If You Are An Indian Farmer These Loans Can Help You Grow
In 2019, 42.6 percent of the workforce in India was employed in agriculture, while the other half was almost evenly distributed among the two other sectors, industry and services. While the share of Indians working in agriculture is declining, agriculture is still the main sector of employment. But the farmer’s condition is not that superior to make it easier. Loan facilities are provided for funding seasonal agricultural operations or related activities like animal farming, pisci-culture or purchase of land or agricultural tools. Farmers can avail an agricultural loan starting at 7% p.a. and with processing fee ranging between 0 to 4% of the loan amount. Banks have different rates of interest. Following are the important banks that help the farmers in sanctioning loans.
HDFC Bank: The agricultural loans are provided to varying tenures to creditworthy customers who are engaged in farming, cash crops, horticulture, plantations, poultry, animal husbandry, dairying, seeds, warehousing, etc. The bank finances seeds, fertilisers, pesticides, micro nutrients and micro irrigation tools. They even consider, transport, storage and processing the food as a thrust area and are offering working capital to eligible customers.
Crop term loans: They are provided to agriculturists for purposes of developing commercial horticulture, establishing orchards and plantations. It is also extended to farmers to grow field crops. The loan is sanctioned on the basis of project feasibility.
Warehouse Receipt Financing: This acts as collateral against the stocks stored in the approved warehouse. HDFC bank funds a certain percentage of the value mentioned in the receipt. The target customers are farmers and small traders. The documentation process is simple and the loan amount is disbursed in a few hours from submitting the receipt to the bank. The borrower can stock the commodity in Central Warehouse Centres and State Warehouse Centres located in India. Borrowers are allowed to stock the commodity in private warehouses that have been approved by the bank.
Retail Agri Loans: Kisan Card/Kisan Gold Card: Kisan Gold card offers loans with tenure up to 84 months to the farmers. The card can be used to buy agricultural equipment and to meet other agricultural related expenses. The credit limit is set for a year and it can be renewed subsequently. You get crop production cover, post-harvest and domestic consumption requirements are met and other equipment related expenses are covered. A free Personal Accident Insurance cover of Rs.2 lakh is provided to the cardholder. You can make use of the daily withdrawals that have an upper limit of Rs.15, 000 through all ATMs and of Rs.25, 000 at merchant outlets.
Tractor Loan: These are available to buy new or used tractors. The loan is available without additional collateral security. The interest rates are lower and it caters to all segments.
SBI Agriculture Loan
It is a pioneer and a market leader in agriculture-financing in India with a portfolio of over Rs.1, 20,000 crore in agricultural advances that covers more than 1.1 lakh farmers and their families. SBI caters to the agriculturists and farmers needs and has a vast network of 10,505 urban and rural branches.
Crop Loan: This loan covers the expenses related to crop production, post-harvest activities, contingencies, etc. Borrowers are provided a Kisan Credit Card, a type of electronic Rupay Card, using which they can withdraw money from ATMs with ease. These cards can also be used for purchasing fertilisers for the farm.
Agricultural Term Loan: These are long term loan schemes which a farmer can avail to meet their non-seasonal expenses. One can avail this loan to buy or upgrade equipment such as windmills, solar power. The repayment tenure can go up to 4 years.
Solar Pump Set Loan: If a farmer is involved in small irrigation projects and requires capital to buy a photovoltaic pumping system, then availing a solar pump set loan is the appropriate option. The repayment tenure can be upto 10 years.
Loan for Allied Agricultural Activities: Farmers can apply if they need to raise working capitals to meet their farming expenses.
Farm Mechanisation Loan: If a farmer requires working capital so that they can either purchase new farming machinery or upgrade their existing ones such as purchasing a new tractor or getting an old one repaired, then they can apply for these types of loan.
Agricultural Gold Loan: The applicant can avail this type of loan by pledging their gold ornament as security. The loan amount can be used to meet various farming expenses such as buying machinery or to meet costs related to cultivation of crops.
