What Is Agriculture Loan in India?

An agriculture loan is an overdraft facility which could be used to meet the cost of farming, cultivation and working capital activities for agri-business and associated activities. This loan could also be used for buying cattle, purchase of equipment for farming and irrigation and other agricultural requirements.
Agriculture loans are generally low interest loans that farmers can avail to run their farming business more efficiently.

What can an agriculture loan be used for?

An agriculture loan can be availed to:

•    Purchase agricultural land.

•    Purchase farming and irrigation equipment

•    Cover operating expenses

•    Purchase cattle and livestock

•    Cover storage/ warehouse expenses

•    Help with the marketing expenses

In India, Government banks, private banks, co-operative societies, rural and urban banks provide agricultural loans to farmers. Most banks offer Retail Agri Loan - Kisan Credit Card which is a specially designed credit card for farmers. It provides convenient credit for farmers to meet day to day farming requirements.

Another type of loan offered is the Long-Term Loan for agriculture & allied activities. This could be availed for larger expenditure like buying agriculture equipment, cattle etc.
The repayment tenure differs with each lender. You can pay back the loan in convenient monthly/Half yearly/ Yearly instalments as per your budget.

General Benefits of Agriculture loans:

•    Simplified documentation

•    Easy and convenient loan

•    Flexible loan repayment options based on your income

•    Attractive interest rates

•    No hidden charges

•    Quick processing

•    Non-mortgage loans are also available with certain lenders

Eligibility to avail an Agriculture Loan:

Following are the basic requirements to avail Kisan Credit Card or an Agricultural Loan from any bank:

•    Ideally, the applicant should fall in the age bracket of 18-70 years

•    Should cultivate agricultural land

Generally, agricultural loans are extended to all types of farmers in India. It is offered to small and marginal farmers, tenant farmers, share croppers and oral lessees.

Documentation Required for Agricultural Loan:

Banks sanction both long-term and short-term agricultural loans to farmers. The documentation is relatively simple 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/cultivation proof as specified by the lender

•    Any other documents as mandated by the lender