How to get Agricultural Loans in India?

Introduction to Indian Agricultural Credit.

Agriculture is one of India’s major industries, with 65% of households earning income from it and 40% of national income. No wonder it is the backbone of India’s economy. As most of the farmers are at the mercy of weather and Gods and their financial conditions they need financial assistance and by receiving this financial assistance they can get good harvests every year. To overcome this financial crisis, the government and many financial institutions provide loans. These loans are known as agriculture loans, there are many types of loans out of which agriculture loans are available to eligible people based on various measures, let’s continue to know about it.

What are considered agricultural loans in India?

You can avail agriculture loan for many reasons, let’s clearly know for which reasons most farmers in India avail loans.

• They get agricultural loan to buy agricultural land.
• Purchase of agricultural equipment.
• Establishing a dairy or small poultry farm.
• Fisheries.
• To meet seasonal agricultural needs
• Expenditures.
• To run daily farming operations
• Operating expenses.
• Capital requirements for agricultural work.

For the reason mentioned above, farmers take agricultural loans from banks to meet their agricultural needs.

Let us see them divided into different types of loans depending on the cash requirements based on agricultural purpose.

What are the types of agricultural loans?

Crop loans and Kisan Credit Card:

It is a short-term loan and is provided to meet the seasonal financial needs of a farmer. It can be used for buying seeds, planting and growing crops. These loans are usually of a small amount and they have little money to meet the needs of seasonal farming.

As these are the recurring needs of a farmer, the government has introduced the Kisan Credit Card scheme so that they can avail loans at low interest rates with easy and quick repayments. It is a multi-purpose smart card and debit card.

Agricultural Term Loans:

This loan is given for a longer period than the crop loan and is used for major agricultural expenditure like purchase of machinery, construction of irrigation facilities. The loan amount can range from a few thousand to 20 to 40 lakhs. The tenure ranges from 3 to 15 years and depends on the repaying capacity of the farmers.

Working capital loans:

It aims to meet the requirements of working capital for agriculture or allied activities. These are useful to cover expenses not covered under crop loans or KCC. Apart from farmers, sellers of seeds, fertilizers, tractors etc. can avail this loan.

Farm mechanization loans:

It can be used to buy new machines like tractors or repair old ones.

Horticulture Loans:

These are loans for setting up horticultural plots

Agriculture gold loan:

Loans are given for pawning gold jewelery and for crop cultivation or other agricultural purposes. It helps farmers get credit using the value of gold.

Forestry loans:

This loan can be used to convert waste land into agricultural land or for other purposes.

warehouse receipt loans:

These loans are useful because they do not need to sell the produce at a low price, after harvesting, a farmer can store the produce in an approved storage warehouse and get credit on the stored produce and the receipt of the stored produce can be used to get loans from banks.

What should be the interest rates for agricultural loans?

The interest rate on these loans varies depending on the type of loan availed, the lender and the end objective. But generally, the interest rates on these loans can be around 8% lower or higher. Apart from that, the borrower pays a one-time repayment amount ranging from 0 to 2% of the loan amount or more. The repayment option is also flexible and they have the option of getting the longest tenure possible based on the type of loan.

What are the Eligibility and Criteria for Farm Loans in India?

Eligibility varies based on the type of loan you take. Generally, the criteria are as follows.

Borrower should be above 18 years and below 70 years.

To avail agricultural loan, first the borrower must have agricultural needs.

The borrower must have the necessary assets like agricultural land and the bank will hypothecate the loan.

Tenant farmers, marginal farmers, oral tenants and sharecroppers are also given loans against mortgage if they are able to repay.

A joint or individual purchase loan can be given depending on the lender’s terms and conditions depending on the nature of the loan.

Documents Required to Apply for Farm Loans in India?

The following documents are required for any type of loan you get. Lender may ask for more documents depending on their rules and regulations.

Completed application form.

Land or property documents.

PAN Card, Voter ID, Aadhaar Card or any other recognized ID card as proof of identity.

Address proof can provide any of the following: bank statement, ration card, driving license.

How to Apply for Farm Loan in India?

There are many types of loans and various government, private and corporate banks offer these loans. So it is essential to do thorough research about the options available to you based on the purpose of the loan. Applying for a loan can be done online if you choose companies with online facility or you can visit the nearest branch of your preferred lender.

If you choose an online lender, you can apply for a loan using the official website by filling the application form, uploading all the required documents and clicking on ‘Apply Now’.

If you want to go directly and get a loan, carry all the necessary documents so that the processing is quick.

Whether you apply online or offline there will be a verification process and the loan will be disbursed only when the application is approved.

Agricultural loans are available for various purposes and are offered by various lenders. A borrower should do proper research to get the best deal.