Agriculture plays a pivotal role in India's economy, providing livelihoods to millions of people and contributing significantly to the country's GDP. However, farmers often face numerous challenges, including access to finance. To address this issue and support agricultural development, the Indian government has introduced various agricultural loan schemes. These schemes aim to provide financial assistance to farmers for various purposes, including crop cultivation, farm mechanisation, irrigation, and livestock rearing. Let us explore some of the key agricultural loan schemes in India and their impact on farmers.
What is an Agricultural Loan Scheme?
An agricultural loan scheme is a financial program designed to provide farmers and agribusinesses with access to credit for agricultural activities. These loans help cover expenses such as purchasing seeds, fertilizers, equipment, irrigation systems, livestock, and other farming necessities. Agricultural loan schemes can be offered by banks, cooperative societies, or government agencies, often at subsidised interest rates to support rural development and promote sustainable farming practices. They play a crucial role in enhancing productivity, ensuring timely sowing and harvesting, and reducing dependency on informal lenders who charge high interest. Different schemes may target specific needs, such as short-term crop loans, medium-term loans for machinery, or long-term loans for land development and infrastructure. Timely access to agricultural loans also enables farmers to manage risks, cope with seasonal fluctuations, and invest in modern techniques. Overall, these schemes empower farmers financially, improve agricultural output, and contribute to rural economic growth.
Kisan Credit Card (KCC) scheme
One of the most popular agricultural loan schemes in India is the Kisan Credit Card (KCC) scheme. Launched by the Government of India and implemented by various banks, the KCC scheme provides farmers with easy access to credit for their agricultural and allied activities. Farmers can use the KCC to avail of short-term loans for crop production, purchase of agricultural inputs, maintenance of farm assets, and other agricultural expenses. The scheme offers flexible repayment options and interest rates, making it easier for farmers to manage their finances effectively.
Required documents for agriculture loan scheme
To apply for an agriculture loan, several documents are typically required. These include:
- Identity proof: Aadhaar card, passport, voter ID, or driving license.
- Address proof: Utility bills, ration card, or lease agreements.
- Land documents: Title deed, land ownership certificate, or lease agreement.
- Income proof: Income tax returns, bank statements, or crop-related income details.
- KYC documents: Bank account details and photographs.
- Agriculture-related documents: Project reports, crop estimates, or market demand analysis (if applicable).
- Loan application form: Duly filled, with relevant personal and financial details.
Pradhan Mantri Fasal Bima Yojana (PMFBY)
The Pradhan Mantri Fasal Bima Yojana (PMFBY) is an agricultural insurance scheme aimed at providing financial protection to farmers against crop losses due to natural calamities, pests, and diseases. Under this scheme, farmers pay a nominal premium, and in case of crop damage, they receive compensation for their losses. The PMFBY aims to enhance the financial resilience of farmers and encourages them to adopt modern agricultural practices without the fear of crop failure.
Eligibility criteria for agriculture loan scheme in India
Eligibility criteria for agriculture loans in India generally include the following:
- Age: Applicants must be between 18 to 65 years of age.
- Nationality: Indian citizens or farmers with a valid residence proof.
- Land ownership: The applicant should either own or lease agricultural land.
- Income source: Must be involved in agricultural or related activities.
- Credit history: A good credit score (depending on the lender).
- Repayment capacity: Ability to repay the loan, supported by income proof or project viability.
- Crop type: Specific loan schemes may be linked to certain crops or agriculture-related projects.
Interest subvention scheme for short-term crop loans
The Interest Subvention scheme for short-term crop loans is another important agricultural loan scheme introduced by the Government of India. Under this scheme, farmers availing of short-term crop loans up to a certain limit are eligible for interest subvention, effectively reducing the cost of credit. The scheme aims to make agricultural credit more affordable for farmers and encourage them to invest in crop production. It also incentivises timely repayment of loans by providing an additional interest subvention for prompt repayment.
Agriculture Infrastructure Fund (AIF)
The Agriculture Infrastructure Fund (AIF) is a government-backed initiative aimed at improving the agricultural infrastructure across India. Launched to strengthen post-harvest management, reduce wastage, and enhance farmers’ income, the scheme provides financial support in the form of low-interest loans for building warehouses, cold storage units, sorting and grading facilities, and other essential infrastructure. Both individual farmers and farmer producer organizations (FPOs) can avail of the fund, making it accessible to a wide range of stakeholders. By enabling better storage, processing, and transportation of agricultural produce, AIF helps farmers fetch higher market prices and ensures food security. The scheme also encourages private investment in agri-infrastructure projects, boosting rural employment and economic growth. Timely utilisation of this fund can significantly enhance productivity and profitability. Additionally, for farmers looking to leverage their property for further financial support, options like a loan against property can complement the benefits of AIF.
