Agriculture loan interest rates

What is agriculture loan?

Agriculture loans are generally low interest loans that farmers can avail to run their farming business, buy agricultural land or farming equipment. Overall, it helps farmers run their business more efficiently.

What can an agriculture loan be used for?

An agriculture loan could potentially help the farmer to:

 • Purchase agricultural land.

 • Purchase farming equipment and cover operating expenses

 • Purchase livestock

 • Cover storage/warehouse expenses

 • Help with the marketing expenses

Who offers Agriculture loans?

In India, most commercial banks, co-operative societies rural and urban, provide agricultural loans to farmers.
Agriculture loan Interest Rates in India

Agriculture in India forms a major part of the Indian economy. Hence, agriculture sector has been given priority lending status. Banks and other major lenders offer agricultural loans to farmers at lower interest rates as compared to other loans.

As per the instructions of Govt. of India, crop loans up to Rs. 3 lakh are being disbursed at the interest rate of 7% p.a. The Government also provides interest subvention of 3% p.a. to those who repay their dues, thus effectively offering the crop loan at 4% p.a.

Crop loans beyond Rs. 3 Lakh are being disbursed by the banks at the rate of interest as per RBI norms and the bank's lending policies.

Collateral requirement:

As per the terms and instructions of the RBI, no separate security is required for crop loans up to Rs. 1 Lakh. For crop loans extending beyond Rs. 1 lakh, security might be required and the kind of collateral is decided by the individual bank as per RBI guidelines.

Documentation Required for Agricultural Loan

Banks sanction both long-term and short-term agricultural loan to farmers. Documentation is relatively simpler to make the process hassle-free for farmers. However, the following basic documentation is required:

 • Valid Identity Proof – Voter ID Card / Aadhar Card / Ration Card / PAN Card Passport / Driving License

 • Valid Address Proof – Lease / Rent Agreement / Passport / Driving License / Ration Card, / Utility bill (not more than 3 months old) / Bank Statement

 • Land ownership proof

 • Kisan Credit Card

The required documents can vary from bank to bank and it is best to contact your lender directly.

Agricultural Loan Eligibility

Agricultural loans are extended to all types of farmers in India. It is offered to small and marginal farmers, tenant farmer, share croppers and oral leases.