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Agricultural loans are offered to farmers, joint cultivators, sharecroppers, tenant farmers, self-help groups and other persons engaged in agriculture. These loans can be either secured or unsecured and are offered by leading banks as well as government institutions. An agricultural loan can be used for various purposes such as meeting expenses related to cropping, upgrading/ purchase of farm machinery, construction of irrigation channels, and other allied agricultural activities. In the following sections, details regarding the interest rates charged on different types of agricultural loans by the major lenders of India, factors affecting agricultural loan interest rates, etc. are discussed.
Current Agricultural Loan Interest Rates
| Banks/NBFCs | Interest Rates(p.a.) | |
| Axis Bank | 11.25% onwards | Apply Now |
| IndusInd Bank | 10.49% onwards | Apply Now |
| IDFC First Bank | 10.99% onwards | Apply Now |
| HDFC Bank | 10.85% onwards | Apply Now |
| ICICI Bank | 10.85% onwards | Apply Now |
| Kotak Mahindra Bank | 10.99% onwards | Apply Now |
| Tata Capital | 11.99% onwards | Apply Now |
| Federal Bank | 12.00% onwards | Apply Now |
| DMI Finance | 12.00% - 40.00% | Apply Now |
| L&T Finance | 12.00% onwards | Apply Now |
| Kreditbee | 16.00% - 29.95% | Apply Now |
| MoneyTap | 13.00% onwards | Apply Now |
| Piramal Finance | 12.99% onwards | Apply Now |
| Aditya Birla | 10.99% onwards | Apply Now |
| Moneyview | 14%-36% | Apply Now |
| Cashe | 27.00% onwards | Apply Now |
Also Know: Which bank offers low interest on personal loan?
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Processing Fee on Agricultural Loans
The following are the processing fees applicable to agricultural loans from major banks in India:
| Name of the Lender | Processing Fee |
| Central Bank of India | Nil on loan amount up to Rs. 25,000.
Rs. 120 per lakh, subject to a maximum of Rs. 20,000. |
| Indusind Bank | 1.25% of the sanctioned amount. |
| Axis Bank | Up to 0.75% of loan amount. |
| ICICI Bank | Up to 2% of the loan amount. |
Factors Affecting Interest Rates
Following are some of the major factors that affect interest rate on agricultural loan:
- Credit Score: It is one of the first things that banks check before approving a loan application. Credit score is a 3 digit numerical summary of your credit report which is prepared on the basis of your repayment history.
- Fixed Obligation to Income Ratio: It refers to the part of your income formed by ongoing loan EMIs, credit card dues and other such obligations.
- Credit Utilization Ratio: It refers to the amount of credit used by you out of the total credit available to you. The higher your credit utilization, the more debt you are carrying and the riskier you will be perceived as a borrower by potential lenders.
- Number of Loan Applications: This corresponds to the number of lenders to whom you have submitted your loan application.
- Previous Relationship with the Lender: This applies when you have previously taken a loan such as a personal loan or home loan from the lender, or if you have a savings bank account or other form of deposit with the lender.
How to Get an Agricultural Loan at a Low Interest Rate?
Follow the tips mentioned below to get an agricultural loan at the best possible interest rate.
- Maintain a high credit score, as a high score builds lender’s trust in you.
- Keep your fixed obligation to income ratio at a low, as it indicates greater repayment ability.
- Maintain a low credit utilization ratio, preferably below 30%.
- Avoid multiple loan applications at the same time. Doing so can portray you as credit hungry and bring down your credit score.
Frequently Asked Questions (FAQs)
Q1. What is the interest rate for State Bank of India agricultural loan?
Ans. Interest rate on SBI agricultural loan starts from 7% per annum.
Q2. What is the interest rate on ICICI Bank Agri Term Loan?
Ans. The interest rate on ICICI Bank Agri Term Loan starts from 10.35%.
Q3. What is agricultural gold loan?
Ans. Agricultural gold loan refers to a secured loan provided to farmers against the pledge of gold ornaments. The loan amount can be used for multiple reasons, including cultivation of crops.
Q4. What is the general age criterion to avail an agricultural loan in India?
Ans. Your age should fall in the range of 18-70 years to avail an agricultural loan in India.
Q5. What are the various documents required for an agricultural loan?
Ans. Generally, the following documents are required for an agricultural loan:
- Proof of Identity (Aadhaar Card, PAN Card, etc.)
- Proof of Address (Aadhaar Card Voter ID, Driving License, Ration Card, etc.)
- Proof of Income
- Duly-filled Loan Application Form
- Security Post Dated Cheques
Q6. What is the interest rate on Axis Bank Agriculture Loan?
Ans. Interest rate on Axis Bank Agricultural Loan starts from 7% per annum.
Q7. What is the interest rate on HDFC Bank Agricultural Loan?
Ans. Interest rates applicable to a HDFC Bank Agriculture Loan are determined on a case by case basis and mentioned in the loan agreement. .
Q8. Can I take an agricultural loan to buy farm machinery?
Ans. Yes, you can avail an agricultural loan to purchase/ upgrade your farm machinery as this loan can be availed for various types of farming activities.