A few of the nation’s top lenders provide agricultural loans with interest rates as low as 7.00% p.a. These loans have processing costs that range from 0% to about 4% of the loan amount. Depending on their circumstances, potential borrowers can apply for either a long-term or short-term farm loan.
Compare Best Agriculture Loan Interest Rates in India
| Name of the Bank | Interest Rate | Processing Fee |
| Central Bank of India (Cent Kisan Tatkal Scheme) | 10.05% p.a. onwards | Up to 0.625% of the loan amount |
| IndusInd Bank (Crop Loan) | 7% – 14.25% p.a. | Up to 1.25% 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) | At the discretion of the bank | As per the lender’s terms and conditions |
| Union Bank of India (Land Purchase Loan) | MCLR + 0.10% to MCLR + 2.65% | Up to Rs.25,000 – Nil |
| Karur Vysya Bank (Green Harvester) | 10.7% p.a. | As per the lender’s terms and conditions |
| UCO Bank (UCO Kisan Bhoomi Vridhi) | Base Rate, Simple rate at half yearly rest | Nil up to Rs.3 lakh |
**Note: Up until October 2019, this was the interest rate that the lender assessed. For the most recent interest rate, please get in touch with the bank.
Why Are Agriculture Loans Important
More than half of India’s population still relies on agriculture for their primary source of income as of 2015, and many more are employed in the sector because the majority of the country’s rural population still works in agriculture. This is also because this industry supplies the majority of the raw materials needed by the industrial sector as well as the highest quantity of wage items needed by non-agricultural sectors. Even if the farming community, State and Federal governments, and the government were able to produce a record 244.78 million tons of food grains in 2010–11, it might not have been sufficient to raise the community’s standard of living. Financial assistance is desperately needed for India’s agricultural sector.
Fees and Charges for Agriculture Loan
- Foreclosure charges – will be assessed in the event that the borrower pays off their loans early and terminates their loan early.
- Processing fee – Before the loan is disbursed, a one-time processing fee will be subtracted from the borrower’s approved loan amount.
- Late payment charges – There will be late payment fees if the EMI is not paid according to the lender’s timetable.
- Stamp duty charges – Charged at actuals or in accordance with state laws that may be relevant.
- Bounce charges – be assessed in the event that the payback check bounces.
- Valuation charges – will be billed in the event that the applicant’s business or residential property is valued.
- ocumentation charges – will be assessed the appropriate fee.
*Note: Not all lenders will impose all of the fees listed above. In addition, additional fees can apply based on the terms and conditions set forth by your lender.
Types of Agriculture Loans
When it comes to agriculture loan finance, there are several banks across the nation that support farmers in their designated regions. These banks are exclusive to the government and are recognized for maintaining maximum transparency in loan handling as well as making sure that farmers don’t have to pay extra for borrowing money from a bank they use frequently.
State Bank Agriculture Loans
The bank has the biggest nationwide network, with branches operating with full amenities even in the most remote regions of the nation. Crop loans, produce marketing loan schemes, loans secured by warehouse receipts, Kisan credit card schemes, agricultural term loans, land development schemes, finance for combine harvesters, minor irrigation schemes, Kisan gold card schemes, land purchase schemes, finance for horticulture, lead bank schemes, finance for dairy farming, and agribusiness heads schemes are some of these schemes. Together with loans via 30 regional rural banks, the Bank also offers microfinance through Self Help Groups.
Nationalised Bank Agriculture Loans
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 are only a few examples of nationalised banks that offer agricultural loans. In actuality, the majority of nationalized banks provide tools to help farmers take advantage of low interest rates on agricultural loans.
Co Operative Agricultural Bank Agriculture Loans/ NABARD
is in charge of paying out refinance proceeds to commercial banks, regional rural banks (RRBs), state cooperative banks, rural development banks, and other qualified financial institutions. Through its Rural Infrastructure Development Fund, it also approves funding for initiatives related to drinking water programs, health and education, rural roads and bridges, irrigation, and soil conservation. In addition, NABARD provides crop loans through the Rashtriya Krishi Bima Yojana and the Kisan Credit Card Scheme.
Agriculture Loan FAQs
- Do lenders charge a fixed or floating rate of interest?
Depending on the terms and conditions set forth by the lender, interest rates on agricultural loans may be fixed or variable. Before taking out a loan, make important to choose which of the two interest rates you are okay with.
- How can I reduce the interest charged for an agriculture loan?
It’s advisable to analyze the interest rates offered by various lenders and choose a loan with terms that are both affordable and have a competitive interest rate. Additionally, you can bargain for a lower interest rate if you and the lender have a history of banking together.
- How is the interest paid by the borrower?
The interest will be paid as part of your monthly EMI.
- Will my interest decrease if I make pre-payments?
No, unless you select a loan with a fluctuating interest rate, the interest you pay will be the same for the duration of the policy. Prepayments, however, will lessen the monthly EMI you must pay, which will relieve your financial stress.
How often can I expect the interest rate to change if I borrow an agriculture loan with a floating rate of interest?
Only a change to the bank’s Marginal Cost-Based Lending Rate (MCLR) will affect floating interest rates.
