KCC Interest Rate and Interest Subvention: 7% to 4%
- Base KCC rate
- 7% a year (up to ₹3 lakh)
- Prompt repayment incentive
- 3%
- Effective rate if repaid on time
- 4% a year
- Subvention paid to banks
- 1.5%
- Benefit period
- Up to 1 year from disbursement
- MISS budget 2026-27
- ₹22,600 crore
To work out your own figure, use the KCC interest calculator at the top of this page. It uses the 7% rate, the 3% prompt repayment incentive and a ₹3 lakh limit, which is what RBI's operating circular applies today.
Below, we explain where these numbers come from: the Modified Interest Subvention Scheme (MISS), the conditions you must meet to pay only 4%, and why you may have heard of a ₹5 lakh limit. This is general information, not financial advice. Your bank's sanction letter is the final word on your loan's byaj (interest).
How 7% becomes 4%: the rate ladder
RBI's circular for 2025-26 (13 January 2026) sets out the scheme like this:
| Step | What happens | Who gets it |
|---|---|---|
| 1. Loan given | Short-term KCC loan up to ₹3 lakh at 7% a year | Farmer pays 7% |
| 2. Interest subvention | Government gives 1.5% to the lending institution | Bank or PACS |
| 3. Prompt Repayment Incentive (PRI) | Extra 3% for repaying on time | Farmer |
| 4. Final cost | 7% minus 3% = 4% effective | Farmer who repays promptly |
The benefit lasts for up to one year from the date the money is disbursed. If you repay after one year, the benefit is not available. Aadhaar seeding and eKYC are mandatory. Farmers who are only in animal husbandry, dairy, fisheries, beekeeping and similar activities have a sub-limit of ₹2 lakh.
Banks claim the 1.5% and 3% from the government on the Kisan Rin Portal, which is why your bank needs your Aadhaar and eKYC to be correct.
Worked examples in rupees
These examples use simple yearly interest so the numbers are easy to follow. Your bank's actual calculation can differ (for example, by the dates you draw and repay money), so treat them as illustrations.
| Loan amount and period | Interest at 7% | Interest at 4% (repaid on time) | You save |
|---|---|---|---|
| ₹50,000 for 1 year | ₹3,500 | ₹2,000 | ₹1,500 |
| ₹1,00,000 for 1 year | ₹7,000 | ₹4,000 | ₹3,000 |
| ₹1,50,000 for 6 months | ₹5,250 | ₹3,000 | ₹2,250 |
| ₹2,00,000 for 1 year | ₹14,000 | ₹8,000 | ₹6,000 |
| ₹3,00,000 for 1 year | ₹21,000 | ₹12,000 | ₹9,000 |
| ₹4,00,000 for 1 year | ₹21,000 on the first ₹3 lakh | ₹12,000 on the first ₹3 lakh | ₹9,000; the extra ₹1 lakh is outside the ₹3 lakh cap at the bank's own terms |
The last row shows why the limit matters. Under the operating circular, only the first ₹3 lakh gets the 7% and 4% treatment. Ask your bank in writing what rate applies to any amount above that.
हिंदी में सारांश
किसान क्रेडिट कार्ड (KCC) पर ₹3 लाख तक के अल्पकालिक ऋण पर ब्याज 7% सालाना है। सरकार बैंक को 1.5% ब्याज छूट देती है और समय पर चुकाने वाले किसान को 3% अतिरिक्त प्रोत्साहन मिलता है, इसलिए असली ब्याज 4% रह जाता है। यह लाभ पैसा मिलने की तारीख से एक साल तक ही है, और आधार सीडिंग व eKYC जरूरी हैं। उदाहरण: ₹1,00,000 पर एक साल का ब्याज 7% पर ₹7,000 और समय पर चुकाने पर ₹4,000। बजट 2025-26 में सीमा ₹5 लाख करने की घोषणा हुई और PIB ने मार्च 2026 में इसे लिखा, लेकिन RBI का 13 जनवरी 2026 का परिपत्र अभी भी ₹3 लाख तक ही लाभ देता है। अपने बैंक से पक्का करें। RBI के नए KCC नियम 1 जनवरी 2027 से स्वीकृत ऋणों पर लागू होंगे। प्रोसेसिंग शुल्क बैंक की नीति पर निर्भर है।
₹3 lakh or ₹5 lakh? What is announced and what applies
You may have read that the KCC interest subvention limit is now ₹5 lakh. Here is the record, in date order:
| Date | What happened |
|---|---|
| 1 February 2025 | Union Budget 2025-26 announced raising the MISS loan limit from ₹3 lakh to ₹5 lakh (PIB, 4 and 25 February 2025) |
| 28 May 2025 | Cabinet approved continuing MISS for 2025-26 with the existing 1.5% subvention, as reported by Business Standard (May 2025) |
| 13 January 2026 | RBI's MISS circular for 2025-26 still caps the subvention and PRI at ₹3 lakh per farmer |
| 11 March 2026 | PIB backgrounder says the crop loan limit "rose from ₹3 lakh to ₹5 lakh in 2025-26" (allied and fisheries from ₹2 lakh to ₹5 lakh) |
So two official documents say different things. The ₹5 lakh limit has been announced, but the RBI circular that banks operate under still applies the 7% and 4% rate only up to ₹3 lakh. We found no RBI circular yet for MISS in 2026-27. Please confirm the current limit with your bank before you plan a larger loan.
