For those who is using the Kisan Credit Card (KCC) to support farming needs It is important to understand what will happen to the loan in the event that an unfortunate event such as death or an accident of serious severity happens. The world is not always predictable, and knowing the rules of settlement will give you security. If the KCC borrower dies or suffers an accident the banks must follow certain procedures to settle the loan amount.
The rules are constantly updated and are drafted by Reserve Bank of India (RBI) and the government to help support farmers families and to make closure procedures simple. Let’s take a look at the process starting with insurance payouts, and then the specific procedures your family or nominees need to follow after an event, and then address your most frequently asked concerns to help you navigate this critical circumstance.
KCC Loan
If an KCC loan holder dies the responsibility to pay back loans typically transfers to nominees or legal heirs. If you’re nominee, heir or of a deceased person, you need to inform the bank by providing the death certificate, along with either the succession certificate or the legally heirship certificate. The bank will then decide on the procedure to close an account on loan.
When the owner of the KCC loan comes with an insurance policy for personal accidents (which majority of them do) insurance companies will cover a portion or all of the remaining loan amount, often as high as Rs50,000 in the event of permanent accident or disability, or even more, depending on the coverage. In some instances, under the government’s schemes such as PMJJBY or PMSBY the as much as Rs2 lakh of insurance coverage will help in clearing the loan in the event of an accident or death happens.
KCC Loan Settlement After Death Overview
| Situation | Settlement of KCC Loan |
| 1. Death | Legal heirs and nominees may contact the bank. Insurance could cover a portion or all of the the loan |
| 2. Accident | If death or permanent disability is the case the insured is permanently disabled or dies, insurance coverage (up to Rs50,000/Rs2-Rs5 Lakhs) is available. |
| 3. No Insurance | Legal heirs have the responsibility for the debt, however banks could agree to a settlement or go ahead with the process of asset recovery. |
| 4. Required Docs | Death certificate, succession/legally heir certification, claim forms must be filled out and submitted. |
| 5. One-time Settlement | Banks can allow partial payments to end this loans (“settlement”) and can affect the credit score you’ll have in the future. |
| 6. RBI Rules | Banks should release collateral promptly after settlement. Any delay could result in compensation. |
| Official Website | https://www.rbi.org.in |
What If There’s No Insurance on the KCC Loan?
In the event that insurance isn’t in force The bank is given the legal right to recover fees from the heirs to the deceased’s estate. Sometimes, banks are open to an out of court (or “one-time settlement” arrangement) if the family members are facing financial difficulties. When this happens, banks could accept a lump sum of money, often smaller than the full amount due to declare the account paid. But you should remember: a “settlement” is reported to credit bureaus as a closed-but-not-fully-paid account, which can impact your ability or your family’s ability to take loans in the future.
Step-by-Step: What You Should Do
- Inform the bank immediately of the borrower’s death, accident or death.
- Send the required documents, such as death certificate, succession certificate or legal heir certificate.
- Find the active status of your insurance under KCC Most insurance plans will automatically subtract a modest cost from the account in order to ensure that the insurance is kept alive.
- Make an insurance claim through your bank, in the event that you are it is eligible.
- If insurance is not available or is not available, try negotiating with the bank to settle or a payment.
- Make sure that every agreement is written and request a complete as well as a complete settlement.
- Banks must release all collateral the day of total payment or in 7 days of the date of settlement; in case of any delay the legal heirs can receive the amount of about the amount of Rs5,000 per day.
If you are taking out the KCC loan, being prepared for unplanned incidents, such as major accidents or death, protects your family from financial pressure. Knowing the procedure means that your family members can respond quickly to Inform the bank, make insurance claims and when necessary to reach an acceptable settlement. Make sure that your KCC insurance is in good standing, since this will drastically ease the burden of your family should there be a a tragedy. If you take the proper steps your loved ones are protected and your legacy of agriculture will continue to flourish without worry.
FAQ’s
1. If my family member who holds an KCC loan passed away then will the loan automatically cancelled?
The loan cannot be waived automatically. If there’s an insurance policy in force that is linked to the KCC The insurer will pay for the loan to the insurance limit once you make an insurance claim. If not, the legal heirs are accountable for the payment. The amount of settlement or waiver depends on the policies of the bank and the status of insurance.
2. What amount of insurance can you get in the event of the death or disability of a person?
Most of the time, KCC loans include accident insurance which pays up to Rs50,000 in the event of the event of permanent impairment or even death. Through government programs like PMJJBY or PMSBY that are linked to numerous KCCs and a payout of upwards of Rs2 lakh, or even more. Some banks offer greater coverage (up to Rs 5 lakh) for certain situations dependent on the policy and the amount of premium.
3. Does a loan agreement affect my family’s credit score in the future?
Yes that the process of settling on a loan (paying less than the amount due) adversely affects your CIBIL/credit score for a number of years. The account will be marked “settled,” which can hinder the heirs of yours or you new loans.
Hi, I’m Harikesh, a content writer at cgncollege.com. I write engaging and informative articles covering the latest news, India, and global updates. My goal is to keep readers informed with accurate and insightful stories from around the world.
