Agricultural Loans in India
Agriculture is the backbone of the Indian economy and it surely comes as no shock to see financial institutions are providing monetary assistance to farmers around the country. Agricultural loans are available for various kinds of farming-related operation.
Types of Agricultural Loans in India
A loan can be used for the following agricultural activities:
- Running day-to-day activities
- Purchasing farm machinery like tractors, harvesters, et cetera
- Buying land
- Storage purposes
- Product marketing loans
In addition, these financial supports can also be provided in the form of grants and subsidies, which are typically intended to secure farmers in the case of crop loss or crop failure.
Agricultural loans in India are not only provided to farmers engaged in the cultivation of food crops, but are also available to anyone who is involved in other agricultural sectors, such as horticulture, aquaculture, animal husbandry, silk farming, apiculture, and floriculture.
National Bank for Agriculture and Rural Development (NABARD)
In India, all prominent banking and financial organizations at all levels, provide a huge amount of financial assistance to farmers. Although, the National Bank for Agriculture and Rural Development (NABARD) initiated this trend of raising the rural economy and agriculture through financial credit back in the early 1980s. When it comes to credit in the agricultural field, all the other banks across the country fall under the control of NABARD.
This financial institution is operating in collaboration with the Indian Government to improve the agriculture sector. It is credited with a variety of creative schemes, which have greatly benefited farmers across the country. The most prominent scheme initiated by NABARD is the Kisan Credit Card (KCC).
Kisan Credit Card Scheme
The Kisan Credit Card is a scheme initiated by Indian banks early in 1998 to meet the financial needs of the agricultural sector. It is achieved by offering monetary assistance to farmers, which in turn gets with multiple features and advantages. The amount of the loan depends on various factors, such as cultivation costs, farm maintenance costs, etc.
It has been especially useful for those farmers who are not conscious of banking practices. In addition, it is intended to secure farmers from unfair and unofficial creditors that can land them in a huge debt.
Farmers can also use the KCC card to withdraw money for the objective of crop production and domestic needs.
Applying for the Kisan Credit Card (KCC) is an easy, trouble-free procedure, which requires limited documentation. It also provides coverage for crop insurance, alongside interest payments subsidies. In terms of interest, farmers applying for loans under the Kisan Credit Card scheme can borrow money at 7% per year, for amounts up to Rs. 3 lakh.
The Kisan Credit Card (KCC) is linked to the farmer’s savings account and all payments are made under a single account. Furthermore, any credit balance in the KCC account gains interest. Every farmer can apply for a Kisan Credit Card, and if you want to apply for one, visit your nearest bank for more details.
Other Similar Types of Agricultural Loan Schemes
The NABARD has also helped significantly in the development of a range of other schemes, which target particular sectors. Many of them are listed below:
- Dairy Entrepreneurship Development Scheme: This scheme is designed to encourage the dairy sector, in particular by establishing modernized dairy farms, fostering calf breeding, offer infrastructure, updating logistical activities to boost the product on a commercial scale, and produce self-employment.
- Rural Godowns: The main purpose of this scheme is to help farmers across the country by offering them with godowns. It will, in turn, boost their holding ability significantly and, as a consequence, they’ll be able to sell their goods at reasonable prices, instead of selling them under distress. In addition to this, with a nationalized warehouse system in place, the advertising of agricultural products becomes easier.
- Loan Against Warehouse Receipts: Warehouse receipt funding acts as a foolproof way of stopping distress sales. Whenever a farmer requires money, post-harvest, everybody has to do store their product in an accredited warehouse of the Warehousing Development and Regulatory Authority (WDRA), which in turn gives them a receipt. This warehouse receipt mentions crucial information, such as the quality and quantity of the product, and can be used to receive credit from banks up to 70% of the value of the collateral.
- Solar Schemes: Such schemes have been introduced to minimize dependency on grid power by encouraging solar equipment usage. The concept here is to replace diesel pumps with solar ones, considering that they have low running costs and are environmentally friendly.
The official website of NABARD can be visited for more information on these schemes, alongside details on how to apply for them. Because most of these are subsidization-based schemes, your bank will change your loan repayments against corresponding subsidies which you are eligible to, through the funds released by NABARD.
Leading Banks that offer Agricultural Loans in India
In public-sector banks of India, there are many leading financial institutions recognized for their excellent credit services in agriculture-related sectors. Most of these banks are listed below.
State Bank of India Agricultural Loans
The State Bank of India is a pioneer in the financing of agricultural projects. Millions of farmers around the country have been supported by their 16,000 plus branches. They provide a range of goods, such as the Kisan Credit Card, a gold loan for crop production, and a multi-purpose gold loan for agricultural operations.
