Features of Agriculture Loan
- End-use Flexibility: Agricultural loan can be availed to meet a variety of expenses related to farm activities, such as to purchase new farmland/ cattle or to manage the operating costs and other allied activities
- Various Types: Several types of agricultural loan exist on the basis of end use as well as the repayment tenure
- Minimal Documentation: Generally, the agricultural loan can be availed with simple and minimal documentation
- Collateral Optional: Both secured and unsecured agricultural loans are offered on the basis of loan quantum and applicant profile
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Agricultural Loan Interest Rate – 2023
The following table summarizes the interest rate of agricultural loans as well as Kisan Credit Card as offered by some leading lenders:
|Axis Bank||10.49% onwards||Apply Now|
|IndusInd Bank||10.49% onwards||Apply Now|
|IDFC First Bank||10.49% onwards||Apply Now|
|HDFC Bank||10.50% onwards||Apply Now|
|ICICI Bank||10.50% onwards||Apply Now|
|Kotak Mahindra Bank||10.99% onwards||Apply Now|
|Tata Capital||10.99% onwards||Apply Now|
|Bajaj Finserv||11.00% onwards||Apply Now|
|Federal Bank||11.49% onwards||Apply Now|
|DMI Finance||12.00% - 40.00%||Apply Now|
|L&T Finance||12.00% onwards||Apply Now|
|Kreditbee||12.25% - 30.00%||Apply Now|
|MoneyTap||12.96% onwards||Apply Now|
|Piramal Finance||12.99% onwards||Apply Now|
|Aditya Birla||13.00% onwards||Apply Now|
|MoneyView||15.96% onwards||Apply Now|
|Cashe||27.00% onwards||Apply Now|
Types of Agriculture Loan
Following are the major types of agricultural loans offered by various banks and other lenders in India.
On The Basis of Loan Tenure
- Crop Loan/ Kisan Credit Card (Retail Agri Loan): Kisan Credit Card/ Kisan Card is an ideal agriculture loan option to meet short-term credit requirements, such as expenses resulting from the cultivation of crops, post-harvest activities, maintenance of farm equipment, etc. The card is generally available in the form of an electronic RuPay Card, which the farmers can use to draw money from ATMs to make the required purchase. Thus, it provides convenient credit to meet your daily farm requirements.
- Agriculture Term Loan: This refers to the long-term loans of up to 48 months offered by various lenders to meet agricultural expenditures that are generally not seasonal in nature. The loan amount can be used to purchase new machinery or upgrade existing ones, install solar power, windmills, etc. Banks generally allow repayment tenure of 3 to 4 years for this loan, so that you can pay back the borrowed amount back in monthly/bi-annual/yearly installments as per the borrower’s convenience.
On The Basis of End Use
- Farm Mechanization Loan: This loan can be used to purchase new machinery, repair/ replace old ones, purchase tractors or harvesters, or any other agricultural equipment. While some banks provide a general-purpose loan, others have categorized these loans into different types based on the end-use. For example, the State Bank of India offers tractor loans, combine harvester loans, and loans for irrigation equipment.
- Solar Pump Set Loan: This agricultural loan is offered for the purchase of a photovoltaic pumping system for small irrigation projects. It is generally a long-term loan with a repayment tenure of up to 10 years.
- Loan for Allied Agricultural Activities: This loan is offered to farmers to meet working capital requirements and long-term investment needs for allied agricultural activities.
Other Loan Types
- Horticultural Loan: This agricultural loan is given for the development of the land for setting up orchards or vegetable farms, clearing of undergrowth or wild trees, minor irrigation activities, setting up boundary walls/fencing, and other horticultural reasons.
- Agricultural Gold Loan: This loan is provided to farmers against the pledge of gold ornaments. It may be offered for crop cultivation as well as for other agricultural purposes. This loan features relatively low-interest rates and helps farmers unlock the value of their gold jewellery that is usually lying idle in the house or bank locker.
- Forestry Loan: This agricultural loan is given for raising crops that grow on trees. Like horticulture loans, it can be given to clear the undergrowth or wild trees, turn barren land into cultivable land, prepare land by setting up irrigation channels, and so on.
NOTE: Borrowers should keep in mind that each bank offers different agricultural loans for varied needs. These products differ on criteria such as eligibility, margins, collateral, interest rates, tenure, etc. Hence, we advise you to contact the specific lender to know more about the loan product.
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- Age Criteria: Min. 18 years and Max. 65 years
- Should have access to cultivate land
- Indian Citizen with no criminal record
- Should not have defaulted on any previous loan
Documents Required to Apply for the Loan
Following is the list of documents required by most of the lenders for an agricultural loan:
- 2 Passport sized photographs
- Duly Filled Application form
- Kisan Credit Card
- Identity Proof: Voter ID, PAN card, Aadhar Card, Ration card, etc.
- Address Proof: Utility Bills (Electricity/Water Bills), Voter ID, Aadhar Card, etc.
- Income Proof: Bank Statement, ITR, etc.
Providers of Agricultural Loan
Following are some of the major providers of agricultural loan in India:
|Name of the Lender||Major Types of Agricultural Loans Offered|
|State Bank of India (SBI)||
|Central Bank of India||
|National Bank or Agriculture and Rural Development (NABARD)||
Benefits of Agricultural Loan
- Available with minimal documentation.
- Special Interest rates starting at 7.00% p.a. Maybe lower for specified Government-backed schemes
- You can repay the loan over flexible repayment tenure.
- Some lenders also offer the unsecured agricultural loans, depending on the applicant’s profile and the quantum of loan applied for.
- You can use the agricultural loan amount for a variety of agricultural purposes, ranging from short-term seasonal farm activities to long-term investment in farm machinery.
1. What are the entities that can avail agriculture loan?
Ans. Agriculture Loan can be availed by individual farmers engaged in agriculture or Livestock farming that include Poultry, Fishery, Dairy, Animal Husbandry, etc. This loan can also be availed by marginal farmers, sharecroppers and tenant farmers.
2. What is the interest rate offered by banks for Agriculture Loan?
Ans. The interest rate offered by banks to farmers is at nominal rate with special waivers and benefits along with flexible repayment options.
3. What is the loan amount offered under Agriculture Loans?
Ans. The loan amount depends on the applicant’s profile and business requirements, such as cultivation area, size of land, farming area, farming products, location, equipment used, etc.
4. For what purpose are agriculture loans offered?
Ans. Agriculture Loans are offered by almost every lending institution for all types of farming operation and agricultural activities that include farming equipment and infrastructure, marketing operations, etc.
5. From where I can avail Agriculture Loan?
Ans. Agriculture loans are offered by financial institutions that include government, private and public sector banks, Regional Rural Banks, Urban banks, Co-operative societies, etc.
6. What is the interest rate for SBI Crop Loan?
Ans. The interest rate for SBI Crop Loan starts at 7.00% per annum.
7. What is the interest rate for ICICI Agri Term Loan?
Ans. The interest rate for ICICI Agri Term Loan begins from 8.20%.
8. Who can avail an agricultural loan?
Ans. Generally all farmers, joint cultivators, sharecroppers, SHGs, JLGs and tenant farmers can avail an agricultural loan.
9. Can I avail an agricultural loan to upgrade my farm machinery?
Ans. Yes, you can avail a farm machinery agricultural loan to upgrade and even purchase new farm machines.
10. What is Kisan Credit Card?
Ans. Kisan Credit Card is a digital means of availing a short term agricultural loan. It is typically available as a RuPay Card with a pre-defined limit provided by a bank and can be used to withdraw cash from ATMs across India to finance various agricultural activities.