Agricultural Loan: An Overview

An Agricultural Loan is a type of loan provided to farmers and agribusinesses to help them finance agricultural activities such as crop production, purchase of equipment, irrigation, land development, and other farming-related needs. These loans are offered by banks, cooperative societies, and non-banking financial institutions.

Benefits of an Agricultural Loan

1. Financial Support for Farmers
   Helps meet the expenses of crop production, equipment purchase, and other agricultural activities.

2. Low Interest Rates
   Subsidized interest rates under government schemes like Kisan Credit Card (KCC) or NABARD-backed programs.

3. Flexible Repayment Terms
   Repayment is often linked to the crop cycle or harvest season, allowing flexibility.

4. Multiple Loan Types
   Includes short-term (for seasonal activities), medium-term (for livestock or irrigation), and long-term loans (for equipment or land development).

5. Collateral-Free Loans
   Loans up to a certain limit may be available without collateral under various government schemes.

Eligibility Criteria

Eligibility criteria may vary by lender, but generally include:

• Applicant Type: Individual farmers, self-help groups (SHGs), joint liability groups (JLGs), and agribusiness firms.

• Age: Minimum 18 years; maximum age as per lender policy (often up to 70 years).

• Land Ownership or Lease: The applicant should own or lease agricultural land or be engaged in farming activities.

• Purpose: Loan should be for legitimate agricultural use such as buying seeds, fertilizers, equipment, or for irrigation, etc.

• Credit History: Clean repayment history is often preferred.

Documents Required

For Individuals/Farmers:

• Identity Proof (Aadhaar Card, PAN Card, Voter ID, etc.)

• Address Proof (Aadhaar, Electricity Bill, Ration Card, etc.)

• Land Ownership Proof (Patta, Land Records, or Lease Agreement)

• Photographs (Passport-size)

• Bank Account Details (Recent statements or passbook)

• Kisan Credit Card (KCC), if applying under the KCC scheme

For Agribusinesses/Groups:

• Business registration certificates

• Partnership deed or Memorandum of Association (if applicable)

• Tax returns and audited financials (for higher loan amounts)

• Details of farm assets and operations