Empowering Farmers: SBI Agriculture Loans for Sustainable Growth

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Updated On: 13-Mar-2023 10:02 AM

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State Bank of India's Agriculture Loans: A Detailed Article on the Types of Loans and Eligibility Offered by One of the Leading Banks in India's Agricultural Sector

State Bank of India has emerged as a market leader in agricultural financing in India, offering a diverse portfolio of over Rs. 1,20,000 crore in agricultural advances to support more than 1.1 lakh farmers and their families. SBI's extensive network of 10,505 urban and rural branches enables it to cater to the financial needs of agriculturists and farmers across the country, making it a reliable source of agricultural financing.

State Bank of India's Crop Loan and Kisan Credit Card Scheme for Farmers

State Bank of India provides crop loans to farmers for covering crop production, post-harvest activities, and contingencies related to farming. The bank offers a Kisan Credit Card (KCC) that functions as an electronic Rupay Card, enabling borrowers to withdraw money from ATMs with ease. Farmers can also use the KCC to purchase fertilizers for their farms.

Here are some key features and benefits of the KCC scheme:

• The credit balance in the KCC account earns interest at the savings bank rate.
• State Bank Kisan Card is a free ATM cum debit card available to all KCC borrowers.
• For a loan amount up to Rs.3 lakh, borrowers receive interest subvention at 2% p.a.
• Timely repayments result in additional interest subvention at 3% p.a.
• All KCC loans offer crop insurance for specific areas or crops.
• In the case of non-repayment before the due date, the interest will be at the card rate. For non-repayment after the due date, interest is compounded half-yearly.
• The interest rate is 7% p.a. (simple interest)*
• For the first year, the loan amount is based on cultivation cost, farm maintenance expenses, and post-harvest expenses. After that, a 5-year loan is sanctioned based on the scale of finance.
• Repayment is fixed based on the harvesting and marketing period of crops.
• For KCC limits up to Rs.1 lakh, no collateral is required. The sanctioned KCC limit is considered when fixing collateral requirements.
• Farmers and joint cultivators, tenant farmers, sharecroppers, oral lessees, joint liability groups, and self-help groups are eligible for the KCC scheme. The required documents include a filled-out application form, and ID and address proof (PAN Card, Voter ID, Aadhaar Card, Passport, or Driving License).

Agricultural Gold Loans

Farmers can obtain loans for agricultural purposes by pledging their gold ornaments. These loans have attractive interest rates and are quickly disbursed. All farming activities can be funded through these loans, and there are two types of gold loans available to farmers: Agri Gold Loan for Crop Production and Multi-Purpose Gold Loan.

Agri Gold Loan for Crop Production

Key Features and Benefits:

• These loans can be availed of by pledging gold ornaments.
• The loan process is easy and convenient.
• The loan is provided at 10,000 SBI bank branches.

Interest Rate:

• For loans up to Rs. 3 lakh – 7% p.a.
• For loans above Rs. 3 lakh – 9.95% p.a.

Margin: As per the Loan To Value Ratio fixed by the bank

Repayment:

• For Demand Loan – 12 months after loan disbursal
• For Overdraft/Cash Credit – Limit is reviewed annually and is valid for 3 years

Collateral: Pledge of gold ornaments

Eligibility for Agri Gold Loan for Crop Production: All farmers involved in short-term crop production are eligible for the loan.

Interest Subvention:

• To be eligible for interest subvention, the borrower must be involved in agricultural activities.
• The loan amount is based on the Scale of Finance (SOF) for the grown crop and the acreage.
• After the interest subvention period, the outstanding amount will be charged interest at a rate of 9.95% p.a.

Documents Required:

• Application form, duly filled
• 2 passport size photos of the borrower
• ID proof - PAN Card, Voter ID, Aadhaar Card, Passport, or Driving License
• Address proof - Voter ID, Aadhaar Card, Passport, or Driving License
• Proof of agricultural crops or land

Multi-Purpose Gold Loan

Key Features and Benefits:

• Low interest rates.
• The loan process is easy and convenient.
• No hidden charges.
• Flexible repayment schedules.
• Loans are available at all semi-urban and rural bank branches.

