Loan Against Agricultural Land in India Explained

A loan against Agricultural land as the name suggests, allows you to borrow against the value of your agricultural land. You can then use these funds to start or grow your agricultural business, pay for necessary repairs or upgrades, or even invest in real estate.

Agriculture loan interest rates are relatively low & offer flexibility, it is because of this that these are becoming increasingly popular. In this blog, we will be learning all that you need to know about getting a loan against your agricultural land. Read on to know more!

What is a loan against agricultural land?

A loan against agricultural land is exactly what it sounds like - a loan that's secured by your agricultural land. You use your land as collateral, and in return, the lender provides you with the funds you need. It's a great option for agricultural land owners who need quick access to funds but don't want to sell their land. And, according to the Income Tax Appellate Tribunal, the sale proceeds of agricultural land are not taxable as capital gains.

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Key Aspects of Securing a Loan Against Agricultural Land

• Targeted Beneficiaries: Designed exclusively for individuals involved in agriculture, such as farmers, planters, and horticulturists, excluding businessmen and professionals.
• No Income Tax Returns Required: Applicants generally aren't required to present Income Tax Returns, streamlining the application process.
• Minimal Documentation: The process demands only essential paperwork, making it more accessible.
• Long Loan Tenure: Loans can extend up to 20 years, offering long-term financial support.
• Transparent Costs: There are no hidden fees associated with these agricultural loans.
• Flexible Repayment Plans: Lenders provide repayment schedules that consider the borrower's financial situation and agricultural timelines.
• Quick Processing: Banks prioritise rapid processing to align with the agricultural calendar and critical harvest periods.
• Versatile Use of Funds: Borrowers can use the loan for various purposes, including:

• Investing in food processing units, agricultural equipment, dairy, fisheries, and rice mills.
• Funding micro-irrigation projects, greenhouses, cold storage facilities, and horticulture centres.
• Purchasing agriculture insurance to safeguard against crop losses.
• Buying livestock or covering marketing and operating expenses, supporting comprehensive agricultural development and maintenance.

Benefits of Loan Against Agricultural Land

Here are some of the key benefits of loan against agricultural land:

1. Quick and easy access to funds: Unlike other types of loans that can take a long time to process and require a lot of documentation, loan against agricultural land is a relatively quick and straightforward process. You can often get your funds in a matter of days, making it a great option for those who need access to cash quickly.
2. Lower interest rates: Because the loan is secured by your land, lenders are more willing to offer you lower interest rates than they would for an unsecured loan. This can save you a significant amount of money over the life of the loan.
3. Keep your land: With loan against agricultural land, you get to keep your land, which means you can continue to use it for agriculture or as an investment. This is a big advantage, as it allows you to maintain control over your most valuable asset while still accessing the funds you need.
4. Flexibility: Loan against agricultural land can be used for a variety of purposes, including starting or expanding an agricultural business, paying for necessary repairs or upgrades, or investing in real estate. This flexibility makes it a great option for those who have multiple financial goals.
5. No impact on existing agricultural land mortgage loan against agricultural land: If your land is already mortgaged, taking a loan against it will not impact your existing mortgage. This means you can access the funds you need without having to worry about losing your land.

Bank criteria for SBI, HDFC, Axis Bank and more

Now that you know what you need, let’s take a closer look at what major banks in India look for when lending against agricultural land. Loan against agricultural land SBI, for instance, offers loans for up to 60% of the value of the land, with a repayment period of up to 10 years. HDFC loan against agricultural land, on the other hand, offers up to 50% of the value, with a repayment period of up to 20 years.

Axis Bank offers loans against agricultural land for up to 60% of the value, with a repayment period of up to 15 years. This is just a snapshot, and criteria may vary depending on the bank and location.

Bajaj housing mortgage loan against agricultural land on the other hand, is specially designed for farmers, planters, and horticulturists with a flexible repayment tenure of up to 20 years, no hidden charges, multi-purpose usage, and minimal documentation.

Here is a comparison of the bank criteria for loan against agricultural land for some major banks in India:

It’s important to keep in mind that the criteria for loan against agricultural land may vary depending on the bank and location. To get the most accurate and up-to-date information, it’s best to contact the bank directly or consult a financial advisor. Additionally, it’s always a clever idea to compare the terms and conditions of multiple banks to find the best loan option that meets your specific needs and financial situation.

