Agriculture Loan

Agriculture Loan Meaning - Banks, microfinance firms, and government agencies all provide agricultural loans to help India's agricultural sector expand. These loans can be used to finance agricultural initiatives such as purchasing land, updating or purchasing farm machinery, establishing irrigation channels, and constructing grain storage facilities, among other things.

Characteristics of Loan on Agriculture Land

• End-use Flexibility: An agricultural loan can be used to cover a wide range of farm-related expenses, such as the purchase of new acreage or animals, or to manage running costs and other linked activities.
• Optional collateral: Both secured and unsecured agricultural loans are available, which depends on the loan amount and applicant profile.
• Various sorts: Agricultural loans are classified into several sorts based on their intended usage and repayment period.
• Minimal Documentation: In most cases, an agricultural loan can be obtained with very little documentation.

Agriculture Loan Interest Rate by Different Banks

Eligibility for Agriculture Loan Schemes

Small and marginal farmers, sharecroppers, oral lessees, and tenant farmers are all eligible to qualify for Agricultural Loans.

Documents Required to Apply for Loan for Agricultural Land Purchase Application

The documentation required to obtain agricultural loans are quite simple. These are some examples:

• Valid photo identification
• Address verification
• Credit card Kisan: This is a card that is given to all farmers.
• Evidence of land ownership, revenue receipts, a record of rights, and so on.

Types of Loans in Agriculture

• Agriculture Term Loan: These are long-term loans of up to 48 months issued by various lenders to fund agricultural expenses that are not seasonal in nature. The loan proceeds can be used to purchase new or upgrade current gear, as well as to build solar panels and windmills. Banks typically give a repayment period of 3 to 4 years for this loan, allowing you to pay back the borrowed sum in monthly/bi-annual/yearly installments at your convenience.

• Farm Mechanisation Loan: This loan can be used to buy new machinery, repair or replace old ones, or buy tractors, harvesters, or other agricultural equipment. While some banks offer general-purpose loans, others categorize these loans based on their intended function. 

• Crop Loan or Kisan Credit Card: Kisan Credit Card or Kisan Card is an appropriate agriculture loan solution for meeting short-term credit requirements, such as crop cultivation expenses, post-harvest activities, farm equipment maintenance, and so on. The card is typically accessible in the form of an electronic RuPay Card, which farmers can use to withdraw funds from ATMs in order to make the necessary purchase. As a result, it offers accessible loans to satisfy your daily farm needs.

• A Loan for the Allied Agricultural Activities: This loan is available to farmers to help them fulfill their working capital and long-term investment needs for allied agricultural activities.

• Agricultural Gold Loan: This loan is made available to farmers in exchange for the pledge of gold jewelry. It may be made available for crop production as well as other agricultural uses. This loan has low-interest rates and allows farmers to access the value of their gold jewelry, which is normally sitting idle in the house or bank locker.

• Forestry Loan: This type of agricultural loan is used to grow crops that grow on trees. It can be used to clear undergrowth or wild trees, turn barren ground into cultivable land, prepare the land by installing irrigation channels, and so on.

• Horticultural Loan: This agricultural loan is used to develop land for orchards or vegetable farms, remove undergrowth or wild trees, small irrigation activities, erect boundary walls/fencing, and other horticultural purposes.

Who is Eligible for Farm Loans?

• Age requirements: Minimum of 18 years and a maximum of 65 years.
• Indian national with no criminal history.
• Land should be available for cultivation.
• Should not have had any previous loan defaults.

Documents Required for Loan to Buy Agricultural Land Loan

The following is the documentation that most lenders request for an agricultural loan:

• Application form duly completed.
• Credit Card Kisan.
• Two pictures (passport size).
• Utility bills, voter ID, Aadhar card, and so on can be used as proof of address.
• Voter ID, PAN, Aadhar card, Ration card, and other forms of identification are acceptable.
• Income documentation includes bank statements, ITRs, and other tax returns.

Which Bank is Best for an Agriculture Loan?

Banks that provide agricultural loans to farmers:

• State Bank of India
• Central Bank of India
• ICICI Bank
• Axis Bank
• Union Bank