India is working to widen the scope of its landmark Kisan credit card by making the product usable as a financial-inclusion tool in addition to its original purpose as a credit tool for farmers.

To make agricultural credit available more easily to farmers, the card issuer will convert the magnetic stripe Kisan credit card into a chip smart card usable at ATMs, India’s finance minister announced March 16.

Local media report that card will be usable at RuPay-branded ATMs, though PaymentsSource was not immediately able to confirm the information.

Kisan credit cards are usable only with biometric readers carried by business correspondents. Cardholders must swipe their card and then authenticate themselves using the print reader to access cash from their credit limit.

The issuer will complete the chip card conversion by the end of June next year, a spokesperson for the finance ministry tells PaymentsSource, noting the government will appoint a technology vendor for the project to help with the conversion.

According to the Reserve Bank of India's plan, all of India's point-of-sale and ATMs will accept EMV chip cards by mid-2013.

In January, India’s government announced its plans to expand the scope of the Kisan card by enabling farmers to use it also as a debit card linked to a separate account that earns interest (see story). The government, however, has yet to add the debit function, the spokesperson says.

One state in India recently demanded that the central government upgrade its Kisan credit card so farmers may use it at ATMs and keep it longer before requiring a new one (see story).

The National Bank for Agricultural and Rural Development launched the Kisan credit card in 1998. Rural and cooperative banks across India issue the card based on farmers’ land holdings so they may buy supplies such as fertilizer and pesticides.

However, farmers must repay their Kisan card loans within three years, and they may make any number of cash advances and purchases within a fixed limit based on the scale of their farm operations.

Kisan cardholders also may secure cash advances for farming-related purchases at a low interest rate. They must pay back cash advances within 12 months. The cards impose annual interest rates of less than 5%.

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