Agriculture Loan Schemes in India
Posted on February 27, 2026
Agriculture plays an important role as the backbone of the economy and helps in promoting economic stability. To empower farmers and boost agricultural productivity, different financial institutions and governments have implemented agricultural loan schemes that provide accessible credit to the farmers, helping them to invest in crops and improve overall farm infrastructure. Agricultural loan schemes help farmers reduce dependency on informal credit sources and ensure great sustainable growth in the farming sector.
With the help of agricultural loans, farmers can leverage their land and secure a loan against property, which also provides financing options for diverse needs. This kind of approach ensures maximizing the utility of assets, making it an excellent option for business expansion, debt consolidation, and medical expenses. Let us understand more about it.
What is an agricultural loan scheme?
An agricultural loan scheme is a financial program designed to provide farmers with access to good credit for agricultural activities. The loans cover different expenses such as livestock, irrigation systems, equipment, fertilizers, and purchasing seeds. Agricultural loan schemes are offered by cooperative societies, banks, and government agencies to support rural development, which plays an important role in enhancing productivity and ensuring timely sowing and harvesting. Different schemes may target specific needs, such as medium-term loans for machinery and long-term loans for infrastructure and development. These schemes help to empower farmers financially, improve agricultural output, and contribute to rural economic growth.
Required documents for the agriculture loan scheme:
Different documents for agricultural loan schemes are as follows:
– Fully completed application form with personal and financial details.
– Aadhar card, Voter ID, passport, or any government-issued ID.
– Utility bills, ration card, bank statement, or passport for verification of address.
– Copies of land title deeds, revenue records, or land lease agreements.
– Income tax returns, bank statements, or income certificates issued by authorities.
– Passport-size photographs of the applicant.
– A detailed plan of the intended agricultural project.
– Recent 6-month bank statements for financial assessment.
– Any other documents required for property collateral.
Types of Different Agricultural Loan Schemes:
Different types of agricultural loan schemes are as follows:
Crop loans: Crop loans help to meet the short-term financial needs of farmers for crop cultivation. These loans cover pesticides, fertilizers, seeds, and labor, and the government provides low-interest rates to make these loans accessible to farmers.
Farm mechanization loans: To encourage modern equipment and machinery, farm mechanization loans are there. Farmers use these funds to purchase tractors, harvesters, and other machinery, enhancing productivity.
Livestock loans: These loans are designed to support farmers in buying livestock such as cattle, poultry, and other animals. These funds are used to construct sheds and meet different veterinary expenses.
Land development loans: To improve the quality of land and undertake irrigation projects, farmers can avail themselves of land development loans. These funds can help in constructing bunds, leveling lands, and implementing irrigation systems to enhance agricultural yield.
Kisan Credit Card Scheme: The Kisan Credit Card Scheme provides farmers with a credit card that allows them to access short-term credit. It covers different agricultural expenses, and the cardholder enjoys flexibility in repaying the borrowed amount.
Warehouse receipt loans: These loans are collateralized by stored produce. Farmers can store their harvest in accredited warehouses and use the warehouse receipts as collateral to secure loans.
Benefits of Agricultural Loan Schemes:
Some of the major benefits of agricultural loan schemes are as follows:
Rural Development: Agricultural loan schemes play an important role in improving rural development by injecting funds into local economies. Increased agricultural activities stimulate demand for goods and services, thereby creating more employment opportunities.
Financial Inclusion: Agricultural loan schemes promote financial inclusion by providing farmers, who face barriers to traditional banking, with access to credit, which is important for rural economic development.
Increased productivity: By providing funds to purchase quality seeds, fertilizers, and modern equipment, farmers can adopt advanced farming practices, leading to higher yields.
Technology adoption: Farm mechanization loans help to encourage the adoption of modern agricultural activities, leading to improved efficiency and reduced manual labor, which leads to better farm management.
Livelihood diversification: With specialized loans, farmers can be able to diversify their source of income, which not only contributes to the sustainability of the farm but also enhances the overall economic well-being of farming communities.
Government agricultural loan schemes for farmers:
Some of the major agricultural loan schemes for farmers are as follows:
Agricultural Infrastructure Fund: The agricultural infrastructure fund is a government-backed initiative focusing on improving agricultural infrastructure across India. These funds help to provide financial support in the form of low-interest loans to build warehouses, cold storage units, and other essential infrastructure. Both individual farmers and farmer-producer organizations can benefit from it. The scheme also encourages private investment, which helps in boosting rural employment and economic growth.
National Bank for Agricultural and Rural Development Schemes: NABARD, one major institution for agricultural and rural development in India, provides various loan schemes and financial assistance programs to promote agriculture and rural development. The schemes include the Rural Infrastructure Development Fund, Dairy Entrepreneurship Development Schemes, and Watershed Development Fund. NABARD further provides refinance facilities to banks and financial institutions for extending credit to farmers and rural entrepreneurs.
Modified Interest Subvention Scheme: The modified interest subvention scheme is a government-backed scheme to provide financial relief to farmers by reducing the cost of credit. Under this scheme, farmers receive a subsidy on the interest charged by banks for short-term crop loans. Typically, the scheme offers a concessional interest rate for timely repayment with additional incentives for prompt repayment within a stipulated period. MISS helps ensure the farmers have easy access to institutional credit, reducing their reliance on informal moneylenders who charge exorbitant interest rates.
Conclusion
Agriculture-based MSMEs play a huge transformational role towards sustainable growth as India’s agricultural growth increases; promotions from digital innovators and awareness of loan schemes could help in unlocking the full potential of rural India for entrepreneurship.
Different rural-based entrepreneurs can make the best use of agriculture-based MSME loan schemes, which could help in expanding their business activities and further help India’s government’s idea of Atmanirbhar Bharat as a prosperous rural economy.