Looking to take a loan on agriculture land? Discover the best banks offering loans against agricultural land, their benefits, and how to choose the right one for your needs.

So when it is to apply for a loan against agriculture land, the right bank plays the pivotal role. If maybe as a farmer seeking funds for increased production or any other person wishing to expand their agriculture business, most banks offer loans secured by agricultural land. However, which bank is most suitable for your kind of business? Okay, let’s look at what all of the available possibilities are and determine that.

Introduction

Going for a loan on agriculture land might just be what you want, but you don’t know how it will go? Whether you need credit for the farming business, to buy the machinery, or to buy more acreage, the right loan is critical. It pays to take the time and be picky when selecting a bank since this affects your money, time and effort. Well without further ado, let’s get into everything you need to know about loans against agricultural land and which banks are the best at offering them.

Understanding a Loan Against Agricultural Land

A loan against agricultural land is that kind of secured loan where the applicant uses the land as security. This holds you in a position to be able to borrow or get cash in proportion with the agricultural property you possess. One can use the loan for many things related to farming like purchasing of new machines, seed, fertilizers and even expanding on the farm.

This type of loan is unique to farmers and agricultural businesses and, therefore, will be perfect for anyone in the farming industry.

Advantages of A Loan Against Agricultural Land

If you are in this situation and wondering why you should take a loan against your agricultural land, then read on to find out. Here are some compelling reasons:

Flexible Usage: Such funds may be utilized to buy, feed, stock, and further enhance farming inputs, or for development of the business.
Lower Interest Rates: Because the land acts as security, some of the resulting loans bear lower rates of interest than the normal non-recourse loans.
High Loan Amounts: The loan size is usually heftier because it is anchored on the value of your land.
Longer Repayment Tenure: Another importance feature of the agricultural loans is that it is usually given with flexible and long repayment periods.

Bonus Terms for Loan Against Agriculture Land

Before applying, the applicant should acquaint himself/ herself with the prerequisites of the program. Typically, banks will look for the following:

Ownership of Agricultural Land: To pledge it as security you need to own the property that you are offering for the collateral.
Income Proof: A farmer may be asked by the banks to provide proof of the earning from agriculture, although some banks are lenient on this.
Age: Many banks have age limits for loaning: the borrower has to be at least 18 years old and no more than 70.
Credit Score: You can obtain better terms if you have a good credit history although some of the banks may be flexible.

Documents Required:

Proof of land ownership
Identity and address proof
Proof of income (if any)
A comprehensive loan form which borrowers are supposed to fill in order to secure the loan.

List of Banks that Provide Loans Security by Agricultural Land

However, the following is a look at some of the best banks that offer loans on agriculture land and why.

1. State Bank of India (SBI)

SBI is among the leading and most reputable bank groups in India. They have several agricultural loan products for the farmers for their needs. Some key features include:

Loan Amount: Up to 80% of the land’s value
Interest Rate: Similarly, progressive interest rates ranging from about 7.5% per annum.
Repayment Tenure: Huge loan amounts and tenure flexibility up to 15 years

2. Punjab National Bank (PNB)

This is another example of a leading bank PNB coming up with attractive loan schemes exclusively for farmers. Here’s why it’s a good choice:

Interest Rate: Starting at 8% per annum
Eligibility: Credible to such farming individuals and agribusiness companies
Loan Amount: This paper depends on the evaluation of the ground to be used as security.

3. HDFC Bank

HDFC Bank also offers loans against agricultural land, with several benefits for borrowers:

Loan Amount: The granting of these loans is in proportions considerably higher than the value of the land.”
Repayment Flexibility: Flexible repayment plans depending on the customers’ status
Interest Rate: These charges attract interest rates of between 8-9 % per annum depending on the particular loan scheme desired.

4. ICICI Bank

The bank’s loan products targeted at the farming community are one of the best in the country to this credit, ICICI Bank. Some of the features include:

Specialized Loan Programs: It is designed with specific solutions for various segments of agriculture ranging from equipment buying to farm expansion.
Interest Rate: Starting at 8.5% per annum
Loan Tenure: Up to 10 years

5. Bank of Baroda (BoB)

Bank of Baroda provides a range of agricultural loans with favorable terms for farmers:

Loan Amount: Up to 75% of the land value
Interest Rate: Starting at 7.75% per annum
Repayment Period: Repayment terms to 12 years

Interest Rate comparison and Loan Term comparison

First of all, the focus is made on the interest rate, sum of money and terms of repayment for the loans. Below is a table to help you make a clear comparison:

Bank	Interest Rate	Loan Amount	Repayment Tenure
SBI	7.5%	Up to 80% of land value	Up to 15 years
PNB	8%	Based on land value	Up to 12 years
HDFC Bank	8-9%	High loan amounts	Flexible
ICICI Bank	8.5%	Tailored loan programs	Up to 10 years
Bank of Baroda	7.75%	Up to 75% of land value	Up to 12 years

Factors to Consider When Choosing a Bank

When choosing the best bank for your loan on agriculture land, keep these factors in mind:

Interest Rates: Interest rates have a direct tendency with the loans and therefore lower interest rates equal to cheap loans.
Repayment Flexibility: For this reason, it is good to select an agency that allows for eased repayment methods especially if you work in an industry where you get paid based on seasons.
Customer Service: Effective customer relation helps in managing the loan issues.
Processing Speed: Others might be slow in processing loan application and disbursement of cash so consider the issue of duration taken.

How to secure the Best Agricultural Loan

Want to get the best deal? Here are a few tips:

Negotiate the Interest Rate: Late when the bank meter is already set for you, especially if you have a good credit rating or if you have been a client with the bank for many years.
Maintain a Good Credit History: A good credit score should facilitate your attempt of getting better interest rates and better terms.
Compare Offers: Getting the first offer means not to wait for a better opportunity to come knocking on your door. Comparison of different banks will help you find the most suitable one.

Some of the Most Frequently Encountered Problems When Approaching a Bank for a Loan Secured By Agricultural Land

Even though loans against agricultural land can be beneficial, they also come with challenges:

Documentation: Banks need a lot of paperwork which is not good in terms of efficiency.
Fluctuating Land Values: Your land value may rise or fall and determines the amount of cash that can be advanced to you.
Repayment Pressure: Sometimes the borrowers earn agricultural income and paying money back might be difficult when you are farmers especially during times of low farming.

Conclusion

If one has to take a loan on agriculture land it is a very important decision in which one should not rush into. Based on the right bank, it is possible to obtain the attractive interest rates, different repayment terms, and the high loan funds. Remember the criteria most important to your situation like the standard of customer relations, the interest rates and the repayment schedules. That way you’re sure to get the best deal and you’ll stand well equipped to make a choice based on your research.

1. What is the maximum amount one can borrow under the facility from agricultural land?

The loan amount differs from bank to bank but in general the amount ranges from 70% to 80% of value of the land.

2. Is it possible to take a loan on agricultural land if having a low rating?

Yes, your interest rates could be higher, and some banks may place a number of condition to their credit.

3. How many days does it take for approvals of loan against agricultural land?

It may take 1 to 2 weeks to obtain approval; however, it is contingent on the selected bank and the quality of accompanying documents that is submitted to the bank.

4. They also want to know what will happen if they fail to meet their obligations when repaying the loan.

In case of default, the bank is able to grab your agricultural land in an effort to recover the loan amount owed.

5. I want to know if it’s possible to use money gotten from the loan for non agricultural related activities.

No, loans against agricultural land are usually for business related to farming such as purchasing implements, seeds or simply enlarging your farm.

Which Bank Is Best for a Loan Against Agricultural Land