Interest Rate: 9.95% p.a.

Margin: As per the Loan To Value Ratio fixed by the bank

Repayment Tenure:

• For Demand Loan – 12 months after loan disbursal
• For Overdraft/Cash Credit – Limit is reviewed annually and is valid for 3 years

Collateral: Pledge of gold ornaments

Documents Required:

• Application form, duly filled
• 2 passport-size photos of the borrower
• ID proof - PAN Card, Voter ID, Aadhaar Card, Passport, or Driving License
• Address proof - Voter ID, Aadhaar Card, Passport, or Driving License
• Proof of agricultural crops or land

Loan for Farm Mechanization:

Farm mechanization loans are provided to farmers for purchasing farm machinery such as power tillers, tractors, combine harvesters, etc. These loans are available without any collateral. The different types of farm mechanization loans are described below:

Tractor Loan:

There are four types of loan schemes under tractor loans:

SSTL (Mortgage Free)

Key Features and Benefits:

• This Stree Shakti Tractor Loan scheme offers a low-interest rate and does not require any mortgage.
• The loan will be sanctioned within three days.
• There is a monthly repayment option.
• Interest Rate: 11.20% p.a.

Margin:

• 25% for a tractor, based on the original invoice
• 50% for tractor accessories
• Repayment Tenure: 36 months with a moratorium period of 1 month
• Prepayment Penalty: Nil
• Processing Fee: 1.25%
• Part Payment Fee: Nil
• Duplicate No Due Certificate Charge: Nil
• Late Payment Fee: 1% p.a. on unpaid amount
• Failed EMI Charge: Rs.562 per EMI

Eligibility Criteria:

• The borrower or co-borrowers must be women.
• The applicant should have at least 2 acres of agricultural land in their name.
• The annual income of the borrower should be at least Rs.1.5 lakh.

Documents Required:

   Pre-sanction documents:
     1. Application form, duly filled
     2. passport size photos of the borrower
     3. ID proof - PAN Card, Voter ID, Aadhaar Card, or Passport
     4. Address Proof - Voter ID, Aadhaar Card, or Passport
     5. Documented proof of land
     6. Income proof - Certificate from the revenue authority
     7. Quotation of the tractor issued by the dealer to the customer

  Pre-disbursement documents:
     1. Loan documents
     2. 6 post-dated cheques

  Post-disbursement documents:
     1. RC book of the tractor with hypothecation charges in favour of the State Bank of India
     2. Original invoice of the tractor
     3. Comprehensive insurance policy for the vehicle

Liquid Collateral Tractor Loan

The Liquid Collateral Tractor Loan is a type of loan that is secured against a collateral. This loan has a low interest rate and is ideal for those who are looking to purchase a tractor for their agricultural needs. The loan will be sanctioned within 3 days of application and comes with a monthly repayment option.

Key Features and Benefits:

• Low interest rate
• Sanctioned within 3 days
• Monthly repayment option
• Collateral includes time deposit with the bank, gold ornaments, NSC, etc.
• Prepayment penalty is nil
• Processing fee is 1.25%
• Late payment penalty is 1% p.a. on the unpaid amount
• Failed EMI charge is Rs. 562 per EMI
• The margin is 10%
• The repayment tenure is 48 months with a 1-month moratorium period
• The collateral can be up to a minimum of 30% of the loan amount

Eligibility Criteria:

• The borrower or co-borrowers should only be women.
• There should be at least 2 acres of agricultural land in the name of the applicant.
• The annual income of the borrower should be at least Rs.1.5 lakh.

