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About Loan for Agriculture
India is predominantly an agricultural economy and the nation thrives on the basis of this sector. Farming is a set of many activities that are involved in transforming a seed to an end product. There are a lot of techniques, procedures and equipment involved in advanced farming. Most of India’s farmers have limited resources and need to opt for loans to fulfil their requirement.
Agricultural loans in India just doesn’t just involve the farming activities for the cultivation of crops but also any other forms of agriculture such as animal husbandry, horticulture, floriculture, silk farming, aquaculture, pisciculture, and apiculture.
Some of the main areas covered under a farming loan are:
- Managing daily operations
- Purchase of tractors, harvesters and other farming machinery
- Purchase of farming lands
- Organising storage facilities
- Marketing of the products
- Transportation cost from farms to markets
- Expansion of agricultural activities
Apart from these, there are also financial aids such as grant and subsidies that provide protection to the farmer in the event of damage to crops due to weather conditions or other factors.
The main purpose of Agricultural Loans is to provide credit flow for the smooth functioning of the farming sector in the country. This involves the quantum of production and productivity.
What are the eligibility criteria for Agriculture Loans in India?
All kinds of farmers such as small and marginal farmers, sharecroppers, oral lessees and tenant farmers are eligible to apply for the Agricultural Loans.
What are the Documents required for the Agriculture Loans?
The set of documents required for availing agricultural loans are very basic. These include:
- Valid Photo identity proof
- Valid address proof
- Proof of land-ownership, revenue receipts, a record of rights etc.
- Kisan Credit card: This is a card issued to all the farmers
Specifications of interest rate for the Agricultural Loan
Crop Loans :
As per guidelines by the government of India, for crop loans more than Rs 3 lakhs the interest rate is 7% p.a. If the farmers are able to repay the loan timely, they are offered an interest subvention of 3%, resulting in the interest rate being 4% p.a.
For loans beyond Rs 3 lakhs, the interest is charged as per RBI directives. According to the RBI guidelines, for loans up to Rs 1 lakhs, there is no requirement of security. For loans above Rs 1 lakhs, there is a requirement for collaterals.
Post-harvest :
The interest rate for the post-harvest loan is 7% with interest rate subvention. If the farmers avail post-harvest loan against negotiable warehouse receipt, the banks will charge commercial interest rates.
Land-purchase :
The interest rate for land purchase within 5 km of the farmer’s residence varies from time to time. For loans up to Rs 50, 000, there is no margin required. However, for loans above Rs 50000, the margin requirement is 10%.
Types of Agricultural Loans
When it comes to agricultural loans, there are various options in India. There are nationalized and private banks which provide the loans with various specifications. The government-recognized banks ensure complete transparency in Loan processing, disbursal, and repayment. This ensures that the poor farmers are not cheated, and they do not end up paying anything extra towards the loan.
National Bank for Agriculture and Rural Development (NABARD)
NABARD is the premier bank for providing financial aid to the farmers. This financial institution is the one which has conceptualized the provision of financial aid to the farmers back in the 1980s. For credit in the field of agriculture, all the Indian banks fall under the authority of NABARD. The financial aid to the farmers provided by NABARD is one of the flagship programmes of the Government of India. One of the most notable contributions of NABARD is the Kisan Credit Card (KCC).
Kisan Credit Card Scheme
The Kisan Credit card is a unique product designed specially to help the poor and illiterate farmers who aren’t much aware of the banking activities. The aim of this card is to protect the interest of the farmers from the hands of unscrupulous moneylenders who might charge exorbitant interest from them. This credit card is linked to the farmer’s savings account and can be used to easily avail finance for various agricultural activities such as cultivation, farm maintenance, purchase of tractors, and many more activities.Loans by Nationalised Banks
Leading nationalized banks such as Punjab National Bank, Union Bank of India, United Bank, Oriental Bank of Commerce, Dena bank etc. provide agricultural loans. Most of these banks offer low interest rates and a plethora of facilities to the farmers. The services offered by these banks are the construction of rural godown, debt swapping, warehouse receipt financing etc.
Loans by State Bank of India
State Bank of India has helped a huge number of farmers to perform their agricultural activities smoothly. State Bank of India offers products such as Kisan Credit card, multi-purpose gold loan, gold loan crop production. There are also loans for farming activities related to poultry, dairy or fish farming.Private Sector Bank Agricultural Loans
Many leading private sector banks such as ICICI, Axis, HDFC, etc. also offer end-to-end agriculture finance to farmers. All these banks offer short-term as well as long term loans.Frequently Asked Questions: Agriculture Loans
1. Can Agriculture Loan be used to purchase land?
Yes, it can be used to finance land purchase but only within the radius of 3-5 km of the farmer’s house or within the boundaries of the village.