Forestry Loan: If a person is involved in growing crops which grows on trees, then they can apply for a forestry loan. The loan amount can be used to meet the cost of activities such as converting a barren land into a farming land, setting up irrigation channels, clearing wild trees, etc.
Horticultural Loan: Farmers involved in setting up vegetable farms and orchards can apply for a horticultural loan which not only allows them to meet the cost of managing such type of farms, but also helps in meeting the expenses related to other horticulture activities such as clearing wild trees, setting up fence, etc.
National Bank for Rural Development: It offers financing solutions with interest rates starting from 4.5% p.a. They offer short- and long-term refinancing along with direct lending. The tenure of the refinancing can range from 18 months to more than 5 years.
Allahabad Bank: It is a nationalised bank that provides Kisan Credit Card (KCC) under its Akshay Krishi scheme. Akshay Krishi scheme is an exclusive scheme to provide adequate and timely financial support under a single window to the farmers. Facilities given under this scheme are:
Crop loan Component - Cash Credit
Allied activities component - Cash Credit - Working capital for activities allied to agriculture
Term loan Component - To meet Capital requirements
Its Potato Growers Credit Card Scheme offers adequate and timely credit support under a single window to the farmers for their agriculture and other needs. Bank also provides loans for machinery like Tractor/Power Tillers. Farmers living permanently in the control area of the Bank’s branches with a good reputation in the local area are eligible for this loan.
Oriental Bank of Commerce (OBC): provides the Kisan Credit Card-Oriented Green Card (OGS) to qualified farmers for the purpose of meeting their working capital needs and crop production requirements concerning all farm activities, consumption needs, equipment repairs, etc. via the credit card. The bank also offers term loans against the card to meet their investment needs. The Oriented Green Card is given to – farmers, cultivators, and artisans who are engaged in farm and non-farm activities.
Other Agri banking products offered by OBC are:
Model Scheme for Financing Coconut Farming
Advance against Warehouse Receipts to Farmers
Purchase of Land for Agriculture Purposes
Agriculture Clinic and Agriculture Business Centres
Scheme for Financing Working Capital Requirement of Cold Storage
Scheme for Financing Timber Merchants and Saw Mills
Agricultural Loan against Security of Gold Jewellery
Financing Two Wheelers/Three Wheelers to Farmers
Scheme for purchase of Tractor
Punjab National Bank: Person can take loans from the PNB to set up biogas units or minor irrigation apparatus, develop wastelands. It also provides financing for warehouse receipt along with insurance coverage and monetary support to growers in the event of crop failure, due to natural disasters, pests and diseases. The scheme is known as Pradhan Mantri Faisal Bima Yojana.
Axis Bank: Axis bank for years has helped the farming community through its diversified financial products such as tractor loans, gold loans, Kisan Credit Card, warehouse receipt financing, loans for rural godowns, etc.The Bank also provides a product called Contract Farming, in which loan agreements are made between the farmers and corporates. The amount is given by the lender immediately for production and supply of the product and all of it is managed by the Fair Practices Lending Code.
ICICI Bank: Through this bank agriculture loan, the farmers can purchase farm animals or agricultural equipment. The farmers can pay back these loans over a period of 3 to 4 years in -monthly/half-yearly/ yearly instalments as per his convenience. It is hassle-free as it requires easy documentation, has convenient repayment options, and no additional charges. To avail this loan, the farmer needs to submit a general application form, KYC documents, land documents, and post-dated cheques.
Bank also provides a Kisan Credit Card/Kisan Card (KCC). Farmers can use this card at any ATM across the country. To avail the KCC, you just need a piece of farming land and must be 18 to 70 years of age.
Central Bank of India provides Up to 13.25% p.a, State Bank of India offers 7.25% p.a. onwards and IDBI Bank: 7% p.a. onwards respectively.