Documents Required:

 Pre-sanction documents:
    1.	Duly filled application form
    2.	3 passport size photos of the borrower
    3.	ID proof – PAN Card, Voter ID, Aadhaar Card, or Passport
    4.	Address Proof - Voter ID, Aadhaar Card, or Passport
    5.	Documented proof of land 
    6.	Income proof – Certificate from the revenue authority
    7.	Quotation of the tractor that the dealer issues to the customer

 Pre-disbursement documents:
    1.	Loan documents
    2.	6 post-dated cheques
    3.	Liquid security pledge

 Post-disbursement documents:
    1.	RC book of the tractor with hypothecation charges that are in favour of the State Bank of India
    2.	Original invoice of the tractor
    3.	Comprehensive insurance policy for the vehicle

Tractor Loan Scheme

This loan scheme can be utilized for purchasing tractors along with their implements, accessories, insurance, and registration. The loan amount has no upper limit. The loan processing will be completed within 7 days of submitting the required documents. The repayments can be made on a monthly, quarterly, or annual basis. A concession of 1% p.a. on the interest rate will be provided in case of prompt repayment.

Key Features and Benefits:

• Interest Rate 11.95% p.a.
• Margin 15% of the cost of the tractor, accessories, insurance, etc.
• Repayment Tenure 60 months with 1-month moratorium period
• Collateral Mortgage of land for a value not less than 100% of the loan amount
• Prepayment Penalty Nil
• Processing Fee 0.5%
• Part Payment Fee Nil
• Duplicate No Due Certificate Nil
• Late Payment Penalty 1% p.a. on the unpaid amount
• Failed EMI Charge Rs.562 per EMI
• Penalty for not registering the tractor within 1 month of delivery 2% for the default period

Eligibility Criteria:

• There should be at least 2 acres of agricultural land in the name of the applicant.

Documents Required:

  Pre-sanction documents:
      1. Application form, duly filled
      2. 3 passport size photos of the borrower
      3. ID proof – PAN Card, Voter ID, Aadhaar Card, or Passport
      4. Address Proof - Voter ID, Aadhaar Card, or Passport
      5. Documented proof of land
      6. Title search report from the panel advocate
      7. Quotation of the tractor that the dealer issues to the customer

  Pre-disbursement documents:
      1. Loan documents
      2. Post-dated cheques
      3. Original title deeds of the land for mortgage

  Post-disbursement documents:
      1. RC book of the tractor with hypothecation charges that are in favour of the State Bank of India
      2. Original invoice of the tractor
      3. Comprehensive insurance policy for the vehicle

Tractor Loan Scheme with Tatkal Processing

Key Features and Benefits:

• This tractor loan scheme is mortgage-free.
• The loan will be processed within 48 hours.
• The borrower will get free personal accident insurance cover of up to Rs.4 lakh.
• The interest rate on this loan is low.
• There is no processing fee.
• The loan can be repaid in monthly, quarterly, or half-yearly frequencies.
• Interest Rate:
• Margin of 25% - 11.20% p.a.
• Margin of 35% - 10.95% p.a.
• Margin of 50% - 10.55% p.a.
• Margin: Minimum 25% of the tractor’s cost, including registration and insurance charges*
• Repayment Tenure:
• 48 months (for installments fixed on net loan)
• 60 months (for installments fixed on total loan)
• Collateral: Lien on Time Deposit Receipt (TDR) accepted as margin money
• Prepayment Penalty: Nil
• Processing Fee: Nil
• Part Payment Fee: Nil
• Duplicate No Due Certificate: Nil
• Late Payment Penalty: 1% p.a. on the unpaid amount
• Failed EMI Charge: Rs.562 per EMI

Eligibility Criteria:

• All farmers (individually or as joint borrowers) who own and cultivate land can apply.
• There should be at least 2 acres of agricultural land in the name of the applicant.

Documents Required:

 Pre-sanction documents:
    1.Application form, duly filled
    2. 3 passport size photos of the borrower
    3. ID proof – PAN Card, Voter ID, Aadhaar Card, or Passport
    4. Address Proof - Voter ID, Aadhaar Card, or Passport
    5. Documented proof of land
    6. Quotation of the tractor that the dealer issues to the customer

 Pre-disbursement documents:
    1. Loan documents
    2. 48 or 60 post-dated cheques

 Post-disbursement documents:
    1. RC book of the tractor with hypothecation charges that are in favour of the State Bank of India
    2. Original invoice of the tractor
    3. Comprehensive insurance policy for the vehicle

*This includes registration and insurance charges.

