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Agricultural loans are availed by farmers to fund seasonal agricultural routines or activities related to farming such as dairy, animal farming, and fish farming. An agricultural loan can fulfil seasonal agricultural activities like purchasing agricultural land or tools. These funds can smoothen the process of sowing, weeding, fertilizers, seeds, insecticides, and engaging labour for cultivation and harvesting the crops.
Apart from prominent banks, the Government of India also helps farmers to have substantial credit to increase their agricultural productivity. Besides short-term and long-term agricultural loans, banks also provide credit cards to the farmers.
➤ Agricultural Loan Interest Rate
The interest rates for the agricultural loan is based upon the loan scheme that a borrower selects. The interest rate for the agricultural loan usually starts from 8.80% p.a. Besides this, a borrower has to pay a processing fee at the time loan disbursal, usually the processing fee for agricultural loan ranges between 0% to 2%.
➤ How to Calculate EMI for Agricultural Loans?
Prior to borrowing an agriculture loan, it is important to calculate the payable EMI. By using an online EMI calculator, you can check the details of your monthly instalments. As you enter the preferred loan amount, loan tenure, and interest rate, the EMI calculator shows the details as EMIs, total interest, and total amount that you will pay during the loan tenure.
➤ How to Apply for An Agricultural Loan?
Before availing an agricultural loan, make sure you research about it online and apply for it. When you apply for an agriculture loan by visiting the nearest branch of the lender, please carry your important documents as it will smoothen your agricultural loan application process. However, many lenders offer you to apply the same loan via online mediums. Here, if you apply for an agricultural loan online, go to the official website of the lender and fill your essential details to process your loan application process. Before the loan disbursal, the lender will probe your application and once it gets approved, you will get loan amount in your account.
Reason to Take an Agricultural Loan
- Purchase of farming equipment and machinery
- Purchase of land
- Horticulture projects
- Purchase of vehicles
- Establishment of dairy units
- Setting up small poultry units
- For working capital needs
- For seasonal requirements
- For fish farming
➤ Features and Benefits of Agricultural Loans
- Simplified Documentation: At the time of applying for an agriculture loan, the applicants have to submit fewer documents such as a valid photo identity proof and residence proof. These documents can be attached to the application form.
- Quick Processing: The application process and loan disbursal takes lesser time. Once the lender gets convinced with your application and documents submitted with your application, you get quick loan disbursement in your account.
- Lucrative Interest Rate: Usually the interest charged on agricultural loans starts from 8.80% which is a good option for farmers as compared to other forms of loans.
- Flexible Loan Repayment Alternatives: Many agricultural loan providers offer short-term and long-term credit solutions. Therefore, it gives a farmer to choose a desired loan product as per financial requirements and repayment capacity.
- No Hidden Charges: Apart from processing fee and pre-payment charges, there are no hidden charges when an applicant applies for an agricultural loan. However, lenders usually inform potential borrowers about the other charges.
➤ Documents Required for Agricultural Loans
- Duly filled application form
- KYC documents
- Land / asset documents
- Security PDC
- Any documented mandated by the lender
➤ Eligibility Criteria for Agriculture Loans
- The applicant’s age should be between 18 years and 70 years.
- The applicant should have the assets the banks can mortgage at the time of loan borrowing.
- Any individual application or a joint application can be made according to the terms and conditions suggested by the lender.
Best Banks for Agricultural Loans
- State Bank of India
- ICICI Bank
- Axis Bank
- HDFC Bank
- Union Bank of India
- Punjab National Bank
Ques. Can I get an agricultural loan to purchase a land?
Yes, you can apply for an agricultural loan. But banks usually sanction a loan for the land that is enclosed by the village boundary or the land within the radius of 3 to 5 Kms of the farmer's residence.
Ques. What is the procedure to pre-close my loan account?
Many lenders allow you to pre-close your agricultural loan before the loan tenure, but you will require paying a pre-closure penalty to the lender. Before applying for the agricultural loan, ensure that you apply for a loan that has a lower fore-closure charge.
Ques. What is the process to apply for an agricultural loan?
The ideal agricultural loan application process includes the following steps: • Fill the loan application • Submit it with relevant documents. • Wait for the lender to scrutinize your application. • Once you get approval, you get money in your account.
Ques. How much time do lenders take to process agriculture loan applications?
The time taken by a lender to process the loan application based on the terms and conditions. In India, usually a lender may take up to 7 days to process your loan application.
Ques. Do I need a guarantor to get an agricultural loan?
Most of the lenders out there would require a guarantor. So, if you want to smoothen your agriculture loan process, ensure you have a guarantor.
Ques. What are the terms and conditions to purchase land from agricultural loans?
Marginal and small farmers are eligible to buy a land via agricultural loan. Sharecroppers and tenant farmers can also take the benefit of such loans.
Ques. Is it possible to purchase a land in the name of women?
Yes, the land can be bought in the name of a woman. According to the Government’s policy, women in distress, SHG members, and widows can take advantage of such loans to purchase land.
Ques. What are the other activities that can be fulfilled with an agricultural loan?
Apart from purchasing a land, the agricultural loan amount can be used to purchase agricultural tools, storing the produce, and purchase transport facilities.