The agricultural sector can be considered to be the backbone of our country’s economy. Millions of people living in the rural parts of India depend on agriculture as their main or only source of livelihood. A major part of the population in our country constitute of farmers.
Most of the farmers and people involved in the agricultural activities struggle when it comes to finding sufficient funds to meet their on-going requirements or to expand their activities.
Farmers who have gold jewelry can consider taking a loan against gold to meet their requirements. Considering this loan is secured the interest rate is quite low. However, not all requirements can be always met using a gold loan.
The best solution to this problem would be to apply for an agricultural loan from a bank or NBFC. Agricultural loans are being provided to farmers by the co-operative societies, commercialized banks, and both rural and urban banks at reasonable interest rates.
What Is An Agricultural Loan?
An agricultural loan is a loan provided by a bank or NBFC or a financial agency to a farmer to support their seasonal/on-going agricultural activities. These activities include preparing the agricultural land for farming, buying a piece of land, facilities for storage, buying farming equipment, seeds, pesticides and fertilizers, laborers for cultivation and harvest, etc.
Increasing the flow of credit to increase productivity in Agriculture and farming has been given priority in the agricultural policy set by the Indian Government. Banks and NBFCs provide:
- Short term agricultural loans- for production
- Loans for agricultural seasons- for investment
Criteria For Eligibility To Get An Agricultural Loan
The criteria for eligibility vary from bank to bank and depend on the particular scheme that you plan to apply for. The following are some of the criteria in general.
- The age of the loan applicant should be between 18 and 70 years.
- Based on the terms and conditions set forth by the bank/NBFC the agricultural loan may be applied individually or jointly by two or more individuals.
- The required assets must be owned by the loan applicant. This has to be hypothecated to the lender on borrowing the agricultural loan.
Can You Get An Agricultural Loan Without Any Security?
Yes, you can. Until January this year (2019):
- The maximum amount that the farmers could borrow was up to Rs. 1 Lakh as an agricultural loan.
- No collateral security is required for that.
- However, the things purchased with the loan amount will be considered as a security.
- This could be a piece of land, livestock or farming equipment.
- The land purchased will be mortgaged with the bank until the total loan amount is paid off.
The New Directive From The RBI
In February 2109, the RBI has put forth a new directive regarding the agricultural loans that are free of collateral security.
- The maximum agricultural loan amount that can be taken has been increased from Rs. 1 Lakh to Rs 1.6 Lakhs.
- The maximum limit was increased mainly due to the rise in agricultural input costs and other prices linked to farming activities.
- This will benefit especially the farmers operating on a small scale/marginal level.
- Farmers will be better equipped to make bigger investments as well.
As long as the agricultural loan amount stays within the maximum limit of Rupees 1.6 Lakhs, the farmer does not have to worry about providing collateral security to the bank/NBFC.
This blog is maintained by the Finaura team. Finaura is a solution that will help you find the best gold loan solution from gold loan company nearest to you. If you have any queries please feel free to contact us. Call us on +91 484 2388285 or email us at [email protected]