Types of Agricultural Loans in India

There are several types of agricultural credit, including Short-term credit, Medium-term credit, Long-term credit, Crop Loans, Farm development Loans, Live- stock loans, Kisan Credit cards, Agribusiness loans, agricultural real estate loans, allied agricultural loans, equipment loans, warehouse receipt loan, Forestry loans, Horticulture loan, Multipurpose Gold Loan, Solar pump set loan, etc.

Short-term credit:

Farmers use short-term credit for purchasing seeds, fertilizers, and paying wages to hired workers. These loans are typically repaid after the harvest.

Medium-term credit

Farmers borrow money to purchase cattle, pumping sets, and other agricultural implements and to carry out minor improvements in their farms. These loans are usually larger than short-term loans. Repayment is for a period of 2 to 5 years.

Long-term credit:

Land purchase loans are long-term loans, and the repayment tenure can extend up to 15 years.

Land purchase Loan:

Land purchase Loan aims to facilitate the acquisition of agricultural land by landless, sharecroppers, and small, and marginal farmers, helping them expand their cultivation areas. The loan can be utilized for buying agricultural plots, orchards, or farmland. Based on eligibility, farmers can also avail of other facilities like Forestry Loans, and Horticulture Loans to establish or maintain the nurseries of orchards, ornamental plants, as well as quick-growing trees and shrubs. Land purchase loans are long-term loans, and the repayment tenure can extend up to 15 years.

Horticulture Loan:

It is a short-term loan. Provision for availing subsidy from National Horticulture Board (NHB) under “Development of commercial Horticulture through Production and Post-Harvest Management” Farmers, permanent Tenant, leaseholder, SHGs, JLGs, Proprietorship, Partnership, LLP concerns, Private, Public Ltd. Companies are eligible to avail the loan. Margin Nil for short term loan up to Rs 100000/-

Livestock Loans:

Livestock loans which are also known as loans for allied agriculture activities, are designed to meet the financial requirements of farmers involved in animal husbandry, poultry farming, or dairy farming. These loans enable farmers to purchase livestock, construct livestock sheds, invest in feed, and procure equipment necessary for maintaining the health and well-being of the animals.

Crop loan:

 Crop loans, also known as Kisan Credit Cards, are specifically designed to meet the short-term financial requirements of farmers during the cultivation season. These loans are primarily utilized for purchasing seeds, fertilizers, pesticides, and other inputs required for crop production. Crop loans are usually sanctioned for the duration of one agricultural season and are repaid after the harvest. The crop loans are subsidized by the government, through its various schemes like interest subvention schemes up to a certain loan amount.  

To know more about Kisan Credit Card Read: KISAN CREDIT CARD (KCC) SCHEME FOR FARMERS, ANIMAL-HUSBANDRY AND FISHERIES

Farm mechanization Loan:

Farm mechanization loan focuses on promoting modern agricultural practices by providing financial assistance for the purchase of farm machinery and equipment. The maximum loan amount is 20 lakhs repayable in fixed EMIs over a specific tenure.

Agribusiness Loans: Loans provided to agricultural businesses for purposes such as processing, packaging, and marketing agricultural products.

Agriculture Gold Loan is also a type of Crop Loan where loans are primarily utilized for purchasing seeds, fertilizers, pesticides, and other inputs required for crop production against the security of Gold ornaments and coins.

 Warehouse Receipt Loans:

Warehouse receipt loans provide farmers with access to credit based on the value of their stored agricultural commodities. Under this system, farmers deposit their produce in a recognized warehouse and receive a receipt that represents the value of the stored goods. These receipts can be used as collateral to secure loans from financial institutions. Warehouse receipt loans are particularly beneficial for farmers who need immediate funds but prefer to wait for better market prices to sell their produce. By using the warehouse receipt as collateral, farmers can obtain loans at lower interest rates, with flexible repayment terms. Once they sell the stored commodities, the loan is repaid and normally loans are extended for a period of 12 months.

 Solar Pump Set Loan:

Farmers can take advantage of solar financing to purchase a solar photovoltaic water pumping system. This agriculture loan usually is extended for tenure of 10 years and the repayment is linked to the additional income generated due to irrigation provision.