NEW DELHI, 17 May 2025: In a landmark move aimed at bridging the credit access gap for landless cultivators, the National Bank for Agriculture and Rural Development (NABARD), in collaboration with the Reserve Bank of India (RBI) and the State Bank of India (SBI), has initiated pilot projects leveraging Central Bank Digital Currency (CBDC) to extend the benefits of Kisan Credit Cards (KCCs) to tenant farmers.
The pilots are currently operational in select districts of Andhra Pradesh—Krishna, West Godavari, and East Godavari—and Odisha—Cuttack and Puri. Under this initiative, digital currency is being disbursed directly to tenant farmers for the purchase of agricultural inputs such as seeds and fertilizers from pre-approved vendors. This system ensures transparency and prevents diversion of credit, while empowering genuine cultivators.
“Through these pilots, we are trying to see whether something can be given to tenant farmers independent of landlords,” said Ajay Sood, Deputy Managing Director at NABARD.
Early Impact: Odisha and Andhra Pradesh Lead the Way
The pilot initiative has already shown promising results. As of the end of FY25, 501 tenant farmers in Odisha received sanctioned loans totaling INR 2.73 crore, with INR 1.13 crore disbursed. In Andhra Pradesh, 218 tenant farmers have benefitted, with INR 1.86 crore sanctioned and INR 78.58 lakh disbursed.
According to an official note, this marks a milestone as the first-ever use-case of digital currency in agricultural credit.
Addressing a Long-Standing Gap
Currently, 30-40% of India’s gross cropped area is cultivated by farmers who do not own the land. Traditionally, KCC loans are extended only to landholding farmers, excluding a large section of cultivators from formal credit channels.
While initiatives such as Joint Liability Groups (JLGs) have been explored to support landless farmers, banks often face difficulties in verifying tenant farmers’ status as actual cultivators. “The gap primarily stems from lack of land ownership documentation, low financial literacy, and hesitancy from banks due to unclear credit usage,” noted the official document.
As of now, India has 77.1 million operational KCC holders, including 1.24 lakh for fisheries and 44.4 lakh for animal husbandry.
Evolving KCC Framework and Credit Support
Under the Modified Interest Subvention Scheme (MISS), farmers with KCCs can avail loans up to INR 3 lakh at 7% annual interest. Those who repay promptly benefit from an additional 3% interest subvention, effectively reducing the rate to 4%.
From FY26, the government has proposed raising the credit limit under KCC to ₹5 lakh annually, acknowledging the rising costs of inputs and expanding agricultural needs. Moreover, since 2019, the KCC scheme has been expanded to include working capital requirements for allied activities such as dairy, animal husbandry, and fisheries.
In FY25 alone, over INR 28.98 lakh crore was disbursed through commercial banks, cooperative banks, and regional rural banks. Of this, nearly 60% constituted short-term crop loans, while the rest supported investments in agriculture and allied sectors.
The Road Ahead
CBDC’s application in agricultural credit presents a revolutionary opportunity to build a more inclusive and efficient rural finance system. If successful, the model could be scaled across India, enabling millions of tenant farmers to access formal credit, reduce dependency on informal moneylenders, and improve agricultural productivity.
By harnessing the power of digital currency, NABARD and its partners are not only modernizing agri-credit infrastructure but also empowering a traditionally underserved farming population—making financial inclusion a reality in India’s hinterlands.
By Jagdish Kumar