Loan Against Agricultural Land
A loan against agricultural land is a secured advance where farmers pledge their land as collateral to banks or financial institutions to access capital for farming operations, equipment, or allied agricultural activities.
What is a Loan Against Agricultural Land?
If a farmer has a piece of land in his/her name, that can be used as collateral to obtain a loan from a bank or a financial institution. When a borrower pledges an agricultural land for money it is called as a ‘Loan Against Agricultural Land’ or ‘Agriculture Loan’.
Features of Loan on Agricultural Land
The main features of an agriculture loan are mentioned below:
- Loan Against Agricultural Land is specially designed for people who cultivate crops like farmers, planters, or Horticulturists. It cannot be availed by a businessman or a professional.
- Usually, the farmer does not have to furnish Income Tax Returns to apply for this type of loan.
- It requires minimum documentation.
- The loan tenure goes up to 20 years with many banks.
- There are no hidden charges on Agriculture Loans.
- The lender usually works out a flexible repayment plan considering the farmer's situation.
- The turnaround time is fast and the banks are sensitive to the harvest season.
- The borrower can use the funds for agricultural purposes like food processing, buy agricultural equipment, set up dairy units/fisheries/rice mills, or for micro-irrigation.
- They can also use the funds to set up a greenhouse, cold storage, or a horticulture centre.
- To buy agriculture insurance to protect from crop losses.
- You can use the funds to buy livestock or cover your marketing and operating expenses.
Eligibility Criteria for Loan Against Agricultural Land
The eligibility criteria that must be met to obtain an agriculture loan are mentioned below:
- Farmers, Dairy Owners, Horticulturists, and any Orchard owners are eligible to apply for an Agriculture Loan.
- Most lenders prefer the age of the applicant to be between 24 and 65 years of age.. However, there are few banks who offer loans to applicants who are 18 years of age. The eligibility differs from one bank to another.
- If the land is owned by two people, co-applicant is mandatory.
- An agricultural land is pledged as collateral. The borrower should have clear titles to the land to be eligible to apply for a Loan Against Agricultural Land.
- Usually, lenders prefer borrowers to have residence stability of 2 years.
- Most banks offer loans based on the size of the land pledged. They usually mention the minimum acres of land a farmer should have to apply for a loan.
RELEVANT PAGES FOR YOU
- Different Types of Bank Loans in India
- Guide to Buy Flats
- Home Loan Procedure
- Top Housing Finance Companies
- Agricultural Loans in India
- Home Loan Processing Fee
- Home Loan Provisional Certificate
- Documents Required For Home Loan
- Documents for Buying Resale Flat
- Secured Vs Unsecured Loan
- Home Loan Approval Time
- Guied To Buy New House
Interest Rate for Loan Against Agricultural Land
The interest rate on agriculture loans differ from one bank to another. You will have to contact the bank directly to find out the exact interest rate that will be charged.
Union Bank- Loan for Agribusiness (Kisan Credit Card)
Loan Amount | Rate Of Interest |
Loan up to Rs.50,000 | MCLR+ 0.10% |
Loans above Rs.50,000 to Rs.2 lakh | MCLR+0.65% |
Loans above Rs.2 lakh to Rs.5 lakh | MCLR+1.90% |
Loans above Rs.3 lakh to Rs.5 lakh | MCLR+1.00% |
Loans above Rs.5 lakh to Rs.25 lakh | MCLR+1.35% |
Loans above Rs.1 crore | You will have to contact the bank for the table. |
Canara Bank Agriculture Loans
Loan Amount | Rate Of Interest |
Agriculture loans up to Rs.3 lakh | MCLR+1.40% |
KCC loans up to Rs.3 lakh (with interest subvention) | 7.00% |
KCC loans above Rs.3 lakh | MCLR+2.30% |
Agriculture loans above Rs.3 lakh to Rs.1 crore | MCLR+2.30% |
Agriculture loans above Rs.1–2 crore (scoring-based) | MCLR+2.20% to MCLR+3.50% |
Agriculture loans above Rs.2–50 crore (rating-based) | MCLR+2.20% to MCLR+3.75% |
IDBI Bank Agri Loans
Loan Amount / Category | Rate Of Interest |
KCC up to Rs.3 lakh (with interest subvention) | 7.00% |
KCC up to Rs.25 lakh (without subvention, non-SFMF) | MCLR(Y)+1.25% |
Loans up to Rs.25 lakh (SFMF farmers) | MCLR(Y)+1.00% |
Loans up to Rs.25 lakh (Non-SFMF, score <70%) | MCLR(Y)+2.00% |
Loans above Rs.25 lakh to Rs.2 crore (scoring-based) | MCLR+1.40% to MCLR+5.15% |
Loans above Rs.2 crore (rating-based) | MCLR+0.10% to MCLR+3.70% |
Note: Interest rates verified from IDBI Bank official rate card. SFMF = Small & Marginal Farmers. Scoring-based rates vary by credit score (95+ = lowest, <55 = highest).
