Agricultural loan are any loans that are availed by a farmer to fund seasonal agricultural operations or related activities like animal farming, pisci-culture or purchase of land or agricultural tools. While seasonal agricultural operations routine activities like include preparing and ploughing land for sowing, weeding, and transplantation where necessary, buying inputs such as fertilizers, seeds, insecticides etc. and engaging labour for cultivating and harvesting the crops.
Documentation Required for Agricultural Loan
Banks sanction agricultural loans, both long-term and short-term to farmers for agricultural activity. Keeping in view the illiteracy of farmers, the documentation requirement is few. However banks insist on the following documentation for agricultural loans:
- ID proof-Voter ID, Photo ration card. Aadhar etc
- Residence proof-Ration card
- Land ownership proof-records of rights, revenue receipt etc
- Kisan Credit Card-This is a card issued to all farmers including small and marginal farmers, tenant farmer, share croppers and oral lessees
Please note that required documents may vary from bank to bank.
Agricultural Loan Eligibility
Agricultural loans are extended to all types of farmers such as small and marginal farmers, tenant farmer, share croppers and oral lessees.
Agricultural Loan Interest Rate
As per government notification, for crop loans the rate of interest and collateral requirement is as follows:
On crop loans: For 2013-14, as per Govt of India notification, crop loans worth Rs. 3 lakh or below would carry an interest rate of 7% p.a. For those farmers promptly repaying loans, Govt. of India also provide allows interest subvention of 3% p.a-effectively bringing down interest rate to 4% p.a.
Crop Loans beyond Rs. 3 Lakh, banks charge interest rate as approved by RBI and other conditions as approved by their Board of Directors.
As per RBI directive, crop loans till an amount of Rs. 1 lakh require no security. Loans over Rs. 1 lakh may require security as per the lending banks terms and conditions.
Post-harvest: Post-harvest loan is available to farmers at a concessional rate of 7% with interest rate subvention. For farmers availing post-harvest loan against the negotiable warehouse receipts, the banks may charge interest at commercial rates.
For land purchase: Banks extend credit for purchase of land within 5 km of the farmers residence at interest rate as determined from time to time. There is no margin for such loans up to Rs 50,000 and amounts higher than this require a margin of 10%. The land is supposed to mortgaged in favour of the Bank and is considered the security.
Effects of the 2018-19 Union Budget Meeting on Agriculture Sector
Spearheaded by the Finance Minister – Mr. Arun Jaitley, the 2018-19 Union Budget Meeting was held on 1 February 2018. The meeting emphasised on expenditure, investment, and policy initiatives by the Government to improve the economy of various sectors such as agriculture, health, education, MSME, infrastructure, education, finance, employment, and many more. The Union Budget meeting also focused on how to improve the cash economy of the country.
Highlights of the Union Budget 2018-19 in Terms of Agriculture
- The Union Budget aimed to help farmers generate higher incomes from the same land parcel by obtaining a minimum of 50% more than their initial investment on crops.
- In case the cost of the produce market becomes less than the Minimum Support Price (MSP), the Government is liable to purchase the agricultural produce at MSP or help farmers receive MSP with the help of Niti Aayog.
- The Government will establish a committee that will not only impose relevant policies and practices applicable to the price and demand, but will also take decisions pertaining to the imports and exports within the country.
- The Finance Minister also stated that 22,000 rural haats will be upgraded to Gramin Agricultural Markets (GrAMs) allowing farmers to sell directly to the customers or purchase goods in bulk.
- An Agri-Market Infrastructure Fund of Rs.2,000 crore will be allocated for the development of the GrAMs and Agricultural Produce Market Committees (APMC).
- The Prime Minister Gram Sadak Yojana Phase III will be put in place to provide all-weather roads to areas that are still uncovered.
- The Government will further promote cluster-based development of agri-commodities to alter the entire chain of production and marketing.
- The Union Budget also emphasised in the development of small and cottage industries by allocating Rs.200 crore to this end.
- The allocation for the Ministry of Food Processing is doubled from the previous financial year to amount to Rs.1,400 crore.
- The Government will also allocate a corpus of Rs.500 crore towards agri-logistics, Farmer Producers Organizations (FPOs), and processing facilities.
- To offer more benefits to small and marginal farmers, animal husbandry farmers and fisheries will be offered Kisan Credit Cards.
- The Government also intends to promote the bamboo sector by allocation a sum of Rs.1,290 crore.
- The 2018-19 Union Budget emphasised on the adoption of solar-powered systems for agricultural purposes. To this end, the Government will not only encourage distribution companies to purchase the additional power generated by the farmers, but will also expand the scope of Long Term Irrigation Fund (LTIF).
- For the infrastructural development of the fisheries and animal husbandry sector, the Government will allocate a total corpus of Rs.10,000 crore.
- The meeting also witnessed a rise in the institutional credit for the agriculture sector which is proposed to be Rs.11 lakh.