Crop Loan

What is Crop loan?

Crop loans are short-term loans as they are meant for seasonal agricultural operations. These loans are also intended to cover the cost of operations that include activities like ploughing and preparing the land for sowing, weeding, transplantation (where necessary), acquiring and applying inputs such as seeds, fertilisers, insecticides, etc. and labour for all operations in the field for raising and harvesting the crops. Thus, the credit required to meet the current expenditure for raising the crops on land till the crops are harvested is construed as production or short-term credit for seasonal agricultural operations.

Crop Loan Benefits

Post demonetisation, a bonanza for farmers was announced by the prime minister who says that government will bear interest for 60 days on crop loans taken by farmers from district cooperative banks and primary societies for sowing operations this Rabi season. In addition to this, on the eve of the new year, the Prime Minister also announced that the 3 crore ‘Kisan Credit Cards’ would be converted to RuPay Card within three months to help farmers purchase various inputs anywhere. NABARD will be given an additional Rs. 20,000 crore to finance district cooperative banks and societies.

These decisions taken by the government in the interest of farmers are expected to bring a lot of benefits for farmers, particularly for those availing crop loans. Farmers who had taken a crop loan for the Rabi crop from district cooperative central banks and primary societies will not have to pay interest on such loans for a period of 60 days. If the farmers have already paid interest on the loan amount in the last 2 months, then their money will be credited back to their bank account. Further arrangements are being made to provide farmers better access to loans from district cooperative banks and primary societies as well.

List of Banks Providing Crop Loan

Crop loans are offered by almost all banks in the country. Some of the popular banks and their crop loans for farmers are listed here.

State Bank of India
IDBI Bank
HDFC Bank
State Bank of Hyderabad
Bank of Maharashtra

How to Get Crop Loan from Banks and Financial Institutions

Crop loan is the most important need of the farmer as it helps them increase and maintain their productive ability. With the help of this loan amount, a farmer can purchase modern but costly equipment and adopt new technologies on their farm. It also enables them to purchase inputs of high quality, further boosting potential yield. Thus crop loans from banks play an important role in the development and prosperity of agriculture in the country.

It is best to compare all the lenders and the rates for the various crop loans and then opt for one. Since they are regulated and driven by government policies, there is very little variation in the numbers for the basic services. As prosperity improves, one should also look into the private sector as well as specified organisations for additional funding options. For prosperous farmers, agriculture and related expenses need capital that may not always be available under government schemes. At its most basic, a crop loan is mostly about sustainability. But it does provide enough of a margin to industrious farmers for driving growth. Combined with other forms of agricultural financing like mechanisation and allied agricultural work, even marginal farmers can find a foothold they desperately seek.

Based on the initial check of all banks and financial institutions, it is best to choose a few lenders and make a list of their pros and cons. For small and marginal holdings, a secure and subsidised lending rate is a must. Larger cooperatives can and should also consider the more ambitious options to augment their crop loan.