Farmers in India incur massive expenses while cultivating crops. Most of the time, they barely make profits and struggle to repay their debts. We have heard the cries of the agriculturists in India lamenting about the low prices they get on their produce, the high cost of manure, and lack of water.
To continue farming, they land up borrowing from private lenders who charge a very high rate of interest which makes things worse. To help farmers in India by offering them financial aid when required, many banks in India offer agriculture loans.
If a farmer has a piece of land in his/her name, that can be used as a collateral to obtain a loan from a bank or a financial institution. When a borrower pledges an agricultural land for money it is called as “Loan Against Agricultural Land” or “Agriculture Loan”.
Features of Loan On Agricultural Land
Loan Against Agricultural Land is specially designed for people who cultivate crops like farmers, planters, or Horticulturists. It cannot be availed by a businessman or a professional.
Usually, the farmer does not have to furnish Income Tax Returns to apply for this type of loan.
It requires minimum documentation.
The loan tenure goes up to 20 years with many banks.
There are no hidden charges on Agriculture Loans.
The lender usually works out a flexible repayment plan considering the farmer’s situation.
The turnaround time is fast and the banks are sensitive to the harvest season.
The borrower can use the funds for agricultural purposes like food processing, buy an agricultural equipment, set up dairy units/fisheries/rice mills, or for micro-irrigation.
They can also use the funds to set up a greenhouse, cold storage, or a horticulture centre.
To buy agriculture insurance to protect from crop losses.
You can use the funds to buy livestock or cover your marketing and operating expenses.
Eligibility Criteria for Loan Against Agricultural Land
Farmers, Dairy Owners, Horticulturists, and any Orchard owners are eligible to apply for an Agriculture Loan.
Most lenders prefer the age of the applicant to be within 24 to 65 years of age. However, there are few banks who offer loans to applicants are 18 years of age. The eligibility differs from one bank to another.
If the land is owned by two people, co-applicant is mandatory.
A agricultural land is pledged as a collateral. The borrower should have clear titles to the land to be eligible to apply for a Loan Against Agricultural Land.
Usually, lenders prefer borrowers to have residence stability of 2 years.
Most banks offer loans based on the size of the land pledged. They usually mention the minimum acres of land a farmer should have to apply for a loan.
Interest Rate for Loan Against Agricultural Land
The interest rate on agri loan differs from one bank to another. You will have to contact the bank directly to know the exact interest rate that will be charged. Some of the banks providing loan against agricultural land is given below:
ICICI Bank- Agri Term Loan
Minimum Interest Rate- 10.50% p.a.
Maximum Interest rate- 13.70% p.a.
Mean Interest Rate- 11.55% p.a.
Union Bank- Loan for Agribusiness
Rate Of Interest
Loan up to Rs.50,000
Loans above Rs.50,000 to Rs.2 lakh
Loans above Rs.2 lakh to Rs.5 lakh
Loans above Rs.5 lakh to Rs.25 lakh
Loans above Rs.25 lakh to Rs.1 crore
Loans above Rs.1 crore
You will have to contact the bank for the table.
Canara Bank Agriculture Loans
Rate Of Interest
Loan up to Rs.3 lakh
Loans above Rs.3 lakh to Rs.1 Crore
Loans above Rs.1 Crore to Rs.2 Crore
MCLR+2.30% to MCLR+3.50% (Depending on type of the loan)
Loans above Rs.2 Crore (Which will be rated internally under RAM Model)
Loans above Rs.5 Crore (Based on External rating)
AAA or Equivalent - MCLR + 1.40%
AA or Equivalent - MCLR + 1.50%
A or Equivalent - MCLR + 1.85%
BBB - MCLR + 2.80%
BB - MCLR + 3.35%
B - MCLR + 3.50%
C&D - MCLR + 4.50%
IDBI Bank Agri Loans
For Term Loans up to Rs.25 lakhs (To small and marginal farmers) -
Minimum rate of interest - BBR+0.50%
Average rate of interest - BBR+0.50%.
For Working Capital and Short Term Loans above Rs.25 lakh up to Rs.3 crore (To small and marginal farmers) -
For Term Loans above Rs.25 lakh up to Rs.3 crore (To small and marginal farmers) -
Documents Required to Apply for Loan Against Agricultural Land
Duly-filled application form
One valid identity proof like your PAN Card, Aadhaar Card, or Passport
One valid proof of residence like Aadhaar Card, Passport, or Utility Bills
Land documents like registration document, taxes paid, and utility bills
No due certificate from Co-operative Credit Society (If required)
Copy of the land sale agreement
Last six months bank statement (If required)
Passport size photograph of the applicant and co-applicant
Fees and Charges for Loan Against Agricultural Land
There are many fees and charges that will be charged on your Agri Loan. Some of the most popular ones are:
A Processing Fee of 0.50% of the loan amount or Rs.3,000 whichever is higher is usually charged. However, this charge differs from one bank to another. During the festive season, many banks waive the processing fees to encourage borrowers to take loans.
Cheque Dishonor Charges
Property Insurance Charges
Statutory and Regulatory Charges
Late Payment Penalty
Valuation of the Property Fees
If you are planning to pledge your agricultural land for money, compare various loans before you choose one. Talk to the bank directly for accurate information.
