Agriculture Loan Rules: If your father is a farmer, if there are farmers in your vicinity, or if you are involved in an agriculture-related business, this information could prove very useful to you. Under the RBI’s Priority Sector Lending norms, banks must allocate a specific portion of their total bank credit—known as Adjusted Net Bank Credit (ANBC)—to the agricultural sector. The primary objective is to integrate farmers and agriculture-related activities into the banking system.
Simply put, banks earmark a share of their total lending for agriculture and allied requirements. Loans can be obtained for activities such as crop cultivation, Kisan Credit Cards, farm equipment, fisheries, animal husbandry, dairy farming, and warehousing.
How much credit is allocated for agriculture?
According to the RBI’s Priority Sector Lending guidelines, the agricultural sector has a target of 18%. This target is determined based on the bank’s Adjusted Net Bank Credit. However, this does not mean that every farmer will automatically receive a loan; loan approval depends on factors such as the farmer’s eligibility, income, landholding, agricultural requirements, credit history, and the bank’s specific policies.
What is the target for small and marginal farmers?
Within the overall 18% target for the agricultural sector, a specific sub-target exists for small and marginal farmers. Regulations mandate that 10% of the agricultural lending target be allocated to small and marginal farmers, thereby emphasising the delivery of bank credit to this segment.
What is covered under agricultural loans?
Loans under the agricultural category are not limited to crop cultivation; they cover a wide range of agriculture-related activities. Farmers can avail themselves of crop loans to meet farming needs, covering expenses such as seeds, fertilisers, pesticides, and other cultivation-related costs. Additionally, eligible farmers can access agricultural credit through the Kisan Credit Card scheme.
Loans may also cover infrastructure projects aimed at enhancing agricultural operations, such as constructing warehouses, cold storage facilities, and storage infrastructure for agricultural produce. In addition to actual farming, priority sector lending also includes agriculture-related activities. These encompass dairy farming, fisheries, animal husbandry, beekeeping, agri-clinics, and other eligible agricultural activities.
The Importance of the Kisan Credit Card
The Kisan Credit Card is an essential banking facility for farmers. Through it, eligible farmers can avail themselves of bank loans to cover farming-related expenses. Having funds available to meet crop requirements helps farmers cover costs for seeds, fertilisers, pesticides, and other agricultural needs.
Do All Farmers Get Loans?
While extending adequate agricultural credit is a priority for banks, this does not mean that every application is automatically approved. Banks evaluate applications by examining documents related to land or farming, the purpose of the loan, repayment capacity, existing loans, and other relevant criteria. Therefore, it is crucial to verify eligibility requirements and documentation details with the bank before applying for a loan.
Benefits for Farmers
The agricultural component of Priority Sector Lending (PSL) aims to provide credit to farmers and those engaged in agriculture-related activities. This offers farmers the option to secure financial assistance from banks for farming operations, agricultural machinery, and allied activities. Furthermore, setting specific targets for small and marginal farmers ensures special emphasis on extending banking credit to this segment.