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  • Agriculture Loan Interest rates

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  • A number of leading lenders in the country offer agriculture loans that start at an interest of just 8.70% p.a. The processing fees for these loans can be as low as 0% and can go up to around 4% of the loan amount. Prospective borrowers can apply for a short-term agriculture loan or a long-term agriculture loan, based on their needs.

    Compare Best Agriculture Loan Interest Rates in India

    Name of the Bank Interest Rate Processing Fee
    ICICI Bank (Agri Term Loan) 10.00% - 15.33% p.a. Up to 2% of sanction limit at the time of disbursement
    Central Bank of India (Cent Kisan Tatkal Scheme) 8.70% p.a. onwards Up to Rs.25,000 – Nil
    Above Rs.25,000 - Rs.120/- per lakh or part thereof
    Maximum: Rs.20,000
    IndusInd Bank (Crop Loan) 10.15% - 14.75% p.a. Up to 1% plus service tax
    HDFC Bank (Retail Agri Loans) 9.10% - 20.00% p.a. 2% to 4% or Rs.2,500
    Federal Bank (Federal Green Plus Loan Scheme) 11.60% p.a. As per the lender’s terms and conditions
    Union Bank of India (Land Purchase Loan) 8.70% p.a. onwards Up to Rs.25,000 - Nil
    Karur Vysya Bank (Green Harvester) 10.30% p.a. As per the lender’s terms and conditions
    Canara Bank (Kisan Suvidha Scheme) 10.10% p.a. As per the lender’s terms and conditions
    Andhra Bank (AB Kisan Rakshak) 13.00% p.a. As per the lender’s terms and conditions
    UCO Bank (UCO Kisan Bhoomi Vridhi) 3.10% - 3.50% p.a. Nil up to Rs.3 lakh

    *Note: The figures mentioned above may vary based on the type of loan scheme you opt for.

    **Note: This was the interest rate charged by the lender up to October 2019. Please contact the bank for the updated rate of interest

    Why Are Agriculture Loans Important

    As on 2015, agriculture is still the principal source of livelihood for more than half the population of India or are related to agriculture as most of the Indian rural side is still dependent on agriculture as a profession. This is also because this industry provides the maximum amount of wage goods required by non-agriculture sectors and most of the raw materials for the industries sector. The Central Government, State Governments and the farming community have succeeded in achieving record production of 244.78 million tonnes of food grains during 2010-11 but it may still not be enough for the community to enhance their standard of living. There is an immense requirement of financial aid necessary for agriculture in India.

    Fees and Charges for Agriculture Loan

    • Foreclosure charges – Will be levied if the borrower prepays their loans and closes their loan account before the completion of the loan repayment term.
    • Processing fee – A one-time processing fee will be deducted from the borrower’s sanctioned loan amount before it is disbursed.
    • Late payment charges – If the EMI is not paid as per the schedule specified by the lender, late payment charges will be levied.
    • Stamp duty charges – Will be charged at actuals or as per the applicable state laws.
    • Bounce charges – Will be charged if the repayment cheque bounces.
    • Valuation charges – Will be charged if the applicant’s residential or commercial property undergoes valuation.
    • Documentation charges – Will be charged as applicable.

    *Note: Not all charges mentioned above will be levied by all lenders. Also, you may have to pay other charges as per your lender’s terms and conditions.

    Types of Agriculture Loans

    There are various banks around the country that aid farmers across their designated regions when it comes to agriculture finance, available in exclusive government recognised banks to maintain maximum transparency in loan handling as well as to ensure that farmers do not have to deal with paying extra for taking loans from a repetitive bank.

    State Bank Agriculture Loans

    The bank has the largest network in the country, with a branch functioning with all facilities in the most rural parts of the country. These schemes include Crop Loans, Produce Marketing Loan Scheme, Loan Against Warehouse Receipts, Kisan Credit Card Scheme, agricultural term loans, Land Development Scheme, Farm Mechanisation Scheme, Financing Of Combine Harvesters, Minor Irrigation Scheme, Kisan Gold Card Scheme, Land Purchase Scheme, Dairy Plus Scheme, Krishi Plus Scheme, Arthias Plus Scheme, Broiler Plus Scheme, Finance To Horticulture, Lead Bank Scheme and Agri Business Heads Scheme. The Bank also provides Microfinance through Self Help Groups along with loans through 30 regional rural banks.

    Nationalised Bank Agriculture Loans

    Nationalised banks that provide agricultural loans include Punjab National Bank, Union Bank of India, UCO Bank, Vijaya Bank, United Bank of India, Syndicate Bank, Oriental Bank of Commerce, Dena Bank, Allahabad Bank, Andhra Bank, Bank of Baroda and Indian Bank only to name a few. In fact most nationalised banks have facilities for farmers to make the most of low agriculture loan interest rates.

    Co Operative Agricultural Bank Agriculture Loans/ NABARD

    Is responsible for refinance disbursement to commercial banks, State cooperative banks, State cooperatives, rural development banks, Regional Rural Banks (RRBs) and other eligible financial institutions. It also sanctions money through its Rural Infrastructure Development Fund for projects covering irrigation, rural roads and bridges, health and education, soil conservation and drinking water schemes. NABARD also offers a Kisan Credit Card Scheme and crop loans under the Rashtriya Krishi Bima Yojana.

    FAQs

    1. 1. Do lenders charge a fixed or floating rate of interest?
    2. Agriculture loans can have fixed or floating interest rates, based on the lender’s terms and conditions. Ensure that you check which of the two interest options you are comfortable with before you borrow a loan.

    3. 2. How can I reduce the interest charged for an agriculture loan?
    4. It is in your best interest to compare the interests charged by different lenders and opt for a loan with a competitive rate of interest and repayment terms. Also, if you have a prior banking relationship with the lender, you can negotiate for a lower rate of interest.

    5. 3. How is the interest paid by the borrower?
    6. The interest will be paid as part of your monthly EMI.

    7. 4. Will my interest decrease if I make pre-payments?
    8. No, the interest that you are charged will remain constant throughout the policy tenure, unless you choose a loan with a floating interest rate. However, if you make pre-payments, the monthly EMI that you will have to pay will decrease, thus reducing the financial burden.

    9. 5. How often can I expect the interest rate to change if I borrow an agriculture loan with a floating rate of interest?
    10. Floating interest rates will only change if there is a change made to the bank’s Marginal Cost-Based Lending Rate (MCLR).

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