Types of Agricultural Loans in India
We can categorize agricultural loans in 5 categories
1. Farm Storage Facilities Loans or warehousing loan provided by government and banks for storage of farm or agriculture commodities for non-perishable commodities.
2. Farm Operating Loans: agriculture loans for day-to-day needs or expansion requirements.
3. Farm Ownership Loans: These include loans for buying agriculture or farming machinery, livestock, tractors etc.
4. Fisheries Finance Program: This program is designed for specific projects in fisheries that qualify under the direction of Congress. A qualified program is eligible for up to 80 percent financing through a direct loan program. This loan program is designed to refinance a private debt on a fishing vessel or to provide for maintenance and repairs on an existing vessel.
5. Other Agriculture Loans: such as housing loans, grants, subsidy from government for loss of crop, crop damage, whether based agriculture subsidy etc.
State bank of India is a nationalized bank which channelizes all governmental schemes to farmers. Various banks in India provide different crop loans, kisan credit cards, agriculture insurance schemes. Agricultural schemes for farmers are as follows.
- Crop loans: for raising various crops or development of crops.
- Produce Marketing Loan Scheme: provides short term credit during requirement at the time of crop selling.
- Loan Against Warehouse Receipts: farmer can get loans upto 70% of the value of goods for storage of agriculture commodities.
- Kisan Credit Card Scheme: The Kisan Credit Card is a unique scheme for farmers through which they can draw a cash loan for crop production as well as domestic needs from the card-issuing branch within the sanctioned limit.
- Kisan Shakti Yojana: provides farm investment credit, as well as personal/domestic loans including repayment of debt to moneylenders. The permissible loan limit will be 50 per cent of the value of land or 5 times the net farm income, whichever is lower, less the outstanding amount.
- Land Development Scheme: scheme for performing various activities for developing existing land such as land leveling, reclamation of soil, bunding and any other soil conservation measures etc
- Minor Irrigation Scheme: loans provided for digging new wells (open/ bore wells), deepening existing wells, setting lift irrigation etc.
- Farm Mechanization Scheme: various banks provide loans for purchasing agriculture equipments, small and large farming machinery, tractors etc.
- Financing of Combine Harvesters: provide loan for one farmer or group of farmers for purchasing combine harvesters, heavy harvesting machines.
- Land Purchase Scheme: the scheme assist small, marginal and landless farmers or labourers for purchasing land.
- Dairy Plus Scheme: scheme for establishment of dairy farm including construction of shed, purchase of milch animals, milking machine and buying other dairy equipments.
- Broiler Plus Scheme: scheme for construction of poultry shed, feeding room and establishment of layer or broiler poultry farm.
- Horticulture finance: include loans for development of fruit orchard, such as mango, chikoo, grapes, pomegranate, apple etc. Also include loans for polyhouse, green house development and marketing of such produce.
- Agri Business Heads Scheme: the scheme provides self employment opportunity to technically trained people for setting new agribusiness, purchasing farm machinery etc.
Cost Associated with Agriculture Finance or Loan
Reserve bank of India released circular regarding loans in India which states that processing fee for agriculture loans should not be exceeding 1% of the gross loan amount and processing fee should not be included in the margin cap or the interest cap of 26%.
Agriculture Loans are either direct or indirect. Direct agriculture loans include loans to individual farmers [including Self Help Groups (SHGs) or Joint Liability Groups (JLGs), i.e. groups of individual farmers, provided banks maintain disaggregated data on such loans], directly engaged in Agriculture and Allied Activities, viz., dairy, fishery, animal husbandry, poultry, bee-keeping and sericulture. Indirect agriculture loans include loans to corporate including farmers' producer companies of individual farmers, partnership firms and co-operatives of farmers directly engaged in Agriculture and Allied Activities, viz., dairy, fishery, animal husbandry, poultry, bee-keeping and sericulture.
Processing fee of Kisan Gold card (saral) by HDFC is Rs 250/-. Repayment schedule charges for the same are Rs 200/- per request. Late payment penalty for KGC types varies from 1.33 % to 2 % p.m. on overdue payment. Supervision charges of KGC types ranges Rs. 500/- to Rs. 2000/-.
Processing fee of Agriculture term loan from JK bank- Rs. 0.05 % of the amount sanctioned with a minimum cap of Rs. 25/- to be paid up front.
Processing charges of agriculture gold loan by Canara Bank varies from no charges (loan upto Rs 25000/-) to Rs. 900/- (Loan up to Rs. 3 lakh). Handling charges differ from nil to Rs. 100/-. Mortgage charges varies from no charges to Rs. 30000/-.However processing charges cannot collected under conditions such as government sponsored schemes, self-help groups or agriculture loans given to employees.
Processing fee of agriculture loan from ICICI bank is up to 4 % of the loan amount.
Late payment penalty is 2 % p.m. on unpaid installment.
Processing fee of agriculture loan in rural from Vijaya bank ranges from nil (Rs.25000/-) to 0.16 % i.e. Rs. 102/- (Rs.25000/- to 2 lakh).
There is no processing fee for agriculture loan up to 10 lakh and no documentation charges for credit limit up to Rs. 2 lakh.
There are no processing and documentation charges for kisan credit card-central bank of India and no collateral security for loan up to 1 lakh.
Government of India has exempted farmers from paying stamp duty on agriculture loan up to Rs. 5 lakh.