A Bird’s Eye View of Major Banks that Lend On Land

So, what are your options when it comes to loan against agricultural land? Let's take a bird's eye view of major banks that lend on land in India:

• SBI - Agricultural Land Development Loan
• HDFC - Agriculture and Rural Development Loan
• Loan against agricultural land Axis Bank - Agricultural Finance
• Bank of Baroda - Agriculture Term Loan
• Mortgage loan against agricultural land ICICI Bank - Agriculture Finance
• Canara Bank - Agriculture Finance Loan

This is not an exhaustive list, but it gives you an idea of the major players in the market.

Comparing Loan Process, Rates, Repayments, and More

Now that you have a list of banks that lend on land, it's important to compare the loan process, rates, repayments, and more. This will help you make an informed decision and choose the right bank for you.

Pros and Cons of Borrowing From Each Bank

Of course, no loan is perfect. Each bank has its own pros and cons, so it's important to weigh them before making a decision. For example, while SBI might have a lower interest rate, HDFC might offer more flexible repayment options.

Pros:

• Provides quick access to funds
• Can offer better interest rates compared to unsecured loans
• Allows you to keep your land
• Can be used to expand your farm or diversify income streams

Cons:

• Agricultural land may be difficult to value accurately
• Risk of repossession if you default on the loan
• Loan amounts may be limited
• May have strict eligibility criteria
• May require collateral other than the land

It's always an innovative idea to carefully consider the pros and cons of borrowing against agricultural land before making a decision. Additionally, you should consider seeking the advice of a financial advisor to help you make an informed choice.

Factors that Affect Your Eligibility for Loan Against Agricultural Land

Aside from the documents you'll need, there are other factors that can affect your eligibility for loan against agricultural land. Some of these factors include:

• The value of the agricultural land
• Your credit score and financial history
• The purpose of the loan
• The location of the land

It's important to keep these factors in mind and be transparent with your bank when applying for the loan.

Hacks to Boost Your Chances of Getting the Loan

Last but not least, here are some hacks that can boost your chances of getting a loan against your agricultural land:

• Keep your credit score and financial history in order
• Be transparent about the purpose of the loan
• Choose a bank that fits your needs
• Have a well-prepared loan application

The Different Forms of Loan Against Agricultural Land:Get More from Your Land With THESE Options

Let's look at the different forms of loan against agricultural land, and help you understand the pros and cons of each loan type.

1. Agricultural Term Loan: This type of loan is for short-term needs such as purchasing seeds, fertilisers, machinery, or for other agricultural activities.
2. Kisan Credit Card (KCC): KCC is a type of loan provided to farmers for their cultivation needs. It is issued by banks such as SBI, HDFC, and Axis Bank.
3. Agricultural Infrastructure Fund: This fund was launched by the government to provide financial support to the agriculture sector. It is aimed at providing loans for infrastructure projects such as storage facilities, cold storage, and processing units. (Source:https://agriinfra.dac.gov.in/)
4. Loan Against Warehouse Receipt: This loan is provided against the warehouse receipts issued for storing agricultural produce.

Get more from your Land with these Loan Options

Are you a proud owner of agricultural land, but not sure how to maximize its potential? Fear not, because there are multiple loan options available for you to tap into the value of your land. In this section, we'll explore the different forms of loan against agricultural land, and help you understand the pros and cons of each loan type.

The different forms of loans against agricultural land

• Agricultural Term Loan: This type of loan is for short-term needs such as purchasing seeds, fertilizers, machinery, or for other agricultural activities.
• Kisan Credit Card (KCC): KCC is a type of loan provided to farmers for their cultivation needs. It is issued by banks such as SBI, HDFC, and Axis Bank.
• Agricultural Infrastructure Fund: This fund was launched by the government to provide financial support to the agriculture sector. It is aimed at providing loans for infrastructure projects such as storage facilities, cold storage, and processing units. (Source: https://agriinfra.dac.gov.in/)
• Loan Against Warehouse Receipt: This loan is provided against the warehouse receipts issued for storing agricultural produce.

Pros and cons of each loan type

Here’s a quick look a the Pros and Cons of each type of Loan against Agricultural Land–

From Application to Approval: Processing Steps for Loan Against Agriculture Land

In this section, we’ll guide you through the loan process, from application to approval.

How to Apply for a Loan Against Agricultural land?

Applying for a loan against your agricultural land is simple and straightforward. All you need to do is visit your nearest bank or financial institution, and fill out the loan application form.