Loan for Combine Harvester

This loan is designed for farmers who wish to purchase a combine harvester and its accessories. The loan can be repaid in half-yearly installments, and the key features of this loan are as follows:

• Interest Rate: 12% p.a.
• Margin: 15% to 25% of the cost of the combine harvester and its accessories
• Repayment Tenure: 9 years, including a grace period
• Collateral: Mortgage of land

Eligibility Criteria:

• This loan is available for all farmers who are capable of operating a combine harvester.
• The applicant must own at least 8 acres of irrigated land.

Required Documents:

• Duly filled application form
• ID proof – PAN Card, Voter ID, Aadhaar Card, Driving License, or Passport
• Address Proof - Voter ID, Aadhaar Card, Driving License, or Passport
• Documented proof of agricultural land.

Loan for Drip Irrigation System

This loan is designed to facilitate the purchase of a drip irrigation system.
Here are the main features of the loan:

• Interest Rate: 12% per annum
• Margin: 15% to 25% of the total project cost
• Repayment Tenure: 5 to 13 years
• Collateral:
• Up to Rs.10,000 - No collateral required
• More than Rs.10,000 - Mortgage or charge on land

Eligibility Criteria:

• All farmers who own land and are engaged in agricultural activities are eligible to apply.

To apply for this loan, you need to submit the following documents:

• A duly filled application form
• Proof of identity - PAN Card, Voter ID, Aadhaar Card, Driving License, or Passport
• Proof of address - Voter ID, Aadhaar Card, Driving License, or Passport
• Mortgage on land
• Deed of Guarantee

Below are three types of other agricultural loans. The first one is:

Dairy Loan

This loan is offered to dairy societies to finance the following infrastructure:

• Construction of milk house or society office
• Purchase of automatic milk collection system
• Purchase of transport vehicle
• Purchase of bulk chilling unit
• Dairy Farm Business Loan

Here are the key features of this loan:

• Interest Rate: 12.10% per annum
• Margin: 15%
• Repayment Period: 60 months (including a start-up period of 6 months)

Collateral: Guarantee of milk union or mortgage of property

Loan Amount: Typically, 85% of the project cost or four times the average profit for the past two years (up to a maximum of Rs. 10 lakh)

Maximum Loan Limits:

• Rs. 2 lakh for the construction of a milk house or society office
• Rs. 1 lakh for the purchase of an automatic milk collection system
• Rs. 3 lakh for the purchase of a milk transportation vehicle
• Rs. 4 lakh for the purchase of a chilling unit

To be eligible for this loan, a milk producer co-operative society affiliated with the district milk union must meet the following requirements:

• Supplies 1,000 litres of milk per day on average to the milk union
• Received an "A" grade in the last audit
• Earned profits (pre-tax) in the previous two years

To apply for this loan, you need to submit the following documents:

• A duly filled application form
• Undertaking from the milk union for deduction and payment of the installment amount for repayment
• Liquidation and no-dues certificate if a loan was taken from another bank previously
• Audited balance sheet for at least two preceding years.

Poultry Loan

This loan is available for farmers who want to build feed rooms, poultry sheds, and other equipment. Here are the key features of this loan:

• Interest Rate: 12.10% per annum
• Margin: 25%
• Repayment: 5 years (in bi-monthly installments), including a grace period of 6 months
• Collateral: Mortgage of the land on which the shed or other infrastructure will be constructed. The mortgage should cover at least 50% of the advance.
• To be eligible for this loan, an individual must have experience in poultry farming and have land for the construction of poultry sheds.