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I have taken Home loan directly through Corporation Bank .I have applied for the loan amount of 12 lakhs for the tenure of 18years .More documents collected for this home loan and got the loan amount on time and it was really sufficient .There was no drawbacks faced so far .I am satisfied with the service .
I had applied for home loan with HDFC limited on few months before, they have sanctioned a loan for 22 lakhs but due to some problem of my builder from my end I kept on hold for the loan process. They have detected for the processing fee of 11 thousands but they refunded 9 thousands rupees. The tenure of 15 years. Interest rate was nominal of 8.55%.
With HDFC limited I have taken home loan on 8 months before which was processed through them directly. They have approved for 8 lakhs but as of now I have taken only for 5 lakhs remaining 3 lakhs I will get later from their end. Due to shop will come in commercial loan so I have split the loan amount to get it. For the tenure of 15 years. The processing fee for 5000 rupees. The rate of interest 8.8%, they have sanctioned the loan within one month.
I have availed Home loan directly through Punjab National Bank .The rate of interest and the processing fee was very high ,I have got the loan amount on delay basis and i have applied for 26 lakhs for the tenure of 15 years.I have not faced any difficulties until i have received the loan .
SBI Home Loan is excellent because I've a salary account with them. They offered me a interest rate of 9.5% approximately. I took the loan amount of Rs. 23 lakhs so far i have got only Rs. 16 lakhs since my building is under construction. My EMI is not yet started. They sanctioned the loan in 2 working days.
SBI is a best bank and they had a better option. There is only simple documentation required and executive came to my place for collecting all the documents. I got the loan within 7 days. SBI did not taken any processing charges and they gave better and cheap interest. They take minimal time and better response from the customer care so i had chosen SBI for my home loan.
My home loan was purchased from Central bank of India. The branch offer was approved the loan immediately and they had a good behavior with the customer. I got the better clarity about the loan process as well as the rate of interest in central bank of India is less than compared to others so i have chosen this bank and the Branch Manager helped me in a better way.
From DHFL I have taken a home loan almost more than a year. One of my cousin's friend working there he recommend to apply for a home loan. The process was smooth and sanctioned a loan within 6 days with sufficient amount of 20 years. The rate of interest was high.
ICICI bank has provided me a home loan at the time of i want on a immediate basis. Since the necessity is over they have provided me a timeliness loan. I taken the loan amount of Rs. 10 lakhs and the have charged me a higher interest rates which i'm not comfortable with.
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DIVYESH PRATAPBHAI FERFA
Reviewed on Oct 05, 2019
I have balance transfer for a home loan with existing finance to HDFC LIMITED. One month before only I have a transfer of a loan. They have outstanding amount of 10 lakhs for the tenure period of 10 years. The rate of interest is 8.6% only for mortgage charges for 8 thousands need to pay for it.
I have taken a home loan with SUNDARAM FINANCE on 10 years before which was processed through them directly. The amount which was given for 13 lakhs for the tenure period of 20 years. There was lot of issues I faced with them customer service is not good response. The rate of interest was high of 14% compare to other.
I have taken home loan directly through State Bank Of India .The rate of interest and the processing fee was nominal ,I have got the loan amount on time and got a clear picture about the loan process ,I have availed this loan for the tenure of 20 years .I have completed only 2 years of EMI so far .,
I have taken Home loan directly through Central Bank OF India ,I have got the loan on exact time ,The rate of interest and the processing fee was nominal ,I have got all the details about this loan very clearly through bank agent.The process was very easy and still this loan is active .
Nearly 11 years before I had taken a home loan with STATE BANK OF INDIA which was processed directly to them.The loan amount was sufficient for the tenure period of 15 years. The rate of interest and processing fee are nominal. They have sanctioned a loan within few days and the process was good.
I have just applied the home loan from Central bank of India. I had a reference over there hence i applied the home loan from Central Bank of India. Documentation process was hassle free. They have offered me a interest rate of 10.1% and the processing fee was 1% of the interest amount +18% GST charges. They have dispatched the loan 20 days. The staffs are so friendly
HDFC was the only bank which is offering for the home loan in the area where i have purchased the house so i opted with HDFC LIMITED. I had applied the loan amount of Rs. 28 lakhs and the given interest rate is 8.5% and they charged me a processing fee of nominal one. I took the loan 3 years ago and they took 40 to 50 days to sanctioned the loan.
I took a home loan with PNB Housing Finance Ltd because the terms and conditions are very liberal at that time, I have been expecting higher loan amount for my purchase. They have fulfilled my requirements and its more than 90%. The rate of interest is little bit higher and they are not following RBI guidelines. When interest rate is increased, they have started charging more but not reduced when it got reduced.
I have completed my home loan with HDFC BANK before 3 years ago. I did foreclosure and that time the interest rate is not much. I bought a residential property and the loan procedure is very easy because my papers are strong and clear to proceed faster.
I have applied for Home loan directly through Bank Of Baroda and got the loan on stipulated time .This loan was upto 15 years and got the loan amount on time ,The agent gave all the required information about the loan process .I have got all the required details about the loan process and there was no drawbacks faced as well.
I am not happy with rate of interest which was given by LIC Housing Finance. I have purchased the Flat in 2017August. The loan amount was 40L and its 15 years tenure. The processing fee is not applicable. The customer service is good. But every year, they are raising the interest rate which was not good.