Agriculture is the backbone of India's economy, with over 58% of rural households depending on it as their principal means of livelihood. However, the risks involved in farming can make it difficult for farmers to obtain financing and invest in improving productivity. Fortunately, the government and financial institutions provide specialised agriculture loans aimed at supporting farmers and the agriculture sector.
If you are a farmer looking to apply for financial assistance, you must meet certain eligibility requirements. This blog post discusses the key agriculture loan eligibility requirements to qualify for farmer loans from banks, non-banking financial companies (NBFCs), and other lending institutions.
Key Eligibility Criteria for Agriculture Loans
To qualify for financial support for your farm or agriculture needs, some of the typical eligibility norms set by lending institutions include:
Indian citizenship
You must be an Indian citizen to apply for agricultural finance schemes from domestic banks. Foreign citizens cannot directly apply, but can be co-applicants or guarantors.
Proof of identity and residence
You must submit documents for an agriculture loan, such as an Aadhaar Card, Voter ID Card, PAN Card, etc., as identity proof. Acceptable documents for address proof include electricity bills, property registration papers, etc.
Proof of land ownership or tenancy
You must provide documents proving ownership or lease of agricultural land, such as land records, sale deeds, or tenancy certificates. Some schemes also allow landless labourers to qualify, subject to specific criteria.
Prior credit and banking history
Providers evaluate your creditworthiness based on your past debt obligations and repayment track record. Having an existing relationship with your bank or financial institution improves Kisan loan eligibility.
Collateral or guarantees
Most agriculture loan schemes require some form of third-party guarantee or asset pledge, such as land, livestock, equipment, etc., to cover the lender's risk. The lender can seize this if you default on repayment.
Commitment to farming activity
The intended loan amount should be commensurate with the scale of your existing farming activity. The lender may consider your income and expenditure statements and visit your actual operations.
Scheme-wise Agriculture Loan Requirements
In addition to the common norms, agriculture loans for farmers provided by specific institutions may have supplementary criteria related to:
- Borrower profile: Different terms for farmers, tenant farmers, sharecroppers, agri-entrepreneurs, agri-professionals, etc.
- Purpose of loan: Regulations specific to crop loans, farm machinery and equipment loans, livestock and fishery loans, agri-allied activity loans, etc.
- Loan amount: Pre-set loan limits depending on the scheme duration, type of farming, landholding size, applicant profile, purpose, etc. For instance, the upper cap for a short-term KCC loan is ₹1.6 lakhs.
- Government policy: Changes in schemes/subsidies offered based on prevailing political priorities, budgets and administrations.
Thus, eligibility norms are largely standardised but can vary across provider segments and specific products. Check for qualifying requirements before applying.
Documents Needed for Agriculture Loans
When you apply for agricultural finance, keep the following documents handy to submit along with your application form:
- Aadhaar card
- PAN card
- Voter ID/driving licence
- Passport-size photographs
- Ration card
- Electricity bill (for address proof)
- Bank account statements
- Income tax return (ITR)
- Land ownership documents
- Form 16 (salary slip)
- Lease agreement, if land is taken on rent
- Purchase invoices for equipment, vehicles, etc., to be financed
- Collateral paperwork
The exact documents needed may vary as per your loan provider’s guidelines. Check their website or enquire with their branch staff before applying.
Meeting the Eligibility Norms
Agriculture is characterised by various intricacies, uncertainties, and challenges. Availing financing can provide farmers with some buffer against income shocks and enable investment in farm upgrades. Most banks, NBFCs, and cooperative credit societies now offer tailored agriculture loan products for individuals engaged in agricultural activities.
However, gaining approval requires fulfilling the agriculture loan eligibility for farmers, set for applicant identity, creditworthiness, intended usage, collateral availability, etc. So, ensure you have all the qualifying paperwork and proofs handy before initiating the application process. This will help expedite processing and enhance your chances of securing the financing critical for supporting your farm’s expenses.
Conclusion
Banks, NBFCs, and cooperative societies play a significant role in supporting Indian agriculture by offering loans that address both immediate and long-term needs. These credit facilities can help farmers manage day-to-day expenses-such as purchasing seeds, fertilisers, and essential equipment-as well as invest in larger projects like improving irrigation systems, building storage facilities, or upgrading transport. By making such funding accessible, these institutions enable farmers to pursue higher productivity and work towards more stable incomes over time.
You can use the Shriram Finance Agriculture Loan Calculator to easily estimate your monthly repayments and plan your farming finances with greater clarity.
