CBDC loans now on kisan credit cards

MUMBAI: RBI has proposed sweeping changes to the kisan credit card (KCC) framework, including the use of central bank digital currency or e-Rupee for farm credit, as part of its draft Commercial Banks–Kisan Credit Card Scheme Directions, 2026, aimed at widening access, improving flexibility, and tightening safeguards for small and marginal farmers.

Under the draft directions, KCC credit can be delivered through CBDC with programmability features that allow funds to be used only for specified purposes. The RBI has also mandated that banks enable KCC operations through UPI and other digital channels, allowing real-time payments at mandis for inputs such as seeds and fertilisers. This marks a shift from earlier guidelines that focused largely on smart cards or debit cards.

RBI has also added a borrower-protection clause for small and marginal farmers by capping interest on shortterm loans at the principal amount. The draft further permits borrowers to voluntarily pledge gold or silver even for loans below Rs 2 lakh, without violating collateralfree norms. Earlier guidelines capped collateral-free agricultural loans at Rs 1.6 lakh with limited relaxations.

The proposed rules define the KCC as a composite facility with a tenure of six years, covering short-term crop loans, allied activities, consumption needs, and longterm investment credit.