The revised framework, which will come into effect from January 1, 2027, applies to commercial banks, small finance banks, regional rural banks, and rural co-operative banks.
The central bank said the updated directions seek to ensure “adequate and timely credit support” for borrowers engaged in agriculture and allied activities through a simplified and standardised credit delivery mechanism.
One of the major changes introduced by the RBI is the standardisation of crop seasons for loan sanctioning and repayment purposes. Under the revised norms, crop seasons for short-duration crops have been fixed at 12 months, while long-duration crops will have an 18-month crop season.
The move aligns the KCC framework with the RBI’s Income Recognition and Asset Classification (IRAC) norms and is expected to bring greater uniformity across banks in determining repayment schedules.
“Crop season means the period from the raising of crops to their harvesting and marketing,” the RBI said in the directions.
The final guidelines follow the draft directions issued on February 12, 2026, for stakeholder and public feedback. The RBI said suggestions received during the consultation process were examined before incorporating suitable modifications in the final framework.
However, the central bank rejected demands for a further increase in the collateral-free lending limit under the KCC scheme, noting that the limit had already been enhanced in December 2024.
As per the revised rules, banks must waive collateral security and margin requirements for agricultural and allied activity loans up to Rs 2 lakh per borrower.
The RBI also clarified that voluntary pledging of gold or silver as collateral for agriculture loans within the collateral-free threshold would not be treated as a violation of collateral-free lending norms.
For loans exceeding Rs 2 lakh, banks will determine collateral and margin requirements based on their internal credit policies and prevailing RBI guidelines.
Additionally, in KCC loans backed by hypothecation of crops or stock and involving tie-up arrangements for recovery, banks may waive collateral requirements for loans up to Rs 3 lakh.
The RBI further directed banks to periodically review and renew short-term credit limits for crop cultivation and allied activities in accordance with their board-approved credit policies.
The revised directions have been issued separately for commercial banks, small finance banks, regional rural banks, and rural co-operative banks under the updated Kisan Credit Card framework.