Provide the necessary documents and wait for the loan amount to be disbursed. If you are confused or have questions, here are the general steps you can follow when applying for a loan against your agricultural land in India:

1. Choose a bank or financial institution: You can start by researching various banks and financial institutions that offer loans against agricultural land. Make a list of the options that best suit your needs and financial situation.
2. Gather required documents: Before applying, gather all the necessary documents, such as proof of identity, proof of income, and ownership documents for the agricultural land. You can check with the bank for a list of specific documents required.
3. Visit the bank: Visit your nearest branch of the bank you have chosen and ask for a loan application form. Fill out the form with all the necessary information and attach the required documents.
4. Submit the loan application: Submit the completed loan application form along with the necessary documents to the bank. The bank will then assess your loan application and may request additional information or clarification.
5. Wait for loan disbursal: Once the bank approves your loan application, the loan amount will be disbursed to your account.

Are you ready to take advantage of the loan options available for your agricultural land? In this section, we'll guide you through the loan process, from application to approval.

How to apply for a loan against agricultural land?

Applying for a loan against your agricultural land is simple and straightforward. All you need to do is visit your nearest bank or financial institution, and fill out the loan application form. Provide the necessary documents and wait for the loan amount to be disbursed. If you are confused or have questions, here are the general steps you can follow when applying for a loan against your agricultural land in India:

• Choose a bank or financial institution: You can start by researching various banks and financial institutions that offer loan against agricultural land. Make a list of the options that best suit your needs and financial situation.
• Gather required documents: Before applying, gather all the necessary documents, such as proof of identity, proof of income, and ownership documents for the agricultural land. You can check with the bank for a list of specific documents required.
• Visit the bank: Visit your nearest branch of the bank you have chosen and ask for a loan application form. Fill out the form with all the necessary information and attach the required documents.
• Submit the loan application: Submit the completed loan application form along with the necessary documents to the bank. The bank will then assess your loan application and may request additional information or clarification.
• Wait for loan disbursal: Once the bank approves your loan application, the loan amount will be disbursed to your account.

Note: The exact steps and documents required may vary from bank to bank, so it's best to check with the bank directly for the most accurate and up-to-date information. You can also visit the official website of the Reserve Bank of India (RBI) for more information on loan against agricultural land in India. (https://rbi.org.in)

Documents You Need for Loan Against Agricultural Land

The documents required for a loan against agricultural land include your KYC documents, proof of ownership of the agricultural land, bank statements, and proof of income.

When applying for a loan against agricultural land, it's essential to have all the necessary documentation in place to ensure a smooth and hassle-free process. Here's a comprehensive list of documents you will need:

1. Completed Application Form: Begin with a thoroughly filled-out application form, which serves as the foundation of your loan request.
2. Identity Verification: Provide a valid form of identification. This could be your PAN card, Aadhaar Card, or Passport. These documents serve to confirm your identity to the lender.
3. Proof of Residence: Alongside your ID, you'll need to prove your place of residence. Options for this include your Aadhaar Card, Passport, or recent Utility Bills. These documents help the lender verify your permanent address.
4. Land Ownership Documents: Essential to this process are the documents related to your agricultural land. This includes the land registration document, evidence of taxes paid on the land, and utility bills pertaining to the property. These papers establish your ownership and the land's eligibility for the loan.
5. No Dues Certificate: If necessary, provide a No Dues Certificate from your local Co-operative Credit Society. This document assures the lender that there are no outstanding dues on the land in question.
6. Land Sale Agreement Copy: In some cases, a copy of the land sale agreement may be required. This document provides details of the land's history and its transactions.
7. Bank Statements: Prepare to submit your bank statements from the last six months, if the lender requires them. These statements offer insights into your financial health and repayment capacity.
8. Photographs: Finally, passport-sized photographs of both the applicant and any co-applicant are usually required. These photos are used for verification and record-keeping purposes.

Understanding the Cost of Loans Against Agricultural Land

When considering a loan against agricultural land, it's essential to be aware of the various fees and expenses involved. These costs can vary between lenders, and it's beneficial to compare options to find the most economical choice. Here's an overview of common charges:

• Processing Fee: This is typically around 0.50% of the loan amount, but it can be a minimum of Rs.3,000, depending on the bank. Note that some institutions may offer reduced fees during promotional periods.
• Prepayment Charges: If you decide to pay off your loan early, you might encounter these fees.
• Conversion Fees: These are applicable if you choose to switch to a different loan plan or interest rate scheme.
• Cheque Dishonour Charges: Incurring if a cheque issued for loan repayment is not honoured.
• Property Insurance Charges: Often required to insure the agricultural land against various risks.
• Incidental Charges: Miscellaneous expenses that may arise during the loan process.
• Statutory and Regulatory Charges: Fees related to legal and regulatory compliances.
• Foreclosure Charges: Applicable if you close your loan before the end of its term.
• Late Payment Penalty: Charged for delays in loan repayments.
• Stamp Duty: A government-imposed charge for legalising loan documents.
• Legal Fees: Costs for legal services, if any, during the loan process.
• Property Valuation Fees: Charges for assessing the value of your agricultural land.
• Inspection Charges: Costs for on-site inspection of the property.

