Agricultural Loans Schemes in India

Agricultural loans in India are not only offered to farmers working towards the cultivation of food crops, but they are available to anyone who is engaged in other agriculture-related sectors like horticulture, aquaculture, animal husbandry, silk farming, apiculture and floriculture.

National Bank for Agriculture and Rural Development (NABARD)

In India, all premier banking and financial organisations, at all levels, offer a great deal of financial help to farmers. However, this trend of boosting the rural economy and agriculture through financial credit was started by the National Bank for Agriculture and Rural Development (NABARD) back in the early 1980s. When it comes to credit in the field of agriculture, all other banks throughout the country fall under the purview of the NABARD.

This financial institution is working in conjunction with the Government of India to boost the agriculture sector. It is credited with several innovative schemes that have immensely aided the farmers throughout the country. The most notable scheme launched by the NABARD is the Kisan Credit Card (KCC).

Kisan Credit Card Scheme

The Kisan Credit Card is a scheme launched by the Indian banks back in 1998, as a way to fulfil the financial necessities of the agricultural sector. This is done by giving monetary support to farmers, which in turn comes with various features and benefits. The quantum of the loan depends on several factors like cost of cultivation, farm maintenance cost, et cetera.

This has been particularly beneficial for those farmers who are not aware of the banking practices. Moreover, it is meant to protect farmers from harsh and informal creditors, which may land them in a massive debt.

The farmers can use the KCC card to withdraw funds for the purpose of crop production and domestic requirements.

Applying for the Kisan Credit Card is a simple, hassle-free process that requires minimal documentation. It also offers crop insurance coverage, along with subsidies on interest payments. Under the government's Modified Interest Subvention Scheme, farmers applying for loans under the KCC scheme can borrow funds at a base rate of 7 percent per annum for amounts up to Rs. 3 lakh, which reduces to an effective 4 percent per annum for borrowers who repay their loans on time.

Loans under the Kisan Credit Card scheme up to Rs. 2 lakh are extended without any collateral or margin requirement, per the Reserve Bank of India's instruction effective 1 January 2025; this collateral-free lending limit is revised by the RBI from time to time. 

The Kisan Credit Card is linked to the farmer's savings account and all the transactions are done under a single account. Additionally, any credit balance in the KCC account earns interest. All farmers can apply for a KCC and if you are looking to apply for one, then visit your nearest bank for more information.

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Other Agricultural Loan Schemes in India

The NABARD has also helped greatly in developing a couple of other schemes, targeting specific sectors. A few of them are listed below:

• Dairy Entrepreneurship Development Scheme: This scheme, along with its successor component under the National Livestock Mission - Entrepreneurship Development & Employment Generation (NLM-EDEG), is currently listed as closed/temporarily closed on NABARD's official website; farmers should check NABARD's current government-sponsored schemes list for active dairy-sector credit support.
• Agricultural Marketing Infrastructure (AMI) Scheme (formerly Rural Godowns): The main objective of this scheme is to help farmers throughout the country by providing them with godowns. This will, in turn, improve their holding capacity drastically and as a result, they will be able to sell their produce at fair rates, rather than selling them under distress. In addition to this, with a nationalised warehouse system in place, the marketing of agricultural produce becomes simpler.

• Loan Against Warehouse Receipts: Warehouse receipt financing serves as a foolproof way to prevent distress sales. When a farmer needs funds, post-harvest, all he has to do is store his produce in a Warehousing Development and Regulatory Authority (WDRA) accredited warehouse, which in turn issues him a receipt. This warehouse receipt mentions important details like quality and quantity of the produce, and can be used to get credit from banks, up to 70 percent of the collateral value.
• Solar Schemes: These schemes were implemented in order to reduce dependence on grid power by promoting the use of solar equipment. The idea here is to replace diesel pumps with solar ones, considering that they have low operating costs and are environment-friendly.
• Agri Clinics and Agri Business Centres Scheme (ACABC): This NABARD-supported scheme provides credit-linked support to agriculture graduates and diploma holders to set up agri-clinics and agribusiness centres that offer paid technical services, inputs and advice to farmers. 

The official website of NABARD can be visited for more details on these schemes, along with the information on how to apply for them. Since many of these are subsidy based schemes, your bank will adjust your loan repayments against the corresponding subsidy you are entitled to, through the funds released by NABARD.