To apply for this loan, you need to submit the following documents:

• A duly filled application form
• ID proof (PAN Card, Voter ID, Aadhaar Card, Driving License, or Passport)
• Address Proof (Voter ID, Aadhaar Card, Driving License, or Passport)

Fisheries Loan

This loan can be used for the purchase of fish net, fish seeds, and other related equipment. Here are the key features of the loan:

• Interest Rate: 12.10% per annum
• Margin: 15% to 25% of the total project cost
• Repayment Period: Maximum of 48 months
• Collateral: For loans up to Rs.1 lakh, no collateral is required. For loans above Rs.1 lakh, land mortgage is needed.
• To be eligible for this loan, all professional fishermen and farmers with knowledge in pisciculture can apply.

To apply for this loan, you need to submit the following documents:

• A duly filled application form
• ID proof (PAN Card, Voter ID, Aadhaar Card, Driving License, or Passport)
• Address Proof (Voter ID, Aadhaar Card, Driving License, or Passport)

Miscellaneous Agricultural Loans

This category includes five types of agricultural loans, as follows:

Produce Marketing Loan

The purpose of this loan is to support farmers so that they do not have to sell their crops under distress, assist in prompt repayment of crop loans, provide liquidity for emergency financial needs, and offer loans against stocks in farmhouses and warehouse receipts. The key features of the loan are listed below:

Loan Amount:

• 60% to 80% of the total value of the produce*
• Repayment: Within 12 months**

Security:

• Loan against goods stored in farmer's godown:
• Primary: Hypothecation of stocks
• Collateral: Mortgage of land or third-party guarantee for loans above Rs.1 lakh

Loan against Warehouse Receipts (WHR):

• Primary: Hypothecation of stocks
• Collateral: No collateral for loans up to Rs.10 lakh

*The loan amount depends on the place of storage of the produce and is subject to a maximum limit of Rs.50 lakh.

**The repayment period depends on the crop and the models of godowns.

Eligibility Criteria:

• All non-defaulting borrowers of SBI who can store their produce in a warehouse or their own farms.
• All non-borrower farmers and crop loan borrowers of other banks who can store their produce in warehouses.

Documents Required:

• The endorsed stock statement for the valuation of stocks at a warehouse or the borrower's residence is needed.

Agri Clinic and Agri Business Centre Establishment

This loan aims to provide self-employment opportunities to individuals who have received training in agriculture extension services. The loan is available to those engaged in various activities, including water and soil quality testing laboratories, post surveillance and control services, repairs, maintenance, and custom-hiring of machinery related to micro-irrigation systems, agri service centres, seed processors, and more. The loan's key features are detailed below:

Loan Amount:

• For individual activities - up to Rs.20 lakh*
• For group activities - a maximum of Rs.100 lakh
  *Projects that have achieved success may be eligible for up to Rs.25 lakh

Repayment Tenure: 5 to 10 years, with a grace period of 2 years

Security:

• For loans up to Rs.5 lakh - hypothecation of assets created
• For loans over Rs.5 lakh - hypothecation of assets created and mortgage of land or third-party guarantee

Soft Loan Assistance: NABARD will provide the applicant's 50% share of the margin as a soft loan with no interest charged.

Eligibility Criteria:

• Graduates in agriculture from state and central universities and institutions recognized by ICAR/UGC
• Degree holders in agriculture from other universities with approval from the Department of Agriculture and Cooperation
• Diploma holders in agriculture subjects from recognized universities
• Biological science graduates with post-graduation degree in agriculture subjects
• Graduates of degree courses with more than 60% content in agriculture recognized by UGC
• Candidates of diploma courses with more than 60% content in agriculture subjects
• Candidates of agriculture courses at plus two levels with a minimum of 55% marks
• Candidates of courses allied to agriculture such as animal husbandry, horticulture, dairy science, forestry, poultry, pisciculture, etc.

In the case of group activities, all members except one should be trained agri-graduates. For loans less than Rs.5 lakh, 100% of the cost of the project will be provided, while loans over Rs.5 lakh will provide 85% of the cost. Additionally, the bank offers a composite subsidy of 44% of the project cost for women borrowers, SC/ST category applicants, and candidates from North East and hill stations. For other categories, a 36% subsidy is provided with no interest charged on the subsidy amount.