How to make sure you pay only 4%
- Seed Aadhaar and finish eKYC on your KCC account. RBI lists both as mandatory for the benefit. See our Aadhaar bank seeding guide if you are unsure what seeding means.
- Note the disbursement date written in your passbook or loan papers.
- Ask the bank for the exact due date for each withdrawal, so you know when the one-year benefit period ends.
- Repay before that date. Repaying after one year means you lose the incentive, and interest follows your bank's terms.
- Keep the repayment receipt and check that the interest charged matches the reduced rate.
- Renew or redraw as your bank allows, and repeat the same discipline every season.
Who is covered and the warehouse extension
The scheme covers loans from public sector banks, private sector banks (rural and semi-urban branches only), small finance banks and computerised PACS ceded with scheduled commercial banks. Regional rural banks and cooperative banks are covered through NABARD (RBI circular, 13 January 2026).
There is also help after harvest. Small and marginal farmers with a KCC can get interest subvention for up to 6 more months on loans against produce stored in WDRA-accredited warehouses, using negotiable warehouse receipts. This lets you wait for a better price without paying full interest.
The Cabinet approved continuing MISS for 2025-26 on 28 May 2025, when there were over 7.75 crore KCC accounts. The 2026-27 budget for MISS is ₹22,600 crore, the same as the 2025-26 revised estimate (PRS).
Processing charges on KCC loans
Interest is not the only cost. On 4 February 2019 the Indian Banks' Association advised member banks to waive processing, documentation, inspection, ledger folio and all other service charges for KCC and crop loans up to ₹3 lakh. This was advisory only: banks follow their Board-approved charges policy, and the government did not make the waiver mandatory (Lok Sabha reply, 18 August 2025).
Under RBI's new KCC Directions of 2026, processing and inspection charges are as per each bank's policy. Ask your branch for a written list of charges before you sign. If you face a problem, use the official numbers on our Kisan apps and helplines page, and never pay an agent who promises a lower rate.
What changes from 1 January 2027
RBI issued the Kisan Credit Card (KCC) Scheme Directions, 2026 on 19 June 2026. They apply to KCC loans sanctioned from 1 January 2027; existing cards continue under the old rules until maturity or next renewal. Key points include a composite KCC tenure of 6 years, a revolving cash credit for the short-term part, and limits rounded to the nearest ₹1,000. The interest subvention itself is governed by the yearly MISS circulars, so keep checking with your bank. For the full KCC rules, see our Kisan Credit Card guide, and for the PM Kisan side of things, the PM Kisan explainer.
Frequently asked questions
What is the kisan credit card interest rate in 2026?
Under RBI's circular of 13 January 2026 for 2025-26, short-term KCC loans up to ₹3 lakh are at 7% a year. If you repay on time, within one year of disbursement, you get a 3% prompt repayment incentive, so the effective rate is 4%. Aadhaar seeding and eKYC are mandatory for this benefit.
Is KCC interest subvention now available up to ₹5 lakh?
The Budget 2025-26 announced raising the limit to ₹5 lakh, and a PIB backgrounder of 11 March 2026 says it rose. But RBI's operating circular of 13 January 2026 still applies the 7% and 4% rate only up to ₹3 lakh, and no 2026-27 circular was found. Please confirm the current limit with your bank.
What is the modified interest subvention scheme?
The Modified Interest Subvention Scheme (MISS) is the government scheme that lets banks give short-term KCC loans at 7%. The government pays lenders 1.5% interest subvention and gives farmers an extra 3% for prompt repayment. The Cabinet continued it for 2025-26 on 28 May 2025, and its 2026-27 budget is ₹22,600 crore.
What happens if I repay my KCC loan late?
The interest subvention and prompt repayment benefit is available only for up to one year from disbursement. If you repay after one year, you do not get the 3% incentive, so you lose the 4% effective rate, and interest is charged as per your bank's terms. Ask your bank for the exact due date of each withdrawal.
Is the KCC interest rate different for dairy or fisheries farmers?
The same 7% rate and 3% prompt repayment incentive apply, but farmers who are only in animal husbandry, dairy, fisheries, beekeeping and similar activities have a sub-limit of ₹2 lakh under the RBI circular of 13 January 2026. Farmers with both crops and allied activities follow the overall ₹3 lakh cap.
Do I pay processing charges on a KCC loan?
The Indian Banks' Association advised banks on 4 February 2019 to waive processing, documentation, inspection and other service charges for KCC loans up to ₹3 lakh, but this was advisory and not made mandatory. Banks follow their Board-approved policy, and RBI's 2026 Directions also leave charges to each bank. Ask your branch for the list.
Sources: PIB: Budget 2025-26 on KCC, 4 Feb 2025 · PIB backgrounder: Kisan Credit Card, 11 Mar 2026 · Business Standard, 28 May 2025 · Indian Cooperative, 16 Jan 2026 · PRS: Demand for Grants 2026-27, Agriculture · Lok Sabha USQ 3990 on KCC charges, 18 Aug 2025. Checked 16 October 2026. Portals and manuals change: confirm on the official site or with your district surveillance unit.