Leading Banks that offer Agricultural Loans in India

Coming to the public-sector banks in India, there are several leading financial institutions who are known for their exceptional credit services in agriculture-related sectors. Some of these banks are mentioned below.

State Bank of India Agricultural Loans

State Bank of India is a leader in financing projects in the agriculture sector. They have helped millions of farmers across the country through their 23,000-plus branches. They offer a variety of products like Kisan Credit Card, gold loan for crop production and multi-purpose gold loan for agriculture activities.

SBI also offers agriculture loans for mechanisation of farms. The funds from these loans can be used to purchase combine harvesters, tractors and install drip irrigation. Moreover, loans for activities related to dairy, poultry or fisheries can also be availed. Credit can be taken against warehouse receipts.

The bank also offers Debt Swapping Scheme, wherein financial aid is offered to farmers to help them clear their dues that have been produced by taking loans from non-institutional lenders like loan sharks, money lenders, et cetera. The main goal of this scheme is to help farmers become debt free and clear their loans coupled with atrocious interest rates.

Lastly, one can look to SBI for financial help if they are looking to boost their agricultural marketing, establish agribusiness and agri clinic centres or purchase land.

State Bank of India's seven former associate banks - 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 - have all been fully merged into SBI (the last five with effect from 1 April 2017) and now operate simply as SBI branches, not as separate subsidiaries.

If you are looking to avail any of these agricultural loans offered by the State Bank of India, then all you have to do is visit your nearest SBI branch for more details and application.

HDFC Bank Agricultural Loans

The HDFC Bank offers a variety of agriculture loans for farmers and agriculturists. The purpose of these loans varies across a broad spectrum, starting from installation of orchards and plantations to promotion of commercial horticulture and production of field crops. Furthermore, the HDFC bank also offers warehouse receipt financing to all farmers and small traders.

Indian Bank Agricultural Loans

Indian Bank offers the Kisan Credit Card for short-term crop production and household needs, with a five-year validity and no margin requirement, and processing fees are waived for loans up to Rs. 3 lakh. Eligible borrowers include owner-cultivators, tenant farmers, oral lessees, share-croppers, and self-help or joint liability groups of farmers, and the bank has also rolled out a digital Kisan Credit Card journey in several states. 

Bank of Baroda Agricultural Loans

Bank of Baroda is another leading name people look to when it comes to availing loans for agricultural purposes. They have various schemes, covering almost all the sectors in agriculture.

For instance, one can take loans to purchase tractors and heavy machinery needed for day to day operations. Moreover, Bank of Baroda also offers working capital and funds required for either setting up units, or running units occupied with dairy, pig farms, poultry, sericulture, rearing of sheep and goat, et cetera.

Farmers can also look to the bank if they are in need of a four-wheeler to help them manage their farm activities better. Bank of Baroda offers four-wheeler loans to farmers with a maximum quantum of Rs. 30 lakh.

Punjab National Bank Agricultural Loans

Punjab National Bank has myriad financial products related to agriculture. For example, one can avail loans from the PNB to establish biogas units, develop wastelands, set-up minor irrigation apparatus, et cetera. In addition to this, people who are interested in pursuing the field of apiculture (beekeeping) can approach Punjab National Bank for financial support.

The bank also offers warehouse receipt financing, along with insurance coverage and financial support to farmers in the event of crop failure, owing to natural disasters, diseases, and pests. This scheme is known as Pradhan Mantri Fasal Bima Yojana. 

Axis Bank Agricultural Loans

Axis Bank has done well to earn a splendid reputation in the world of agricultural finance. Over the years, they have greatly helped farmers through their diversified financial products such as gold loans, Kisan Credit Card, tractor loans, warehouse receipt financing, loans for developing rural godowns and many more.

Axis Bank also offers a product known as Contract Farming, wherein loan agreements are made between farmers and corporates. The amount is provided by the lender instantly for production and supply of the produce, and all of it is governed by the Fair Practices Lending Code.

Before taking any kind of loan, it is recommended that you research carefully and figure out the type of loan that works best for you. Since a huge variety of agricultural loans are offered, finding the one that suits your purpose is absolutely crucial.

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