Scheme for Land Purchase

This scheme is designed to provide loans to small farmers and landless agricultural laborers for the purchase of land. The loan is available to existing borrowers who wish to consolidate their land holdings and develop wastelands. The loan highlights are as follows:

• The loan can be used for the procurement of irrigation facilities and land development, including the purchase of farm equipment and registration expenses.
• Loan amount provided will be 85% of the land's cost*.
• Loan repayment can be made over 9 to 10 years in half-yearly instalments** from the end of the gestation period.
• The land being purchased will serve as security against the loan.
• The maximum loan amount that can be availed is Rs.5 lakh.

*For land purchase up to a maximum of Rs.5 lakh.
**The gestation period is up to 1 year for developed land and 2 years for underdeveloped land.

Eligibility Criteria:

• Small farmers with less than 5 acres of unirrigated land, marginal farmers with 2.5 acres of irrigated land, and landless agricultural laborers are eligible to apply.
• Previous loan repayment history should be impeccable.
• Good borrowers from other banks can also apply if they agree to settle their outstanding dues with the respective bank.

Scheme Name: SBI Krishak Uthan Yojana

This scheme aims to provide short-term production and consumption loans to tenant farmers, oral lessees, and sharecroppers who do not possess any land records. These loans can help increase their income significantly.

Key Features:

• Loan Amount: Up to Rs. 1 lakh*
• Security: Not required
• Repayment: Sale proceeds should be routed through a cash credit account

*Maximum consumption credit allowed is Rs. 20,000 out of the loan amount.

Eligibility Criteria:

• Sharecroppers, landless laborers, oral lessees, and tenant farmers with no land records
• Applicants should have a permanent address proof and must have resided in the current place for at least 2 years.
• Migratory tillers are not eligible.

Documents Required:

• Residence proof
• Identity proof
• Notarized affidavit in the prescribed format.

Debt Swapping Scheme for Farmers

The aim of this loan is to assist farmers in paying off debts obtained from non-institutional lenders, helping them meet their crop production needs. The key features of this loan are as follows:

• Loan Amount: Up to Rs.1 lakh*
• Security: Collateral security in the form of a mortgage on agricultural property
• Repayment: Within 3 to 5 years in half-yearly/annual installments

*100% funding is available if the loan is for agricultural activities

Eligibility Criteria:

• All current borrowers of the bank who are farmers can take this loan. Other farmers in the bank branches' operational areas can also obtain this finance.

Required Documents:

• Notarized Affidavit, stamped and as per the bank format
• A confirmation from the lender on the facts in the Affidavit

Agri Debt Waiver/Relief Scheme, 2008

Farmers can seek debt waiver or relief by contacting their bank branch. Additional information on this scheme is available on the RBI website.

FAQs on SBI Agriculture Loan

Q1. Are joint liability groups and self-help groups eligible to apply for SBI crop loan?

Ans. Yes, they are eligible to apply for a crop loan.

Q2. What is the interest subvention for loans up to Rs.3 lakh?

Ans. For loans up to Rs.3 lakh, a 2% p.a. interest subvention is provided.

Q3. What is the processing time for a New Tractor Loan?

Ans. The processing of a New Tractor Loan will be completed within 7 days from the submission of documents.

Q4. What is the interest rate for a Tatkal tractor loan?

Ans. The interest rate for a Tatkal Tractor Loan varies depending on the margin. If the margin is 25%, the interest rate is 11.20% p.a., while if the margin is 35% or 50%, the interest rate is 10.95% p.a. and 10.55% p.a., respectively.

Q5. For what purpose can I avail the Fisheries loan? What is the interest rate?

Ans. A Fisheries loan can be obtained for the purchase of fish nets, fish seeds, and related equipment. The loan is offered at an interest rate of 12.10% p.a.