India’s agricultural credit landscape is witnessing a promising transformation as NABARD and the State Bank of India pilot the use of the Reserve Bank of India’s Central Bank Digital Currency (CBDC) to extend Kisan Credit Card (KCC) benefits directly to tenant farmers, who traditionally struggle to access such loans due to lack of land ownership. This initiative, running in selected districts of Andhra Pradesh and Odisha, aims to ensure genuine farmers receive timely financial aid to purchase essential agricultural inputs like fertilizers and seeds, eliminating the need for intermediaries.
The pilot programs are active in Krishna, West Godavari, and East Godavari districts of Andhra Pradesh, along with Cuttack and Puri districts in Odisha. These projects have already benefited hundreds of tenant farmers. By the end of FY25, 501 tenant farmers in Odisha were sanctioned loans totaling Rs 2.73 crore, with Rs 1.13 crore disbursed. Meanwhile, 218 tenant farmers in Andhra Pradesh received sanctioned loans of Rs 1.86 crore, out of which Rs 78.58 lakh has been disbursed. Ajay Sood, Deputy Managing Director of NABARD, emphasized that this marks the first use of CBDC for credit disbursement, aimed at directly reaching tenant farmers without dependence on landlords.
CHALLENGES AND THE WAY FORWARD
Tenant farmers cultivate nearly 30-40% of India’s gross cropped area but face significant barriers in accessing credit as traditional KCC loans require land ownership. Previous government efforts, such as forming joint liability groups to extend loans to landless farmers, faced hurdles due to banks’ difficulty in verifying tenant cultivators and concerns over loan usage.
Currently, around 77.1 million KCC holders possess land rights, with credit extended to allied sectors like fisheries (1.24 lakh KCCs) and animal husbandry (44.4 lakh KCCs). Under the modified interest subvention scheme, KCC holders get loans up to Rs 3 lakh at 7% interest, with an additional 3% interest subsidy for timely repayment, effectively reducing interest to 4%. For FY26, the government has increased the loan limit to Rs 5 lakh to boost agricultural growth.
In FY25, agricultural credit disbursed through banks and cooperatives reached a staggering Rs 28.98 lakh crore, with 60% allocated for short-term crop loans and the remainder for investment in agriculture and allied activities.
