Agricultural loan helps farmers run their farms efficiently. With the rising cost of seeds and fertilizers, it gets difficult for farmers to keep up with the cost of farming and production. The farmers can avail these loans offered at a lower rate of interest to stay afloat. The agricultural loan helps the farmers fund seasonal agricultural operations and activities like animal farming, purchase of agricultural tools, seeds and fertilizers, pisiculture and purchase of land. The additional costs incurred by the farmers like storage and transportation are also included in the agriculture loan.
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An agricultural loan is a specific financial instrument that empowers farmers for the upkeep and maintenance of farms and helps them prosper and grow. The agricultural loan can be availed at a lower interest rate along with other subsidies that help farmers, make a profit. The Union Government also backs some of these schemes that fall under the category of agriculture loan. In India most of the commercial banks and co-operative societies provide loans in rural as well as in urban areas. As agriculture is one of the main components of the Indian economy, the agricultural sector is given priority vis-a-vis lending status. Banks and other financial institutions offer agricultural loans at a lower rate of interest as compared to other loans.
There are five main categories of agricultural loans. They are as follows:
Farm operating loans: as the name suggests these loans help in the upkeep and maintenance of farms or can be availed for expansion purpose.
Banks and co-operatives sanction both, long term and short term loans to farmers. Documentation for agriculture loan is relatively simpler to make the process hassle-free and less complicated for the farmers. However, the banks require basic documentation to sanction the loans:
These are the basic documents required for this loan. However, the banks in their own capacity can ask for additional documents.
SEE ALSO: Pradhan Mantri Mudra Yojana
This loan is extended to all farmers in the country who cultivate agricultural land. The applicant must be of the age group of 18- 70 years. Agricultural loans are offered to small and medium farmers, tenant farmers, sharecroppers and oral leases. No security is required to avail a crop loan up to Rs 1 Lakh.
The EMI of your loan depends on the following factors:
EMI= (P*1)*(1+I) ^N/ [(1+I) ^N-1]
1. P stands for principal amount,
2. I stands for interest and
3. N stands for the number of installments.
Crop loans of Rs 3 Lakhs or below carry an interest rate of 7% a year. For farmers who repay loans in a short time, the government provides interest subversion of 3% a year. For Crop loan amounts of Rs 1 Lakh, no collateral is required. Post harvest loan is available at an interest rate of 7% with interest rate subversion. Loans for agricultural land purchases are also available. However, the interest varies from time to time.
The Union Budget focuses on improving the cash economy of the country: the highlights of the Union Budget (2018-19) are as follows:
The Finance Minister announced that the rural haats will be converted and upgraded to Gramin Agricultural Markets where the farmers can directly sell their produce to customers.
An infrastructure fund of Rs 2000 Crores will be allotted to the development of the Gramin Agricultural market and the APMC committees.
The government will bring forth a committee that will revise the policies and also impose new policies keeping in mind demand and supply. The committee will also take decisions related to imports and exports of the country.
The government will further encourage and fund cluster based development to improve the chain of production and marketing.
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