SBI also provides agricultural loans for farm mechanization. The funds from such loans can be used to buy merge harvesters, tractors and to activate drip irrigation. In addition, loans for dairy, poultry, or fisheries-related activities may also be allocated. Credits can be taken against receipts from the warehouse.
The bank also provides the Debt Swapping Scheme, in which financial assistance is given to farmers in order to support them resolve their dues, which have been incurred by lending from non-institutional lenders such as sharks, money lenders, etc. The main purpose of this scheme is to help farmers get debt-free and clear up their loans along with atrocious interest rates.
Finally, one can look to the State bank of India for financial support if they are seeking to expand their agricultural marketing, set up agribusiness and agri-clinical centers, or buy land.
The State Bank of India provides such loans and services via their parent branches and also their seven related subsidiaries- State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, State Bank of Travancore, State Bank of Indore and State Bank of Saurashtra.
If you are trying to take advantage of any of these agricultural loans provided by the State Bank of India, all you need to do is visit your nearest SBI branch for more information and application.
HDFC Bank Agricultural Loans
The HDFC Bank provides a wide range of agricultural loans to agriculturists and farmers. The aim of these loans differs around a wide spectrum, starting from the development of orchards and gardens to the promotion of commercial horticulture and the cultivation of field crops. In addition, the HDFC bank also provides funding for warehouse receipts to all farmers and tiny traders.
Allahabad Bank Agricultural Loans
Allahabad Bank is a further nationalized bank in India providing the Kisan Credit Card (KCC) under its Akshay Krishi scheme. Needless to mention, the functionality of the plan is the same as the KCC scheme. All farmers, tenant farmers, producer owners, etc.
In reality, Allahabad Bank has taken the additional mile to move ahead with its own version of the Kisan Credit Card. The scheme is known as the Allahabad Bank Potato Growers Credit Card Scheme and its primary purpose is to offer farmers adequate financial assistance in a timely way that can help them fulfill their cultivation needs.
Like the State Bank of India, Allahabad Bank provides many services such as warehouse receipt funding, debt swapping, rural godown development, and so on.
Bank of Baroda Agricultural Loans
Bank of Baroda is also another prominent name people are looking at when it comes to borrowing for agricultural purposes. They have different schemes, including almost all agriculture sectors.
For example, loans can be taken to buy tractors and heavy equipment required for day-to-day activities. In addition, the Bank of Baroda also provides the working capital and funds needed either to set up units or to run units engaged with dairy, pig, poultry, sericulture, sheep and goat farming, and so on.
Farmers may also look to the bank if they require a four-wheeler to aid them to handle their agricultural activities easier. Bank of Baroda provides four-wheeler loans with a total amount of Rs. 15 lakh.
Punjab National Bank Agricultural Loans
The Punjab National Bank has a variety of agricultural-based financial products. For instance, loans can be taken from the PNB to set up biogas units, grow wastelands, build small irrigation systems, etc. Furthermore, individuals who are interested in pursuing the apiculture (beekeeping) field can seek financial support from the Punjab National Bank.
The bank also provides warehouse receipt funding, with insurance coverage and financial assistance to farmers in the circumstance of crop failure caused by natural disasters, pests, and diseases. The scheme is recognized as Pradhan Mantri Fasal Bima Yojana. All of this is in addition to the standard financial services provided to farmers, such as the Kisan Credit Card, debt swapping, etc.
ICICI Bank Agricultural Loans
The ICICI Bank provides a range of agricultural loans. Their highest selling product is the Kisan Credit Card, which is an efficient method for farmers to fulfill their daily necessities. They also provide long-term loans to buy machinery or animals, that can be repaid over a period of 3-4 years.
The ICICI Bank also provides quick gold loans to reach the financial needs for agricultural projects. In addition, they also provide an overdraft facility against fixed deposits, also recognized as Kisan Kalpvriksha. For more details on these agricultural loans provided by the ICICI Bank, kindly visit the official website.
Axis Bank Agricultural Loans
Axis Bank has performed well to gain a tremendous reputation around the world of agricultural finance. Over the years, farmers have been greatly supported by their varied financial products, like gold loans, Kisan Credit Card, tractor loans, warehouse receipt funding, rural godowns development loans, and much more.
Axis Bank also provides a product recognized as Contract Farming, in which loans are made between farmers and companies. The sum shall be provided instantly by the lender for the production and delivery of the goods and shall be controlled by the Fair Practices Lending Code.
Before taking any type of loan, it is suggested that you study carefully to find out the kind of loan which fits best for you. Because a wide range of agricultural loans are provided, choosing the one which suits your objective is extremely important.
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