2. What are the other associated activities for which Agriculture loan can be availed?
Purchase of land, purchase of tools, warehouse support for the produce and transportation are the allied activities for which agriculture loans can be availed.
3. What is the amount of security required for availing agricultural loans?
To give a boost to agricultural loans, banks have relaxed the norms for security and collaterals. As per the Government of India, for loans up to Rs 1 lakhs, there is no need for security. For loans exceeding Rs 1 lakhs, the security norms are set by the individual banks.
4. Can women avail agriculture loans?
Yes, the Government of India encourages women to avail credit for agricultural needs. Some banks even provide special facilities for women borrowers.
5. Can every farmer apply for farm purchase loan?
These loans can be availed by marginal or small farmers. This refers to farmers who own 2.5 acres of irrigated land or 5 acres of non-irrigated land. Tenant farmers or farmers operating on a sharing basis can also avail loan for the land purchase.
Latest & Update Loan For Agriculture News
Punjab National Bank Offers Agricultural Loans Through A Missed Call 30 Dec 2022
The Punjab National Bank has added agricultural loan facilities to its missed called services. Farmers can get a loan by giving just a missed call instead of writing an application for the loan. Farmers in need of loans can give missed calls on 18001...
Read moreThe Punjab National Bank has added agricultural loan facilities to its missed called services. Farmers can get a loan by giving just a missed call instead of writing an application for the loan. Farmers in need of loans can give missed calls on 18001805555. Apart from this, they can send an SMS to 56070 or contact the call centre at 18001802222. Another way to do this is to apply through the net banking website netpnb.com or PNB One.
Jammu & Kashmir Bank to offer financing on Mahindra tractors and farm machinery6 May 2022
The world's largest tractor manufacturer Mahindra & Mahindra’s Farm Equipment company has signed a memorandum of understanding (MoU) with the Jammu & Kashmir Bank to finance Mahindra’s extensive range of tractors and farm machinery. The J&K Bank will...
Read moreThe world's largest tractor manufacturer Mahindra & Mahindra’s Farm Equipment company has signed a memorandum of understanding (MoU) with the Jammu & Kashmir Bank to finance Mahindra’s extensive range of tractors and farm machinery. The J&K Bank will offer to finance to prospective customers who can get affordable financing options on Mahindra branded tractors and farm machinery through its branches located in Srinagar, Jammu & Kashmir, Punjab, Himachal Pradesh, Leh, and Ladakh. The main aim of this partnership is to provide hassle-free credit to framers to install mechanization solutions on farmland. This tie-up enables the farmers to avail latest and most convenient Mahindra tractors with appropriate discounts along with J&K’s competitive rate of interest.
New updates on PM Kusum yojana; Farmers can now get a collateral Free loan for Setting Up Solar Plant17 Jan 2022
As per a new update on PM kusum Yojana Rajasthan based farmers can apply for loans without surrendering any collateral securities for installing solar plants. The chief secretary of the energy department says that farmers who are residing in Rajastha...
Read moreAs per a new update on PM kusum Yojana Rajasthan based farmers can apply for loans without surrendering any collateral securities for installing solar plants. The chief secretary of the energy department says that farmers who are residing in Rajasthan are facing obstacles to obtain loans to initiate solar plants. As they do not have proper collateral security. Henceforth, the government of India has decided to provide loans without any collateral security. Haryana chief minister Ashok Gehlot has initiated this scheme. Central government approaches to take advantage of the scheme and give opportunities for farmers to voice their opinion directly to banks and other institutions.
Uddhav Thackeray vows complete farm loan waiver27 Dec 2019
Maharashtra Chief Minister Uddhav Thackeray assures a complete farm loan waiver in the state. He also announced the formation of an experts’ committee on the sugar industry. The Shiv Sena-led government had announced a farm loan waiver upto Rs. 2 lak...
Read moreMaharashtra Chief Minister Uddhav Thackeray assures a complete farm loan waiver in the state. He also announced the formation of an experts’ committee on the sugar industry. The Shiv Sena-led government had announced a farm loan waiver upto Rs. 2 lakhs just one day before the CM had announced the full loan waiver. The state cabinet approved a loan waiver scheme under which short term loans up to Rs. 2 lakhs which were taken between April 1, 2015 to March 31, 2019 will be written off. Thackeray said, “We have waived loans upto Rs. 2 lakh as immediate relief to cultivators. But we will also make sure that their entire loan is waived”.
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