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CreditMantri Finserve Private Limited
CreditMantri Finserve Private Limited Unit No. B2, No 769, Phase-1, Lower Ground Floor, Spencer Plaza, Anna Salai, Chennai - 600002
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Agriculture is the largest industry in India. It plays a vital role in the economic development of the country. Over 70% of Indian households depend on agriculture for their livelihood. In 2017-18, total food grain production of the country stood at 275 million tonnes.
Farmers are given a lot of offers and benefits to assist them in their endeavour of farming. They need help with irrigation, land loans, modern equipment procuring, livestock purchasing and most importantly crop loans.
Crop loans are a type of short-term advance offered pre-dominantly by primary co-operative societies within the area, to cover the cost of cultivation. It can be used for purchase of quality seeds, fertilizers, manure, etc. This loan can be repaid once the crops have been harvested.The loan amount is fixed based on the cultivation area and the type of crop being cultivated. The District Technical Committee (DTC) fixes the scale of financing required for each crop in that particular area. The loan amount would be based on that report.
For loans above Rs. 3 lakhs, the interest rates are based on the RBI guidelines and the banks lending rates.
Repayment
The repayment tenure is fixed by the bank based on the anticipated harvest and the marketing period of the crops. It is usually fixed at 1 year for regular crops and at 18 months for crops like sugarcane, banana, pineapple, etc. However, an annual review is conducted, and the credit limit may be upgraded based on the customer requirements.
Security/Collateral
The loans are offered under two conditions – with tie-ups or back-up by Government agencies and non-tie-ups.
For tie-up loans: RBI guidelines allow banks to offer loans of up to Rs. 3 lakhs without any security or collateral but only hypothecation of the crops.
For non-tie-up loans: The banks may require security/collateral for loans above Rs. 1 lakh
Crop loans are classified under agricultural loans. It is offered by most public and private sector banks. However, the major lender of these loans is by rural agricultural co-operative societies, to benefit the millions of farmers in rural India. One can approach their nearest Rural and Agricultural Co-operative Society for a crop loan. Listed below are some of the banks offering crop loans and their salient features are also given
1. State Bank of India :
2. Union Bank of India :
This crop loan can be availed by all farmers to meet expenses involved in raising a crop including various agricultural practices
3. Vijaya Bank :
Vijaya Kisan Card Scheme
4. IDBI Bank :
Crop loan with Kisan Credit Card
5. ICICI Bank :
Rural branches of ICICI Bank offer Kisan Credit Card loans to eligible farmers
6. Kotak Mahindra Bank :
Crop loans can be availed under two schemes I.e. Kisan Credit Card and Agri Term Loans
There are numerous loan products specially devised for the agricultural sector in India. Crop loans are a vital part of agricultural finance system. It facilitates the farmer to continue and take advantage of seasonal elements that are essential in farming. Kisan Credit card allows farmers to use it for their household expenses too which essentially serves as their income while they are waiting for the harvest.
1. What is a crop loan?
A crop loan is provided to farmers to meet expenses related to the cultivation of crops. The expenses could be anything from irrigation, farm equipment, post-harvest expenses, and other farm activities.
2. What happens if the borrower is not able to repay the crop loan?
The farmer/borrower will have to get the property attached to the loan auctioned to repay the loan. This is the last option that the bank exercises.
3. Is a crop loan a secured loan?
Yes, crop loans are secured loans. The interest is calculated based on the simple interest rate and debited on a half-yearly basis.
4. Does crop loan affect CIBILTM score?
Non-payment of a crop loan will affect the credit score and may look negative on a farmer’s credit report.
5. How can I repay the crop loan?
A crop loan is usually repaid in one single installment after the harvest of the crop.
6. What are the key features of a crop loan?
The Key features of a crop loan can be listed below –
1. They are short-term loans
2. They are provided to farmers to cover the cost of anything related to the cultivation of crops
3. They are usually provided by primary cooperative societies within the vicinity.
4. The loan can be repaid in one single installment after the harvest of the crops is completed.
7. What is the usual duration of a crop loan?
The crop loan is usually extended for a period of 12-18 months.
8. What is the difference between crop loan and Kisan credit card (KCC)?
A crop loan is used by the farmer to meet their working capital requirements to cultivate the crop. Kisan Credit card (KCC) is a type of crop loan but can be used for other purposes as well.