Loan Against Agricultural Land

Understand in detail how a loan against agricultural land works.
APPLY
Loan Against Agricultural Land
APPLY
2 min
26 july 2023

Loan against agricultural land in India

Farmers may face various financial challenges due to crop cycles and uncertain income patterns in India. A loan against agricultural land provides farmers like you with much-needed finances. You can use your agricultural land as collateral to get a significant loan. Let us understand the need for a loan against agricultural land, its features, eligibility criteria, required documents, and fees associated with the loan against agricultural land.

Challenges faced by farmers and financial institutions

While loans against agricultural land provide essential financial support, several challenges must be addressed to make the process more accessible and efficient.

  1. Lack of proper land titles
    One of the most significant obstacles faced by farmers is the absence of clear land titles. Land records in India are often outdated and not properly maintained, leading to disputes over ownership. This deters financial institutions from providing loans against such properties, leaving many farmers without access to credit.
  2. High-interest rates
    Loans against agricultural land often come with higher interest rates compared to other forms of credit. This can put a significant financial burden on farmers, especially during periods of low agricultural productivity.
  3. Limited financial inclusion
    In rural areas, where a substantial portion of agricultural land is located, access to formal banking institutions may be limited. This lack of financial inclusion makes it challenging for farmers to avail loans against their land and pushes them towards informal sources of credit with exploitative interest rates.
  4. Seasonal nature of agriculture
    Agriculture is inherently seasonal, and the income of farmers is tied to harvest cycles. However, loan repayment schedules may not align with these cycles, leading to repayment difficulties for farmers during lean periods.

Process of availing a loan against agricultural land

The process of obtaining a loan against agricultural land involves several steps, and it is essential for farmers to understand each one thoroughly.

  1. Eligibility: To be eligible for such loans, the farmer must have clear ownership of the agricultural land. The land should be free from any encumbrances, liens, or legal disputes that could hinder the loan approval.
  2. Land assessment: The financial institution evaluates the land's value based on its location, size, productivity, and potential for future development. The loan amount sanctioned is usually a percentage of the land's assessed value.
  3. Documentation: Farmers need to provide various documents, including proof of land ownership, land records, revenue documents, identity proofs, and income certificates. The bank or financial institution may also require a detailed project report outlining the purpose of the loan.
  4. Loan disbursement: Once the documentation is verified and found to be in order, the loan amount is disbursed to the farmer's account. Farmers can then use the funds as per their intended purpose.

Since Bajaj Finserv does not offer any loan against agricultural land, if you have a residential or commercial property, you can use it as collateral to get a loan with us. The loan amount offered for Bajaj Finserv Loan Against Property is up to Rs. 10.50 crore* which is significantly high and you can use the amount to cater to multiple needs like business expansion, medical expenses, travel abroad, a lavish wedding, or more.

Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.

Frequently asked questions

What is the PM Kisan Loan?

The "PM Kisan Loan" typically refers to loans or credit facilities provided to farmers in India under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme. This government initiative offers income support to eligible farmers in the form of Rs. 6,000 per year. Banks and financial institutions may offer loans to farmers benefiting from the PM-KISAN scheme, helping them cover agricultural expenses such as purchasing seeds, fertilizers, and equipment. The availability and terms of these loans may vary by institution and region, so farmers should contact their local banks for specific information and application procedures.

Is it mandatory to have a co-applicant for availing Loan Against Agricultural Land?

The requirement for a co-applicant when applying for a Loan Against Agricultural Land can vary by the lending institution. While having a co-applicant is not always mandatory, some lenders may prefer or require it, especially if the primary applicant's financial profile is not sufficient. A co-applicant can provide additional security and enhance the chances of loan approval.

What are the types of agriculture loans available?

Agriculture loans cater to the financial needs of farmers and individuals involved in agriculture. Various types of agriculture loans are available, including crop loans for short-term needs, term loans for capital expenditures, Kisan Credit Cards for revolving credit, and specialized loans for livestock, fishery, horticulture, land purchase, and more. These loans help farmers finance agricultural activities, purchase equipment, livestock, land, and meet other agricultural requirements. The terms and conditions of these loans can vary by region and lender, so farmers should consult with local banks or agricultural financial institutions for specific information on eligibility, interest rates, and repayment terms.

Can we take a loan on agricultural land?

Yes, it is possible to take a loan against agricultural land. Loans against agricultural land are commonly referred to as "Agricultural Land Loans" or "Farm Land Loans." These loans allow individuals who own agricultural land to use the land as collateral to secure financing for various purposes, including agricultural development, farm improvements, working capital, or personal financial needs.

Is a CIBIL score required for an agriculture loan?

A CIBIL score is not typically a primary requirement for obtaining an agricultural loan. Agricultural loans focus on factors related to agricultural operations, land ownership, and the viability of the agricultural project. While some lenders may consider credit history to some extent, agricultural loan eligibility is primarily determined by the value and condition of the collateral (agricultural land) and the borrower's agricultural plans.

Show More Show Less