National Bank for Agriculture and Rural Development (NABARD) schemes
NABARD, the apex institution for agricultural and rural development in India, offers various loan schemes and financial assistance programs to promote agriculture and rural development. These schemes include the Rural Infrastructure Development Fund (RIDF), Dairy Entrepreneurship Development scheme (DEDS), and Watershed Development Fund (WDF), among others. NABARD also provides refinance facilities to banks and financial institutions for extending credit to farmers and rural entrepreneurs.
Pradhan Mantri Krishi Sinchayee Yojana (PMKSY)
The Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) is a flagship irrigation scheme aimed at enhancing the productivity of agricultural lands through improved water management. Under this scheme, farmers are provided financial assistance for various irrigation projects, including construction of farm ponds, dug wells, bore wells, and installation of micro-irrigation systems. By ensuring access to reliable irrigation facilities, the PMKSY aims to increase crop yields, improve water use efficiency, and enhance farmer incomes.
These are just a few examples of the numerous agricultural loan schemes available in India, including Loan Against Property options for farmers seeking additional financial support. Each scheme is designed to address specific needs and challenges faced by farmers and promote sustainable agricultural development. Loan Against Property can provide farmers with the necessary capital by leveraging their existing land or property, ensuring they have access to funding for expansion, infrastructure, or operational costs. Such schemes offer flexibility and can play a crucial role in enhancing productivity and long-term growth in agriculture.
Modified Interest Subvention Scheme (MISS)
The Modified Interest Subvention Scheme (MISS) is a government-backed initiative aimed at providing financial relief to farmers by reducing the cost of credit. Under this scheme, farmers receive a subsidy on the interest charged by banks for short-term crop loans, making borrowing more affordable. Typically, the scheme offers a concessional interest rate for timely repayment, with additional incentives for prompt repayment within the stipulated period. MISS helps ensure that farmers have easy access to institutional credit, reducing their reliance on informal moneylenders who often charge exorbitant interest rates. By lowering borrowing costs, the scheme encourages investment in quality seeds, fertilizers, irrigation, and other farm inputs, ultimately enhancing agricultural productivity. It also provides a safety net during crop failures or adverse weather conditions, helping farmers manage financial risks effectively. Overall, MISS plays a vital role in promoting sustainable farming practices, improving rural livelihoods, and supporting the agricultural economy.
Types of agricultural loans based on purpose
Crop Loans: Short-term loans provided to farmers to cover expenses for sowing, fertilizers, pesticides, labor, and irrigation during the crop cycle.
Equipment or Machinery Loans: Medium-term loans for purchasing agricultural machinery such as tractors, harvesters, pumps, and other farm equipment to improve efficiency.
Livestock Loans: Loans aimed at buying cattle, poultry, or other livestock, including expenses for feed, veterinary care, and housing.
Land Development Loans: Long-term loans for preparing land, leveling, soil improvement, or constructing irrigation systems to enhance agricultural productivity.
Storage and Marketing Loans: Loans to build storage facilities, cold storage, or finance transportation and marketing of produce to reduce post-harvest losses.
Horticulture and Plantation Loans: Loans for developing orchards, vineyards, or plantation crops that require long-term investment.
How to apply for an agriculture loan scheme?
Step 1: Identify your loan requirement – Determine the purpose of the loan, whether for crops, equipment, livestock, or land development, and the loan amount needed.
Step 2: Choose the lending institution – Approach banks, cooperative societies, or financial institutions offering agricultural loans. Compare interest rates, tenure, and benefits.
Step 3: Gather required documents – Collect documents such as land ownership proof, Kisan ID, Aadhaar, income details, crop or project plan, and any previous loan records.
Step 4: Submit the application – Fill out the application form accurately and submit it along with supporting documents to the chosen institution.
Step 5: Loan assessment and approval – The bank evaluates your eligibility, land details, and repayment capacity before approving the loan.
Step 6: Disbursement and utilization – Once approved, the loan is disbursed, and funds can be used as per the loan purpose.
Some popular government schemes
Pro tip: If you are unable to qualify for an agriculture scheme but still need funds to manage your expenses—be it for large investments like infrastructure or smaller operational costs—you can confidently opt for a loan against property. This financing option allows you to leverage your property to secure the funds you need, offering flexibility and convenience for all your agricultural or personal financial needs. Check your loan eligibility! Find out how much loan you can get in seconds.
