LOANS AVAILABLE FOR FARMERS IN INDIA
Farmers need loans to carry to buy various farming inputs such as tools, tractors, fertilizers, machinery, trucks and so on. To ease this process there are several flexible loans available for their convenience.
There are various types of loans offered to farmers such as warehousing loans, farm operation loans, farm ownership loans, fisheries finance program and other agricultural loans. Warehousing loans are provided by the government and banks to store farm and agricultural commodities. In the fisheries loan, farmers can get up to 80% financing for a qualified program. Other loan includes loans obtained for housing, grants, crop damage etc. Agriculture Loans are either direct or indirect. Direct agriculture loans include loans to farmers directly engaged in Agriculture and Allied Activities. Indirect agriculture loans include loans to corporate, partnership firms and co-operatives of farmers directly engaged in Agriculture and Allied Activities.
The Government of India has exempted farmers from paying stamp duty on agriculture loan up to Rs. 5 lakhs. The Reserve Bank of Indi (RBI) states that processing fee for agriculture loans cannot exceed 1% of the gross loan amount and processing fee should not be included in the margin cap or the interest cap of 26%. The State Bank of India (SBI) offers and other nationalized banks offer loan schemes for crop loans, Kisan credit cards, agriculture insurance loans, etc.
The eligibility for these loans is that the farmer should be aged between 18 – 70 years and must possess ID proof (Voter ID / Pan card / Ration card / Aadhar card etc), land documents, Kisan Credit Card and valid address proof (passport / driving license / ration card / bank statement etc). Loans are of 2 types, namely short term and medium term or long term. Short term loans include crop loans and are repaid after harvesting. The loans are given based on one-third gross value and cost of cultivation with a repayment term of one year. Medium term loans are for a period of 5 – 20 years and are required to buy expensive machinery, tractors, trucks, dig bores, land leveling, etc. The interest rates are around 11 – 12%.
Let us briefly look at what these loans offer –
Crop loans are provided to raise crops and offer Kisan Credit Cards with a maximum limit of Rs 150000 for Kharif and Rabi crops. With the help of these credit cards, farmers can access atm’s and withdraw cash required for expenses or even apply for loans. It is a necessary requirement for a farmer to have one of these cards other than the Aadhar card.
Short term credit loans called Produce Marketing Loan Scheme
Kisan Shakti Yojana helps farmers repay debts to moneylenders and provides investment credit. The limit set for this scheme is 50% of the land value or 5 times the farm income.
Loans are provided for land development purposes and irrigation purposes called Land Development Scheme and Minor Irrigation Scheme
Loans for providing capital to buy farm equipments are called Farm Mechanization Scheme
A group of farmers can also apply for a loan under the Financing of Combine Harvesters Scheme
Other schemes include loans for dairy farms, construction of poultry shed, horticulture finance, and agri-business head scheme.
All these and many more schemes help farmers ease the process of farming and provide necessary support where required.
List of Nationalized Banks offering agriculture loans and their processing fee –
Allahabad Bank Crop Loan and Term Loan – this bank has two schemes, namely the Akshay Krishi – Kisan Credit Card Scheme and Allahabad Bank Potato Growers Credit Card Scheme. The first scheme has a limit of Rs 10 lakhs and can be paid in 5 years time. The second scheme has a limit of Rs 20 lakhs.
Andhra Bank Agriculture Loans – this bank also has two schemes, namely the AB Kisan Sampathi (Crop Produce Loan) and the Kisan Kalpataru scheme. The limit on the first scheme is Rs 50 lakhs payable within a year and the second scheme provides a limit of Rs 25 lakhs payable within 9 years.
Canara Bank – Processing fee varies from no charges (loan up to Rs 25000/-) to Rs. 900/- (Loan up to Rs. 3 lakhs). Handling charges differ from nil to Rs. 100/-. Mortgage charges varies from no charges to Rs. 30000/-. No processing fees for government sponsored schemes, self-help groups or agriculture loans given to employees.
Central Bank of India – No fee for Kisan credit card and no collateral security for loan up to 1 lakhs.
HDFC – Processing fee of Kisan Gold card (saral) is Rs 250/-, repayment schedule charges for the same are Rs 200/- per request, late payment penalty for KGC types varies from 1.33 % – 2 % p.m. on overdue payment. Supervision charges of KGC types ranges Rs. 500/- – Rs. 2000/-.
ICICI Bank Agri Term Loan – the loan is available @ 13.50% interest rate and can be paid over 3 – 4 years in easy installment options. Additionally Kisan Credit Card / Kisan Card is provided to farmers.
JK Bank – Processing fee is Rs. 0.05 % of the amount sanctioned with a minimum cap of Rs. 25/- to be paid up front.
Punjab National Bank Agricultural Schemes – have two schemes namely Scheme for Poultry Farming and Scheme for Financing Sheep / Goat Breeding / Rearing Activities.
Vijaya Bank – Processing fee ranges from nil (Rs.25000/-) to 0.16 % i.e. Rs. 102/- (Rs.25000/- to 2 lakhs).There is no processing fee for agriculture loan up to 10 lakhs and no documentation charges for credit limit up to Rs. 2 lakhs.
Other nationalized banks offering loans are –
The Bank of Baroda,
Bank of India,
Bank of Maharashtra,
Indian Overseas Bank,
Oriental Bank of Commerce,
Punjab and Sind Bank,
Union Bank of India,
United Bank of India.
Co-operative Agricultural Banks also offer attractive schemes. Some of these are listed as below –
Bihar State Co-operative Bank – offers loans to Primary Agriculture Credit Societies at an interest rate of 11% per annum
Haryana State Cooperative Apex Bank (HARCO) – offer Kisan Cards and various schemes
National Bank for Agriculture and Rural Development (NABARD) – offers the Kisan Credit Card scheme which is valid for 3 years and payable within a year. NABARD offers short term and medium term loans. NABARD provides schemes for banks and individuals for a multitude of options. The details of the loans offered by NABARD can be obtained from their official website – https://www.nabard.org.
Other Cooperative banks offering loans are –
National Federation of State Cooperative Banks Limited (NAFSCOB)
Odisha State Cooperative Bank Limited (OSCB)
Repatriates Cooperative Finance and Development Bank Limited
Punjab State Cooperative Agricultural Development Bank Ltd
Andhra Pradesh State Cooperative Bank Limited (APCOB).