A brief overview of Agri Loans

 Agriculture is the backbone of the Indian economy. With over 60% of the Indian population employed in the agricultural sector, it is vital to provide them with the necessary financial support to boost production and increase income. This is where Agri Loans come into the picture.

Agri Loans are financial products specifically designed to meet the credit needs of farmers, agriculturalists, and other allied activities. They are offered by various financial institutions, including banks, cooperatives, and non-banking financial companies. The following are a few things to know about such Loans:

• Types

Agri Loans can be classified into three categories based on the purpose for which you avail them of:

Production Loans: These are used for meeting the working capital requirements of farmers. This includes purchasing seeds, fertilisers, pesticides, and other inputs required for farming. These loans are usually short-term loans with a repayment period of six to twelve months. However, it is wise to check this with the lender beforehand.

Investment Loans: Such Loans are used for purchasing machinery, land, or for other capital-intensive activities related to farming. They have a longer repayment period of three to five years, and the interest rates are usually lower than Production Loans. An example of such a Loan includes an Agri Gold Loan where farmers can take borrow money against their gold.

Allied Activities Loans: These Loans are mainly used for activities other than farming. This includes activities like dairy, poultry, fishery, and horticulture. They have a repayment period of up to five years.

• Features

Like Personal Loans, Agri Loans also have a range of features that make them attractive to farmers. Some of these features include:

1. Easy availability: Agri Loans are readily available from various financial institutions, including banks, cooperatives, and NBFCs. This makes it easy for farmers to access credit when they need it.
2. Low-interest rates: The government of India has introduced various schemes to provide credit to farmers at lower interest rates. This includes the Kisan Credit Card Scheme, which provides credit at an interest rate of 7% to 9% per annum.

• Flexible repayment options: Such Loans come with flexible repayment options, which include monthly, quarterly, half-yearly, or yearly instalments. This allows farmers to choose a repayment schedule that suits their cash flow.

1. Collateral-free: As it is with an online Gold Loan, many financial institutions offer Agri Loans without the need for collateral. This makes it easier for farmers who may not have assets to pledge as collateral.

• Insurance

Many Agri Loans come with insurance cover, which protects farmers against crop failure, natural calamities, and other risks. However, it is wise to check this offering on your Banking app beforehand.

• Moratorium period

In most cases, such Loans come with a moratorium period. This allows farmers to repay the loan after the harvest season when they have generated income.