Types of Agriculture Loans and Financing Options

27 Jun 2023

Back to all Articles


Agriculture is the backbone of India's economy, employing a significant portion of the population and contributing to the nation's overall growth. In order to support farmers and enhance agricultural practices, financial institutions in India offer a range of Agriculture Loans tailored to meet the diverse needs of farmers and agribusinesses. These loans play a crucial role in providing financial assistance, empowering farmers to invest in modern equipment, improve infrastructure, and increase productivity. In this article, we will delve into the different types of agriculture loans and explore their features and benefits.

Types of Agriculture Loans Available in India

1. Crop Loans

Crop loans, also known as Kisan Credit Card , are specifically designed to meet the short-term financial requirements of farmers during the cultivation season. These loans are primarily utilized for purchasing seeds, fertilizers, pesticides, and other inputs required for crop production. Crop loans are usually sanctioned for a duration of one agricultural season and are repaid after the harvest.

The government, through its various schemes, offers crop loans at subsidized interest rates up to a certain loan amount. Bank also provide crop loans to farmers based on their landholding and creditworthiness. These loans often involve simplified application processes, minimal documentation, and flexible repayment options.

Agriculture Gold Loan is also a type of Crop Loan where loans are primarily utilized for purchasing seeds, fertilizers, pesticides, and other inputs required for crop production against the security of Gold ornaments and coins.

2. Farm Mechanization Loans

Farm mechanization loan focuses on promoting modern agricultural practices by providing financial assistance for the purchase of farm machinery and equipment. These loans enable farmers to mechanize their operations, enhancing efficiency and productivity. Tractor Loan is the most popular farm mechanization loan. Farmers can utilize the funds to procure tractors, power tillers, harvesters, irrigation systems, and other machinery suitable for their specific needs.

Farm mechanization loans are typically offered for a longer duration compared to crop loans, given the higher investment involved. Financial institutions may require collateral or co-applicants to secure these loans. The repayment tenure often aligns with the expected lifespan of the machinery, allowing farmers to repay the loan in installments over several years.

3. Land Purchase Loans

Land purchase loan aim to facilitate the acquisition of agricultural land by landless, share croppers, small and marginal farmers, helping them expand their cultivation areas. These loans enable farmers to invest in purchase of land for agriculture, horticulture, or other allied farming activities. The funds can be utilized for buying agricultural plots, orchards, or farmland. Based on eligibility, farmers can also avail other facilities like Forestry Loans, Horticulture Loans to establish or maintain the nurseries of orchards, ornamental plants, as well as quick-growing trees and shrubs.

Land purchase loans are long-term loans, and the repayment tenure can extend up to 15 years. Financial institutions assess the creditworthiness of the applicant, along with factors such as land value, location, agricultural productivity and potential surplus income before approving these loans. The acquired land often serves as collateral for the loan.

4. Livestock Loans

Livestock loans which are also known as loans for allied agriculture activities , are designed to meet the financial requirements of farmers involved in animal husbandry, poultry farming, or dairy farming. These loans enable farmers to purchase livestock, construct livestock sheds, invest in feed, and procure equipment necessary for maintaining the health and well-being of the animals.

Financial institutions offer livestock loans based on the type and number of animals, the cost of their upkeep, and the expected returns from the enterprise. These loans often have flexible repayment schedules, considering the time required for the animals to reach maturity or generate income. Collateral may be required to secure larger livestock loans.

5. Warehouse Receipt Loans

Warehouse receipt loan provide farmers with access to credit based on the value of their stored agricultural commodities. Under this system, farmers deposit their produce in a recognized warehouse and receive a receipt that represents the value of the stored goods. These receipts can be used as collateral to secure loans from financial institutions.

Warehouse receipt loans are particularly beneficial for farmers who need immediate funds but prefer to wait for better market prices to sell their produce. By using the warehouse receipt as collateral, farmers can obtain loans at lower interest rates, with flexible repayment terms. Once they sell the stored commodities, the loan is repaid and normally loans are extended for a period of 12 months.

6. Solar Pump Set Loan:

Farmers can take advantage of solar financing to purchase a solar photovoltaic water pumping system. This agriculture loan usually is extended for a tenure of 10 years and the repayment is linked to the additional income generated due to irrigation provision.

If you're interested in applying for loans at any Bank of Baroda branch , you can fill out an online application for an agriculture loan.


Agriculture loans in India play a vital role in supporting farmers and promoting agricultural development. The various types of loans available cater to the diverse needs of farmers, whether it be short-term crop-related expenses, mechanization, land purchase, livestock management, solar financing or leveraging stored commodities. It is essential for farmers to understand the specific terms and conditions associated with each loan type and assess their financial requirements accordingly. By utilizing these loans effectively, farmers can enhance their productivity, modernize their farming practices, and contribute to the growth of the agricultural sector, ensuring a prosperous future for Indian agriculture.

Popular Articles

Tag Clouds

Related Articles

  • Disclaimer

    The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

Leave a Comment

Thanks for submitting your details.

Applying for Loan Against Agricultural Land: A Step-by-Step Guide

Obtaining a loan against agricultural land in India can be a valuable financial tool for farmers and landowners looking to meet their financial needs. This type of agricultural loan allows individuals to unlock the potential value of their agricultural land and utilize it for various purposes. In this blog post, we will delve into the process of obtaining a loan against agricultural land in India, outlining the essential steps and factors involved. We are sure that after reading this article, you will get the answer of all your queries like how to get loan against farm land, how much loan can I get on agriculture land, interest rate on loan against agriculture land, how to get loan against agriculture property.

What are the Consequences of Missing A Home Loan EMI?

A home loan can help you finance the purchase of your dream house. These loans are usually of a high value and, therefore, longer in tenure as well. Lenders typically sanction only 75% to 90% of the cost, and you are required to save enough to make

Add this website to home screen

Are you Bank of Baroda Customer?

This is to inform you that by clicking on continue, you will be leaving our website and entering the website/Microsite operated by Insurance tie up partner. This link is provided on our Bank’s website for customer convenience and Bank of Baroda does not own or control of this website, and is not responsible for its contents. The Website/Microsite is fully owned & Maintained by Insurance tie up partner.

The use of any of the Insurance’s tie up partners website is subject to the terms of use and other terms and guidelines, if any, contained within tie up partners website.

Proceed to the website

Thank you for visiting www.bankofbaroda.in

We use cookies (and similar tools) to enhance your experience on our website. To learn more on our cookie policy, Privacy Policy and Terms & Conditions please click here. By continuing to browse this website, you consent to our use of cookies and agree to the Privacy Policy and Terms & Conditions.