Agriculture term Loan is necessary to provide working capital needs to the farmers. Reliable credit flow is crucial in the agricultural sector. However, the agricultural loans in the country have a major drawback that is an 18 months repayment limit. Therefore, term loans provide a longer refunding time that is 15 years for repaying the amount. Moreover, it acts as an initial investment for conducting agronomic activities.
Besides, it aids to explore areas such as Diary farm, Farm mechanization, irrigation, horticulture, animal husbandry, Inland fisheries, etc. Additionally, improves the livelihood of farmers by controlling the interest rate and increasing the credit flow. Further, RBI and NABARD regulate the overall scheme by lending and providing assistance with banking. Furthermore, guidance is extended, that is by incorporating several cooperative, commercial, and rural banks.
Budget- 2020 supporting agriculture
- Over 11 lakh institutional credit is allocated to agricultural sectors
- The government will provide Rs 10,000 crore for infrastructural development of fisheries and animal husbandry
- Adaptation of solar pumps in agricultural fields
- GrAMs and APMC will receive over Rs 2000 crore
- Promoting the establishment of haats to convey the importance of the agricultural sector
Need for the Agricultural Term Loan
The agricultural term loan is significantly aiding the cultivators and thereby the agricultural sector. With that in mind, the loan assists in
- Attaining equipment for farming
- Land purchasing
- Horticultural activities
- Vehicles for ease of cultivators
- To establish dairy and poultry units
- Working capital is easily attainable via the loan
- Aids in fish farming
EMI For Agricultural Term Loan
Further, the EMI cost for agricultural term loans in comparison with other loans is quite different. In this regard, there is an online EMI calculator that helps to calculate the EMI of the candidate. Moreover, it is quite easy as just requires information such as loan amount, tenure, interest rate, and processing fees. Usually, the rate of interest ranges around 8.8% per annum. In addition to that, 2% of the whole amount in the initial stage.
Salient Features of the Scheme
- Documentation required is simple.
- Very quick processing of the loan
- Low rate of interest
- Variety of loan repayment options
- Hidden charges are nil
Eligibility for agriculture term loans
Farmers are encouraged to avail of the benefits of the scheme. They could range from small to large scale cultivators. Further, the candidate can be between 18 to 70 years old. That apart, the applicant can issue loans individually or in collaboration.
Nature of Assistance
Margin for agriculture term loans
In the time of the loan, margin money is essential. For instance, for loans over Rs 10,000, the margin is 15% to 25%. On the contrary, no margin for a loan below Rs 10,000.
Collateral security for agriculture term loans
- For creating movable assets: For up to Rs 25,000, hypothecation of assets. However, above that will require land mortgage or a third- party guarantee
- No movable assets: For up to Rs 10,000, hypothecation of assets along with DPN or land agreement. In case of the loan over Rs 10,000 land mortgage or a third- party guarantee is mandatory
Documents necessary for receiving Agriculture term loan
- Application form
- KYC documents
- Security PDC
- Land documents
- Documents specifically requested by the lender
Applying for an agriculture term loan
It is important to look into the banks that provide agriculture term loans. After comparison, the applicant can choose the most suitable bank closest to her/ him. Then, it is necessary to visit the respective bank while carrying all the documents. Further, a manual application will be handed over to fill and submit.
In another case, several banks allow the online application via their website. Accordingly, click on apply now and fill in the details. Further, submit the documents.
Regardless of the type of applicant, the lender will verify and update the details from time to time. Also, following the approval, the amount will be transferred to the applicant’s account.