Agriculture loans, Banking, Loans

Agriculture Loans in India

Posted By: Admin
June 10, 2022 |

Get KCC, KOD, Farm machinery loan, documents for agriculture loan, Subsidy for farmers, Agriculture loan benefits

Agriculture loans in India: Almost every business needs funds to evolve and run it successfully. There are various sources of funds which farmers use. One of which is to avail a loan which is the most popular way as of now. Every bank and Non Banking Financial Company is playing a major role in providing Agriculture Loans in India.

The Government of India has taken many initiatives to promote agriculture activities in various streams. The Government of India is also issuing subsidies on various loans, in some cases it can be up to 35% of the loan amount.

Even after so many promotional activities from lenders and Government, the process is not that easy to avail a agriculture loan and fulfill lender’s requirements. Some of the people are actually not aware about schemes available only for farmers in India.

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Here I have tried to provide information about those schemes in a nutshell.

Agriculture loans, we can divide these loans in two categories –

Term loan (Loan in which amount is given to the borrower one time and to be repaid in installments.)
Running Limits (Loans in which a certain amount is fixed and can be availed as per requirement. This can be repaid whenever the borrower has funds to repay within the limitation period.)

Different types of loans are designed for different sectors like Agriculturists, Manufacturers, Contractors, Service providers like Agri-clinic, Infrastructure related etc.

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There are many schemes which banks offer to farmers.

1. Kisan Credit Card (KCC) –

The Kisan Credit Card scheme is a credit scheme. Indian public sector banks introduced this scheme in 1998. This model scheme was prepared by the National Bank for Agriculture and Rural Development on the recommendations of the R. V. Gupta Committee to provide advances for agricultural needs. A farmer can avail Kisan Credit Card to meet comprehensive credit requirements of the agriculture sector by giving financial support to farmers. The KCC provides short term loans to farmers at an interest rate of 4 per cent on the condition of timely payment. According to Bank’s rules, Bank will waive interest up to 3 percent if the farmer repays the loan promptly.

2. Agriculture Overdraft (AGRI OD) –

Overdraft facility for Farmers to meet urgent and unforeseen needs. If a farmer is already enjoying the loan facility under Kisan Credit Card scheme, he can opt for this scheme to fulfill his urgent need related to farming.

3. Agriculture Working Capital Loans –

These loans are offered to farmers and other individuals engaged in agriculture-related activities to meet their various working capital requirements. To meet expenses which are not covered by the Kisan Credit Card scheme, this loan is available for farmers. This scheme works the same as a regular cash credit scheme. You can read more about cash credit limits by clicking here.

4. Agriculture Gold Loans –

Only farmers can avail this but at a lower interest rate. There is no subsidy available for this type of loan. This scheme works as a regular gold loan.

Click here to read more about gold loans in India

5. Farm Mechanization Loan-

Farmers can avail this to purchase/repair/upgrade farm machinery. Banks provide general farm mechanization loans or sub-category loans like drip irrigation loans, tractor loans, combine harvester loans, etc.

6. Animal Husbandry loans/ Dairy Loans/ Fish Farming/ other loans related to animals and birds –

Almost all public sector banks are providing these loans. These loans have a facility of subsidy which can be upto 30-35% depending on the scheme.

7. Warehouse/ Infrastructure loans –

These loans are provided to set up warehouses, cold storages, go downs and other infrastructure related needs. These loans also have provision of subsidy. Generally big scale farmers avail these loans. The Government of India provided subsidies on these loans up to almost 25-40% of the total project cost.

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8. Loans to setup Agri-clinic –

These loans are available to provide expert advice and services to farmers on various aspects to enhance productivity of crops/animals and increase the incomes of farmers. One needs to have required knowledge of this and a degree/ diploma in related streams.

9. To purchase a agriculture land –

This loan scheme is to enable a farmer to purchase land for agriculture purposes. However there is a condition that the purchased plot should be agricultural and located within a radius of 5 km of the farmer’s house/village.

Benefits of Agriculture Loans

Low Interest Rates – One of the biggest benefits of agriculture loans is that the interest rates are low and start at just 8% per annum.
Easy Processing – Most lenders process agriculture loan applications within a couple of working days.
Less Paperwork – Agriculture loans require minimum documentation. The borrower has to submit only a few primary documents like photo id proof, address proof, land ownership deed, etc.
Flexible Repayment – Borrowers can repay the loan as per their convenience. There are both short-term and long-term loans for farmers.

More about the agriculture loans can be find on link

To conclude, A farmer can avail agriculture loans in India for various purposes. Farmers can avail these loans for farming and irrigation equipment purchases, crops for cultivation, and other agriculture-associated activities. Besides farmers, these loans are also available to individuals engaged in other agri-related sectors like animal husbandry, horticulture, apiculture, aquaculture, silk farming, and floriculture.

The government of India encourages women to lead agricultural activities. As a result, some banks offer special discounts on interest rates and other benefits for women borrowers. Read more about Government business loan schemes.

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