Agriculture in India supports about 58% of the country's population and accounts for almost 14% of its GDP. However, in order to consistently produce high-quality crops, most farmers need financial support. Agriculture loans are provided by the government and numerous other financial institutions to aid farmers in weathering financial hardships and managing their businesses.
To guarantee timely, suitable, and equal access to loans for rising agricultural output and profits, it is crucial to create an effective and efficient rural credit delivery system.
What is Agricultural Loan ?
Farmers use loans for a variety of purposes, such as buying agricultural and irrigation equipment, raising crops, and funding other agriculture-related operations. They are also referred to as "crop loans" and can be used to fund the hiring of laborers to cultivate and harvest the crops as well as the purchase of materials like fertiliser, seeds, and insecticides.
Agriculture loans are made available by banks, government organisations, and microfinance companies to help India's agricultural sector grow. Agriculture loans feature lower interest rates than other personal loans that are accessible.
Purpose of Agricultural Loan
For the following reasons, farmers could need agricultural loans:
Buying agricultural equipment
Addressing seasonal farming's demands
Establishing a small poultry or dairy farm
The need for working capital, etc.
Additionally, it can be used for tractor loans, purchasing land, building farmhouses and other structures on it, purchasing harvesters and other agricultural equipment, as well as purchasing other farming inputs like seeds, fertiliser, and pesticides.
Feature and Benefits of Agricultural Loan
Agriculture loans have a few qualities and advantages, such as:
Low rate of interest
Minimal paperwork (just a few documents are needed, including a land title deed, photo ID, and proof of address)
The majority of lenders normally respond to requests for agricultural loans within a few working days.
Farmers are always welcome to repay the debt. Both short-term and long-term loans are open to them.
All fees related to agricultural loans are disclosed up front and are transparent.
Some creditors might also provide unsecured agricultural loans, depending on the borrower's history and the loan amount asked.
The loan amount can be used for a variety of agrarian goals, including long-term investments in farm machinery and a loan for the purchase of agricultural land, as well as seasonal farm operations that last only a few months.
Documents Required for Agricultural Loan
Most lenders need the following paperwork in order to lend money for agriculture:
A pair of passport-size pictures
An application that has been properly filled out Kisan credit card
Identification documents include voter identification, Aadhar cards, PAN cards, and ration cards.
Electricity and water bills, Aadhaar cards, voter identification cards, and other documents can all be used as proof of address.
You can show your income by using documents like bank statements and ITRs.
How to apply for Agricultural Loan
Numerous government, commercial, agricultural, and corporate banks provide a variety of loans under varying terms. According to the loan's objective, a borrower may research the various options available to them.
Loan applications may be submitted in one of two ways:
Online - If applicants choose the online option, they can utilise the official website, complete the application, attach the necessary paperwork, and then click the "Apply Now" button.
Offline - If applicants choose to submit their applications the old-fashioned way, they must make sure they have all the necessary paperwork on hand in order for the process to go smoothly.
Whether an application is submitted online or offline, it will be subject to verification, and the loan will not be disbursed until the application has been approved.