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Over 3 crore Kisan credit cards to be converted to RuPay cards


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Over three crore Kisan credit cards will be converted to RuPay cards, Prime Minister Narendra Modi announced during his New Year’s eve address to the country. The exercise would take over three months, Modi added. Kisan credit cards are offered to farmers to help them access affordable credit for short periods of time.

It’s worth noting the RuPay does not have a credit card product out yet and this could be an entry for the card network to into the credit card business which is currently dominated by Visa and MasterCard. In an earlier interview with MediaNama, AP Hota, CEO of the National Payments Corporation of India (NPCI) said that it was deferring the launch of the RuPay credit card as it is changing to a new switching platform to handle larger number of card transactions. The NPCI was expected to launch the credit card in June but was pushed to December, as indicated by this Hans India report.

Currently, farmers can access the credit through cash withdrawals at ATMs or through bank withdrawal slips. But with RuPay cards, farmers can move to cashless ecosystem and they can now transact online or make digital payments. However, as we have pointed out many times, card acceptance networks in the hinterlands is woeful and POS machines are primarily concentrated in urban areas and by six major commercial banks.

Generally, Kisan credit cards have an interest rate of 9% with an credit limit of Rs 3 lakh. The central government also subsidises the interest payable by customers by 2% if they have a sound track record for three years. Credit limits can also be raised by the institutions depending on repayments and crop requirements. The Kisan credit cards are valid for a period of three years.

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The Kisan credit card was scheme introduced in August 1998  involving commercial Banks, rural regional and cooperative banks. A government committee under the chairmanship of TM Bhasin suggested a review of the cards to make changes to the scheme to make it a smart card and debit card, as indicated by NABARD’s website.

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