Home General Agriculture Loan Interest rates, Schemes, Eligibility

Agriculture Loan Interest rates, Schemes, Eligibility

Agriculture in India is one of the biggest industries and employs the highest number of people in the country. It is also the most venerable section of society and registers huge losses if faced with any climatic conditions.

In this type of situation, the farmer does not have upfront funding to invest in agriculture again and resorts to borrowing money from zamindars or private lenders. If he/she faces losses again, then the problem faced by them is unimaginable.

This is where agricultural loans come in and acts as an aid to them. Agricultural Loans are very helpful loans that help a farmer to get his/her hands on the capital required.

List of Interest Rates on Agriculture Loan

The following are some of the famous banks with interest rates providing agricultural loans to farmers-

BankInterest RateProcessing Fee
State Bank of India7.25% p.a. onwards0% p.a. to 1.25% p.a. of the loan amount
IDBI Bank7% p.a. onwardsAt the discretion of the bank
IndusInd Bank10% p.a. onwards1.25% of the loan amount + GST
Central Bank of IndiaUp to 13.25% p.a.At the discretion of the bank
Karur Vysya Bank8.30% p.a. onwardsAt the discretion of the bank

Types of Agriculture Loan

The following are the types of Agricultural Loan that a farmer can get-

Crop Loan

Crop Loans are those loans that are used by the farmer to meet his daily farming needs like purchasing fertilizers, seeds, electricity bills, etc. During the cultivation period, the farmer always has a cash crunch hence, during this time the credit would allow him to make necessary purchases. One such example of this is the Kisan Credit Card.

Agricultural Term Loan

It is a term loan that is paid back in a loner and eased-out manner. This type of loan can be used for meeting the non-seasonal needs of the farmer like equipment upgrading, windmills, solar panels installation, etc.

Solar Pump Set Loan

Solar Pump Set loan is a specialized loan provided for the installation of solar pumps which are powered by solar energy. This type of loan can be paid back for as long as 10 years of tenure and with low-interest rates.

Loan for Allied Agricultural Activities

Allied Agricultural activities like cattle rearing, hen hatching, artificial insemination, etc. need capital investment and working capital for smooth operations. This type of loan is aimed at them and can be used widely for this.

Farm Mechanisation Loan

Mechanization of Farms helps in increasing production and increase profits for the framer. Any equipment that can be motorized to increase production comes under this scheme. You can get Tracketors, repair equipment, etc. can be done using this.

Horticulture Loan

Farmers involved in horticulture activities like setting up vegetable farms, orchards, etc. can apply for this loan.

Forestry Loan

If the farmer wants to plant a tree-based farm then he/she can get a Forestary Loan which can be used to meet all the expenses that you get out of it.

Agricultural Gold Loan

If a farmer has Gold idle at home then the farmer can use the gold to get a loan. The interest rate charged is lower and the amount that you get is also very good. It is one of the best types of loans that you can get.

Features of Agricultural Loan

The following are the features of the Agricultural loan which make it an attractive option for Farmers-

  • Your loan will be quickly processed and you’ll be able to get the loan
  • The agricultural loan usually does not have any processing fee to ensure that the farmer is put under a minimum burden
  • This type of loan is disbursed faster and if the documentation is correct then the loan can be passed within a few hours
  • Agricultural loans offer very attractive interest rates as compared to other interest rates
  • There are no hidden charges
  • Flexible Loan repayment tenure which enables the farmer to take the loan without any financial stress
  • Insurance benefit also comes with the loan which enables the framer to take a loan without worries

How to Apply for Agricultural Loan?

The following are the steps that you’ll have to follow to apply for the Agricultural loan-

  • Visit the nearest bank branch where you’ve decided to take the loan along with the documents mentioned below
  • Talk to the loan department about your interest in taking a loan and start the process by filling out the application form for the loan
  • After filling out the application submit it along with the documents mentioned below
  • Your loan will be processed by the bank after following various processes like land evaluation, production capacity, loan amount, etc.
  • When everything is done, you’ll be communicated with the loan terms and conditions along with the amount that you’ll be responsible for
  • After that, your loan amount will be disbursed after the processing of the loan

Documents Required for Agricultural Loan

The following are the documents required for the Agricultural Loan-

  • Duly filled application form
  • KYC documents- Aadhaar Card, PAN Card, etc.
  • Land/asset documents
  • Security PDC
  • Any other document mandated by the lender

Eligibility Criteria for Agricultural Loan

The following are the eligibility criteria for the Agricultural loan-

  • The age of the applicant is between 18 years to 70 years
  • The asset i.e. land must be hypothecated with the bank to take the loan
  • You can apply for the loan individually or jointly based on the terms and conditions of the loan

FAQ

Can I take a loan for purchasing the agricultural land?

Yes, you can take a loan at a low-interest rate to purchase agricultural land.

Is foreclosure of the agricultural loan allowed?

Yes, you can always foreclose your loan account after making the entire payment back to the bank.

Can I avail Agricultural loan without security?

Yes, you can avail up to Rs.1 Lakhs without any security.

Will I need a guarantor to apply for the Agricultural loan?

Yes, most lender makes it mandatory for a guarantor to provide a guarantee of the payments.

How long does it take for the loan to get processed?

It may take anywhere from 1-7 days for the loan to get approved. If your documents are strong and do not require a lot of verification or errors then the loan can be processed faster without any issue.