It's crucial to have a direct conversation with your bank for the most accurate and up-to-date information on these charges. Thorough research and comparison of different loan offerings can lead to significant savings and ensure you choose the loan that best fits your financial situation.

Expected Timelines for Loan against agricultural land

The disbursal of the loan against agricultural land typically takes 7 to 10 working days. However, this timeline may vary based on the lender and the documentation process.

Maximising the Potential of your Loan Against Agricultural Land

Are you tired of watching your agricultural land just sit there, not bringing in any income? Well, did you know that you can put that land to work for you with a loan against agricultural land?

Securing the best deal for loan against agricultural land

In order to get the best deal, you need to do your homework. Shop around for the best interest rates and terms from different banks. You can compare loan options from major banks like SBI, HDFC, Axis Bank, and more to find the best fit for your needs. Don't be afraid to negotiate the terms of your loan, either. Remember, the bank wants your business, so you may be able to get a better deal if you ask.

Using Loan Against Agricultural Land To Its Fullest Potential

Once you've secured your loan, it's time to put it to work. There are a number of diverse ways you can use the money, including investments, business opportunities, and even home improvements. Just make sure that you use the loan wisely and that you have a solid plan for repayment.

Building a better financial future with loan against agricultural land

By taking out a loan against your agricultural land, you can build a better financial future for yourself and your family. With the right plan in place, you can use the loan to create additional income streams, which can help you achieve your financial goals faster. So, why wait? Get started today and start maximizing the potential of your agricultural land!

Loan Against Agricultural Land: Bank-by-bank Breakdown

When it comes to loan against agricultural land, not all banks are created equal. Each bank has its own set of features, benefits, and requirements that you'll need to consider.

Features and Benefits of Loan Against Agricultural Land from SBI, HDFC, Axis Bank, and more

For example, SBI offers loan against agricultural land at attractive interest rates with flexible repayment options. HDFC provides quick disbursal of loan amount, while Axis Bank offers a customized loan solution for its customers. Be sure to look into each bank's requirements, such as minimum loan amount and collateral requirements, before making a decision.

Note: The above information is subject to change and may vary from bank to bank. Loan against agricultural land bank of Baroda for example, depends on credit scores and other factors, similar to other competitive banks. Therefore, it is best to check directly with the bank for the most accurate and up-to-date information. So, before you sign on the dotted line, take the time to carefully consider each bank's offering and choose the one that is right for you and your needs. By doing your due diligence, you'll be able to secure the best deal and build a brighter financial future.

A guide to Loan Against Agricultural Land in India with NoBroker

You’ve come a long way in understanding the world of Loan Against Agricultural Land. From the different forms of loans, to securing the best deal, to maximising the loan’s potential, you’ve learned so much!

So, you know that getting a loan against agricultural land in India can be a great way to expand your farm or diversify your income streams. With a number of banks to choose from, it’s important to consider the features, benefits and eligibility criteria before making a decision.

However, with so many options available, it can be tough to decide which one is best suited for your needs. This is where NoBroker comes in. With their expert financial advice and home loan services, NoBroker can help you find the right loan for your agricultural land and guide you through the entire process, from start to finish.

Whether you’re looking for financial advice on your real estate issues, or you want to find your dream home with the right home loan, NoBroker is here to help. So, if you want to make an informed decision about your loan against agricultural land, be sure to check out NoBroker’s home loan services today!

Frequently Asked Questions

Yes, loans can be obtained using agricultural land as collateral, subject to the lender's terms and appraisal of the land's value.

To apply for an Agriculture Loan in Karnataka, individuals must approach a bank or financial institution that offers agricultural loans, submit the required documents, and meet the eligibility criteria set by the lender.

The repayment period for a loan against agricultural land also varies from bank to bank, but it can be up to 20 years.

To apply for a loan against agricultural land, you typically need to provide proof of ownership of the land, proof of income, and other financial documents such as bank statements.

Yes, there are several benefits to taking out a loan against agricultural land. Some banks offer trouble-free application processes, quick loan disbursals, low processing fees, flexible repayment options, and tailored solutions for agriculture finance.

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