Agricultural loans are offered to farmers, joint cultivators, sharecroppers, tenant farmers, self-help groups and other persons engaged in agriculture. These loans can be either secured or unsecured and are offered by leading banks as well as government institutions. An agricultural loan can be used for various purposes such as meeting expenses related to cropping, upgrading/ purchase of farm machinery, construction of irrigation channels, and other allied agricultural activities. In the following sections, details regarding the interest rates charged on different types of agricultural loans by the major lenders of India, factors affecting agricultural loan interest rates, etc. are discussed.
Agriculture Loan Interest Rates
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Agriculture Loan Interest Rates
Current Agricultural Loan Interest Rates
| Banks/NBFCs | Interest Rates(p.a.) |
|---|---|
| Bajaj Finance | 10% - 31% p.a. |
| Axis Bank | 9.99% onwards |
| IndusInd Bank | 10.49% onwards |
| IDFC FIRST Bank | 10.99% onwards |
| HDFC Bank | 9.99% onwards |
| ICICI Bank | 10.60% onwards |
| Kotak Mahindra Bank | 10.99% onwards |
| Tata Capital | 11.99% onwards |
| Federal Bank | 12.00% onwards |
| DMI Finance | Up to 24% |
| L&T Finance | 11.00% onwards |
| Kreditbee | 12.00% - 28.25% |
| MoneyTap | 13.00% onwards |
| Piramal Finance | 11.99% onwards |
| Aditya Birla | 10.99% onwards |
| Moneyview | 14%-36% |
| Cashe | 33.50% onwards |
Processing Fee on Agricultural Loans
The following are the processing fees applicable to agricultural loans from major banks in India:
| Name of the Lender | Processing Fee |
|---|---|
| Central Bank of India | Nil on loan amount up to Rs. 25,000.Rs. 120 per lakh, subject to a maximum of Rs. 20,000. |
| Indusind Bank | 1.25% of the sanctioned amount. |
| Axis Bank | Up to 0.75% of loan amount. |
| ICICI Bank | Up to 2% of the loan amount. |
Factors Affecting Interest Rates
Following are some of the major factors that affect interest rate on agricultural loan:
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The APR (Annual Percentage Rate) of a personal loan is its annualised cost of borrowing, which includes the interest rate as well as the processing fees, documentation fees and other fees charged during the loan origination. The APR is expressed in the form of a percentage and thus, allows personal loan applicants to detect personal loan schemes offered at lower interest rates but with higher processing fees and/or other charges.
The APR of personal loans usually ranges between 11.29% to 35%. For example, assume that you have availed a personal loan of Rs. 5 lakhs @ 10.50% p.a. with a repayment tenure of 5 years. The processing fee charged for this loan is 1.5% of the loan amount, which amounts to Rs 7,500. Therefore, the total borrowing cost of your personal loan will be Rs 1,52,317 and its APR will be 11.16%.
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