Documents Required to Apply for Loan Against Agricultural Land
The documents that must be submitted to avail a loan against agricultural land are mentioned below:
- Duly-filled application form
- One valid identity proof like your PAN card, Aadhaar Card, or Passport
- One valid proof of residence like Aadhaar Card, Passport, or Utility Bills
- Land documents like registration document, taxes paid, and utility bills
- No due certificate from Co-operative Credit Society (If required)
- Copy of the land sale agreement
- Last six months bank statement (If required)
- Passport size photograph of the applicant and co-applicant
Fees and Charges for Loan Against Agricultural Land
There are many fees and charges that will be charged on your Agri Loan. Some of the most popular ones are:
- A Processing Fee of 0.50% of the loan amount or Rs.3,000 whichever is higher is usually charged. However, this charge differs from one bank to another. During the festive season, many banks waive the processing fees to encourage borrowers to take loans.
- Prepayment Charges
- Conversion Fees
- Cheque Dishonor Charges
- Property Insurance Charges
- Incidental Charges
- Statutory and Regulatory Charges
- Foreclosure Charges
- Late Payment Penalty
- Stamp Duty
- Legal Fees
- Valuation of the Property Fees
- Inspection Charges
If you are planning to pledge your agricultural land for money, compare various loans before you choose one. Talk to the bank directly for accurate information.
FAQs on Loan Against Agricultural Land
1.What are the main uses of a loan against agricultural land?
The funds can be used for buying agricultural equipment, setting up dairy units or fisheries, micro-irrigation, establishing greenhouse or cold storage facilities, purchasing livestock, or covering marketing and operating expenses related to farming.
2. Can non-farmers apply for a loan against agricultural land?
No, loans against agricultural land are strictly for farmers, dairy owners, horticulturists, or orchard owners. Businessmen and professionals are not eligible.
3.What is the maximum tenure for a loan against agricultural land?
Most banks offer loan tenures up to 20 years for agriculture loans, though some may vary based on the loan amount and borrower profile.
4.Do I need to submit Income Tax Returns to apply?
Usually, no. Farmers typically do not need to furnish Income Tax Returns for agriculture loans, which makes the application process simpler.
5.What is the minimum land area required to apply?
Banks vary in their minimum land requirements. Most banks specify a minimum acreage based on agricultural zoning and regional norms. Contact your bank for specific minimum requirements.
6.If two people own the land, what happens?
If the agricultural land is owned by two or more people, a co-applicant (typically the co-owner) is mandatory for the loan application.
7.What documents do I need for the application?
You'll need identity proof (PAN/Aadhaar/Passport), residence proof, land registration documents, tax receipts, land sale agreement copy, recent bank statements, and passport photographs.
8. What is the processing fee for agriculture loans?
The processing fee is typically 0.50% of the loan amount or Rs.3,000, whichever is higher. However, this varies by bank and may be waived during festive seasons.
9.Are there hidden charges on agriculture loans?
No, banks typically do not impose hidden charges on agriculture loans. All fees (prepayment, late payment, stamp duty, etc.) are disclosed upfront.
10.Can I prepay an agriculture loan without penalty?
Most banks allow prepayment, but some may charge prepayment penalties. Check with your bank whether prepayment is allowed and at what cost before signing the agreement.
Disclaimer
Credit Card:
Credit Score:
Personal Loan:
Home Loan:
Fixed Deposit:
Copyright © 2026 BankBazaar.com.