What are the interest rates and terms for agricultural business loans?

The interest rates charged on agricultural business loans in India vary between banks and Non-Banking Financial Companies (NBFCs). However, the typical interest rates charged on agricultural business loans by banks and NBFCs in India range from 9% to 30% based on the applicant's credit profile, loan amount, collateral provided and the repayment period.

While the minimum loan amount usually starts from a few thousand, there is no defined maximum cap. However, the loan sanctioned depends on the lender's assessment of repayment capacity.

Depending on the agricultural project requirements, the loans can be offered for short-term periods of less than 1-2 years, medium-term periods between 2 and 5 years, and long terms exceeding 5 years. Applicants are required to repay the loan using Equated Monthly Instalments (EMIs).

Lastly, loan providers may charge a penalty fee if you foreclose on the loan before the tenure. This is usually 1-5% of the principal outstanding. If there is any payment delay or default, an additional fee may be applicable over and above the normal interest rate.