• The maximum permissible limit (MPL) for short-term crop loans will be calculated from the second crop season onwards by adding 10 per cent to the limit of the previous crop season.
• Marginal farmers are eligible for a flexible credit limit (Flexi KCC) ranging from ₹10,000 to ₹50,000 based on bank assessment without relating it to the value of the land.