Innovation in Rural Banking: Case Study of Socioeconomic Determinants of Kisan Credit Card (KCC) in India

There are many innovations in the banking sector in recent periods due to the increase in competition and to sustain in the new era. The Kisan Credit Card (KCC) is one of the innovations in rural banking introduced by NABARD in 1998–99 to increase timely, adequate, and hassle-free credit to farmers in India. The objectives of the current paper are to understand the socioeconomic determinants of KCC and to know the characteristics of the farmer who access KCC to sustain in the formal banking system in India. The unit-level data has been extracted from the 77th round of the national sample survey on ‘Situation Assessment of Agricultural Households’ in 2019 in rural India. The methodology employs logistic regression techniques to analyze the relationships between various socioeconomic factors and the likelihood of farmers having access to KCCs. The finding of the study is the level of education of the farmer, farm size, account in the bank, registration with farmer’s organizations, formal training, and wealth is positive whereas region, religion, access to extension services, and family size are negatively associated with the access of KCC in India. The study highlights how important it is to raise farmers’ knowledge and access to Kisan Credit Cards (KCCs) in all areas of rural India. It recommends that programs designed to inform and educate farmers about financial innovations such as the KCC at the local level should be given top priority by policymakers. They may improve KCC utilization and accessibility for all types of farmers by doing this. The results further emphasize the significance of focused efforts to promote formal agricultural education, banking accessibility, and financial literacy among rural farmers. Legislators can encourage fair participation in KCC programs by successfully addressing these socioeconomic factors. Ultimately, authorities may support rural development and economic advancement in India by enabling wider access to KCCs and enhancing financial literacy.