Agri Loans are also known as Agricultural Loans. Agricultural loans are offered to a farmer to fund seasonal agricultural operations or related actions like animal farming, aquaculture or purchase of land or agricultural tools. This Agri loan is used to buy inputs such as fertilizers, seeds, insecticides etc.
Features of Agricultural Loan:
- End-use Flexibility: Agricultural loan will be offered for farmers to meet a variety of expenses associated to farm activities, such as to buying new farmland/ cattle or to meet the operating costs and other allied activities.
- Various Types: There are many types of agricultural loans based on end use as well as the repayment tenure.
- Minimal Documentation: Usually, with very minimal documentation, this agricultural loan can be offered to farmers.
- Collateral Optional: Secured and unsecured agricultural loans can be availed based on customer profile.
Types of Agriculture Loans:
- Crop Loan/ Kisan Credit Card (Retail Agri Loan): Kisan Credit Card/ Kisan Card is well suited for agriculture loan option to meet short term credit requirements, such as expenses resulting from cultivation of crops, post-harvest activities, maintenance of farm equipment, etc. This card is usually available in the form of an electronic RuPay Card in which the farmers can draw money from ATMs to do the essential purchase. It offers convenient credit to meet farmers’ daily farm requirements.
- Agriculture Term Loan: This type of agriculture loan is well suited for long term loans of up to 48 months offered by several lenders to meet agricultural expenditures which are generally not seasonal in nature. The agricultural loan amount can be utilized for buying new machinery or upgrade existing ones, install solar power, windmills, etc. Banks will provide an option to repay the amount in a tenure of 3 to 4 years for this loan. So, farmers can repay the amount in monthly/bi-annual/yearly instalments as per the borrower’s wish.
- Solar Pumpset Loan: This agricultural loan can be availed for the buying of photo voltaic pumping system for small irrigation projects. It is usually a long term loan with repayment tenure of up to 10 years.
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