Top Agriculture Loans in India - Benefits, Documents, and Charges

Agriculture loans are low-interest loans granted by dedicated government agencies as well as banks for the smooth functioning of agricultural activities in India. The interest rates for the best agriculture loans in India are considerably lower in comparison with other loans. By acquiring loans, farmers can go ahead with purchasing modern machinery, paying for the operating expenses, paying for the warehouse as well as storage expenses, buying new land, constructing sheds for grain storage, buying seeds, pesticides, fertilizers, etc.

Banks in India grant Agri loans that initiate at an interest of merely 7.50 % per annum.

Agriculture is widely regarded as the backbone of the Indian economy, and it unquestionably comes as no wonder to see financial institutions grant monetary aid to farmers all over India. Agricultural loans are available for diverse sorts of farming-related exercises.

In India, agricultural loans are not only extended to farmers working towards food crop cultivation, but they are available to any individual who is involved in other agriculture-related divisions like horticulture, silk farming, apiculture, aquaculture, animal husbandry, and floriculture.

Synopsis

1. Top Agriculture Loans in India: Benefits, Documents, and Charges

2. Types of Agriculture Loans in India

3. Documents Needed to Apply for an Agricultural Loan

4. Features of Agriculture Loans in India

5. Leading Lenders and Interest Rates

6. Agriculture Loans in India: Fees and Charges

7. Eligibility Criteria for Agricultural Loan

8. Significant Aspects to Keep in Mind while Applying for the Loan

9. Benefits of Agricultural Loan

10. Union Budget 2020-21: Agriculture-related Allocation

11. Agriculture Loans in India: Agriculture Loan Providers

12. Agriculture Loans in India offered by Nationalised Banks

13. Summing Up

Types of Agriculture Loans in India

Agriculture is one of the most substantial occupations in India. Farmers and farming business enthusiasts can apply for an agricultural loan for investment purpose & short tenure purposes, like production. Given below are the significant types of agriculture loans in India offered by numerous banks as well as other lenders.

On The Basis of End Use

Solar Pump Set Loan: It’s a type of agricultural loan on the basis of end-use that extends for the purchase of a photovoltaic pumping system with respect to its applicability in small irrigation projects. Solar Pump Set Loan ^[1] is known as a long term loan with a repayment tenure of not more than ten years.

Farm Mechanization Loan: This form of loan can be useful in buying new machinery, repairing and replacing old ones, purchasing harvesters or tractors, or other agricultural equipment. Some banks are ready to lend a general-purpose loan, while other banks have categorized these loans into diverse types on the basis of the end-use. For instance, the State Bank of India extends tractor loans; integrates harvester loans and loans with respect to purchasing irrigation equipment.

Loan for Allied Agricultural Activities: This type of loan is granted to farmers to meet the requirements associated with working capital and needs related to long-term investment for allied agricultural activities.

On The Basis of Loan Tenure

Agriculture Term Loan: Agriculture Term Loans are basically the long term loans of about 48 months granted by several lenders in order to meet expenses pertaining to agriculture that are usually not seasonal in nature. With the help of this loan amount, you will able to buy new machinery or enhance the quality of existing ones, install solar power, windmills, and more. Generally, banks allow repayment tenure of 3- 4 years for Agriculture Term Loan so that you can make the payment for the borrowed amount back either monthly or bi-annual or yearly instalments according to the convenience of the borrowers.

Kisan Credit Card (Retail Agri Loan): Kisan Credit Card Loan is a wonderful agriculture loan preference to meet short term credit needs, such as expenditures resulting from cultivation of crops, maintenance of farm equipment, post-harvest activities, etc.

Kisan Credit Card is generally obtainable in the frame of an electronic RuPay Card, which the farmers can utilise to withdraw money from ATMs to make the needed purchase. Therefore, it renders suitable credit to meet your regular farm demands.

Other Loan Types

Agricultural Gold Loan: This loan is granted to farmers against the security of gold ornaments. It may be extended for crop cultivation and other agricultural objectives as well. This loan features comparatively low-interest rates and supports farmers in unhitching the value of their gold jewellery, usually lying lazily in the house or bank locker.

Horticultural Loan: This agricultural loan is granted for the expansion of the land for installing up orchards or vegetable farms, freeing of undergrowth or wild trees, insignificant irrigation activities, establishing up boundary walls/fencing, as well as other horticultural reasons.

Forestry Loan: This agricultural loan is furnished for cultivating crops that grow on trees. Similar to horticulture loans, it can be delivered to remove the undergrowth and wild trees, transform barren land into cultivable land, settle the land by establishing up irrigation channels, and so on.

Documents Needed to Apply for an Agricultural Loan

The essential documents needed by most of the lenders concerning agricultural loan are mentioned below-

Proof of Identity
- Aadhaar Card
- Driving License
- Voter ID
- Passport
Proof of Address
- Bank passbook
- Latest utility bill
- PAN Card
- Aadhaar Card
Land Documents
Loan application form- duly filled
Security Post Dated Cheques or other collateral (as applicable)

Features of Agriculture Loans in India

The features of agriculture loans in India are showcased below-

Minimal Documentation: Usually, the agricultural loan can be availed with the least and straightforward documentation.
End-use Flexibility: Agricultural loan may get availed to meet different types of expenses concerning farm activities, such as acquiring new farmland or cattle or maintaining the operating charges as well as other allied activities.
Collateral Optional: Both secured as well as unsecured agricultural loans are granted based on loan quantum as well as applicant profile.
Numerous Types: Various types of agricultural loan survive on the basis of end-use and repayment tenure.

