Kisan Credit Card: India is an agrarian country, where farming is not just a job but the livelihood of millions of people. However, farmers often need money for seeds, fertilisers, pesticides, tractors, or new technology. Due to a lack of proper information, many farmers take loans from moneylenders instead of banks and get trapped in high-interest rates. The reality is that the government and banks are together providing agricultural loans to farmers at very low interest rates.
If you know which loan to take for farming, what documents are required, and how the interest rate is determined, then taking a loan becomes quite easy. Here, we are explaining complete information about loans available for farming in simple language.
Types of loans available for farming
Banks offer different types of loans depending on the needs related to farming. Short-term loans are usually called crop loans, which are given for seeds, fertilisers, and daily farming expenses. Investment loans are for things like tractors, irrigation systems, borewells, or land improvement, and their tenure can be from 3 to 7 years. Agro-processing loans are for farmers who want to start a small business along with farming, such as a flour mill, oil mill, or dairy.
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Kisan Credit Card is the cheapest option
The most commonly used loan for farming is the Kisan Credit Card (KCC). Its normal interest rate is around 9%, but the government provides a 2% subsidy, bringing the interest down to 7 percent. If the farmer repays the loan on time, an additional 3% discount is given, and the interest rate comes down to just 4%. It is difficult to find a loan at such a low rate anywhere else.
Documents required for the loan
Before taking an agricultural loan, it is necessary to keep some important documents ready. The required documents include an Aadhaar card, Voter ID, or PAN card as proof of identity; a ration card or electricity bill as proof of address; land-related documents such as Khatauni or Jamabandi; crop details certified by a Patwari or Lekhpal; bank statements for the last six months; and a passport-size photograph.
Easy Loan Application Process
First, visit your nearest government, rural, or cooperative bank. Obtain the application form for an agricultural loan or Kisan Credit Card (KCC) and fill it out with accurate information. Then, submit the land-related documents to the bank. If necessary, a bank official may also inspect the farm. The bank determines the loan limit based on the value of the land and crop expenses. Once all formalities are completed, the loan amount is transferred to the account or the KCC is issued.
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Interest Rate and Other Charges
Typically, the interest rate on agricultural loans ranges from 7 to 12 percent. Many banks do not charge processing fees for KCCs up to ₹3 lakh. Additionally, a small amount is deducted as an insurance premium under the crop insurance scheme, which can provide relief in case of natural disasters or crop failure.
Assistance from Government Schemes
The Kisan Credit Card scheme provides loans for farming and agricultural machinery. The Pradhan Mantri Kisan Samman Nidhi provides direct income support, helping farmers with their expenses. Under the interest subvention scheme, interest rebates are available on crop loans up to ₹3 lakh. Furthermore, natural disaster relief schemes provide relief to affected farmers in repaying their loans. Loans are also available for agriculture-related industries under schemes like cold storage, warehouses, and PM-KUSUM.
Things to Keep in Mind
Loans taken from moneylenders can burden you with interest rates of 24 to 36 percent, while the same can be obtained from a bank at 4 to 7 percent. Timely repayment of instalments can help you secure a larger loan next time. Do not use the money borrowed for farming for unnecessary expenses; otherwise, repayment may become difficult.
