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Agriculture Loans
Agriculture is the backbone of the Indian economy and it certainly does not come as a surprise to see financial institutions offering monetary assistance to farmers throughout the country. Agricultural loans are available for various activities related to the agriculture.
Types of Farm Loans in India
One may make use of a loan for the following agricultural activities:
• Day to day activities
• Buying agricultural equipment such as tractors, harvesters and so on
• Purchasing Land
• Uses for inventory
• Product marketing loans
• Extension
In addition, such financial supports may also be provided in the form of grants and subsidies, typically intended to protect the farmer in case of crop damage or crop failure.
Farmers working in India to grow food crops are not only given agricultural loans, but also available to those engaged in other farming sectors such as horticulture, aquaculture, animal husbandry, silk farming, apiculture and floriculture.
National Bank for Agriculture and Rural Development (NABARD)
All leading banking and financial organizations in India give farmers a great deal of financial assistance at all rates. However, the National Bank for Agriculture and Rural Development (NABARD) began this trend of boosting the rural economy and agriculture through financial credit back in the early 1980s. When it comes to agriculture credit, all other banks around the country fall under NABARD 's remit.
This financial institution is working together with the Indian government to improve the agriculture sector. Several ground-breaking schemes are credited to it that have greatly benefited farmers across the world. The most notable scheme that NABARD has launched is the Kisan Credit Card (KCC).
Kisan Credit Card Scheme
The Kisan Credit Card is a scheme that the Indian banks launched back in 1998 as a way to fulfil the agricultural sector's financial needs. This is achieved by giving the farmers monetary assistance, which in turn comes with different characteristics and benefits. Loan quantity depends on several factors such as cultivation cost, cost of farm maintenance, etc.
This has benefited particularly those farmers who are not aware of the banking practices. In addition, it is intended to protect farmers against harsh and informal creditors, which could land them in a massive debt.
The farmers are permitted to use the KCC card to withdraw funds for crop production and domestic requirements.
KCC application is a simple, trouble-free process which requires minimal documentation. It also offers cover for farm insurance, along with interest rate subsidies. Interestingly speaking, farmers applying for loans under the KCC scheme can borrow funds for amounts up to Rs. 3 lakhs at 7 per cent per annum.
The Kisan Credit Card is linked to the savings account of the farmer, and all transactions are carried out under a single account. Any credit balance in the KCC account additionally receives interest. All farmers should apply for a KCC and then visit your nearest bank for more details if you are looking to apply for one.
Agriculture Term Loan
This refers to the up to 48-month long-term loans provided by various lenders to meet agricultural expenditure that is not necessarily of a seasonal nature. You can use the loan amount to buy new machinery or upgrade existing ones, install solar power, windmills, etc. Banks generally allow repayment tenure of 3 to 4 years for this loan, so you can repay the amount borrowed back in monthly / bi-annual / yearly instalments according to the convenience of the borrower.
Farm Mechanization Loan
This loan may be used to purchase new machinery, repair / replace old machinery, purchase tractors or harvesters, or some other farm equipment. While some banks offer a general-purpose loan, others have categorized these loans into different end-use types.
Solar Pump Set Loan
This agricultural loan is offered for small irrigation projects for the purchase of photovoltaic pumping systems. In general, it is a long-term loan with tenure of repayment of up to 10 years.
Loan for Allied Agricultural Activities
This loan is offered to farmers in order to meet the requirements of working capital and long-term investment needs for related agricultural activities.
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