Leading Lenders and Interest Rates

In the table showcased below, you will get to see the interest rate of agricultural loans as extended by some major lenders:

Name of the Lender	Interest Rate( p.a)
Central Bank	7.50% onwards
State Bank of India	7.50% onwards
IndusInd Bank	9.50% onwards
Axis Bank	In line with different schemes of the government and depends on the profile of the applicant
ICICI Bank	9.60%

Agriculture Loans in India – Fees & Charges

Processing Fee – It is a one-time processing fee deducted from the borrower’s sanctioned loan amount before it gets disbursed.
Foreclosure Charges – These charges will be levied if the borrower makes the prepayment of his loans as well as closes the loan account prior to completion of the loan repayment term.
Stamp Duty Charges – They are charged either at actuals or as per the applicable state laws.
Bounce Charges – In case if the repayment cheque bounces, bounce charges will be levied.
Late Payment Charges – If the payment concerning the EMI is not made as per the schedule specified by the lender, then late payment charges will be levied.
Documentation Charges – These charges will be levied as applicable.
Valuation Charges – It is charged in case if the applicant’s residential or commercial property undergoes valuation.

Eligibility Criteria for Agricultural Loan

The table given below showcases the eligibility criteria to get an agricultural loan in India. Nevertheless, some additional criteria may also apply to some of the lenders. Therefore, you must be in touch with the particular bank in order to check your eligibility status.

Who is Eligible?	Joint Cultivator Owners/ Individual Farmers Self Help Groups or Joint Liability Groups( Encompassing tenant farmers) Share Croppers, Tenant Farmers, and Oral Lessees
Eligibility Criteria	18 to 70 Years
Residential Status	Indian Resident
Land Ownership	Usually, should acquire a segment of agricultural land or must have access to agricultural land for diverse purposes

Significant Aspects to Keep in Mind While Applying for the Loan

Check and make sure that you fulfil all the eligibility criteria encompassing the specified agricultural objectives of the loan opted for
There is no need to make multiple loan applications at a single point as it shows that you are a credit hungry person.
Arrange all the essential documents properly to avail of the loan.
You must maintain a healthy mix of credit, that is, the amount of unsecured as well as secured loans availed by you.
You must try maintaining a low Fixed Obligation to Income Ratio. In brief, your ongoing EMIs must not constitute a vital proportion of your monthly income.
You need to always pay your ongoing loan EMIs along with credit card dues at the right time to maintain a good repayment history, and thereby you will have a high credit score.

Benefits of Agricultural Loan

The benefits of agricultural loan are mentioned below-

Special Interest rates beginning at 7.50% per annum.
It may be lower for distinct Government backed schemes.
It is available with minimal documentation involvement.
You can make the repayment of the loan over a flexible repayment period.
You can utilize the agricultural loan amount for different agricultural purposes, ranging from short-term seasonal farm exercises to long-term investment in farm machinery.
A few of the lenders also grant the unsecured agricultural loan on the basis of the applicant’s profile as well as the quantum of loan applied for.

Union Budget 2020-2021: Agriculture-related Allocation

Finance Minister Nirmala Sitharaman notified an allocation of about Rs. 1.42 crore to the Ministry of Agriculture & Farmer’s Welfare in the Union Budget 2020-21.

This massive number was reserved concerning the following proposals-

Agricultural credit target of about Rs. 15 lakh crore for 2020-21.
Formulation of dynamic warehouses on PPP mode with the aid of viability gap funding.
PM KUSUM to incorporate about 20 lakh farmers for standalone solar pumps as well as a notably 15 lakh for grid-connected pumps.
e-NWR will be united with e-NAM.
“Kisan Rail” as well as “Krishi Udaan” will be propelled by Indian Railways and Civil Aviation, respectively, to promote the national cold supply chain for perishables.
Self Help Groups’ village storage scheme will be started.
To expand coverage of artificial insemination to 70%.
Fish production aim of 200 tonnes by 2022-23.
Fishery extension via 3477 Sagar Mitras and 500 fish FPOs.
Milk processing potential to be doubled by 2025.
To elevate fishery exports to Rs. 1 lakh crore by 2024-25.

Agriculture Loans in India: Agricultural Loan Providers

Major agricultural loan providers in India are-

ICICI Bank

Types of agriculture loans in India offered by ICICI Bank are-

Long Term Agricultural Loan
Retail Agricultural Loan

Union Bank

Bio Gas Loan
Crop Loan
Farm Mechanization Loan
Union Gold Loan
Kisan Credit Card

State Bank of India

Crop Loan
Drip Irrigation Loan
Kisan Credit Card
Combine Harvester Loan

Central Bank of India

Cent Vermicompost Scheme
Kisan Credit Card
Cent Kisan Tatkal Scheme
Cent Solar Water Heater Scheme

NABARD

National Livestock Mission
Agriclinic & Agribusiness Centres Scheme
New Agricultural Marketing Infrastructure

Axis Bank

Kisan Mitra
Kisan Power
AGPRO Power
Kisan Matsya

Agriculture Loans in India offered by Nationalised Banks

Nationalised banks that are involved in offering agriculture loans in India are Oriental Bank of Commerce, Union Bank of India, Vijaya Bank, Punjab National Bank (PNB), UCO Bank, United Andhra Bank, Syndicate Bank, Bank of India, Allahabad Bank, Dena Bank, Bank of Baroda, and Indian Bank etc.

Summing Up

Different banks and other financial institutions are granting agriculture loans in India in order to uplift the agriculture sector and strengthen the agricultural economy by helping and encouraging our farmers. At Aatmnirbhar Sena, we are spreading awareness about numerous agriculture loans in India offered by Banks and other institutions, and we hope that you will take benefits associated with schemes concerning the agriculture segment in India.