Agriculture Loan Interest Rate in India – Compare the Best Loan
Are you a farmer looking to boost your agricultural productivity but struggling with funds? You’re not alone.
Agriculture loans have become a lifeline for millions of farmers in India, helping them buy seeds, fertilizers, tractors, and more. However, one thing that often confuses farmers is the agricultural loan interest rate—which bank gives the lowest rate, what government subsidies are available, and how they vary by state.
In this blog, we’ll break it down in the simplest way possible so that you know exactly where to go and what to choose.
What is an Agricultural Loan?
Agricultural loans are financial aids provided by banks and financial institutions to farmers for various farming-related activities.
These loans are designed to support crop production, equipment purchase, irrigation setup, animal husbandry, and other allied agricultural activities.
Furthermore, to support the growth of India’s agricultural industry, banks, microfinance companies, and government organizations all offer agricultural loans.
Types of Agricultural Loan
Agricultural loans come in different forms depending on the requirement:
• Crop Loan (Kisan Credit Card or KCC): Crop loans, also known as retail agri-loans, assist farmers in meeting short-term costs associated with post-harvest operations, crop cultivation, and farm equipment upkeep. With this loan, farmers get a Kisan Credit Card (KCC), which allows them to take out money for necessary farming expenses.
• Farm Mechanization Loan – Farm Mechanization Loan – Farmers can apply for this loan to upgrade or repair agricultural equipment like tractors or to purchase new machinery.
• Agri-allied Loans – Farmers can use this loan to meet their long-term investment and working finance needs for related agricultural endeavors.
• Agricultural Gold Loan: This loan allows farmers to access the value of their idle gold jewelry by offering low-interest loans for crop cultivation and agricultural uses in exchange for a promise of gold jewelry.
• Forestry Loan: This agricultural loan is used to plant crops, remove wild or undergrowth trees, turn bare land into arable land, and create channels to prepare the area for irrigation.
• Horticulture Loan: This type of loan is used for a variety of horticulture projects, such as planting vegetable farms, orchards, clearing undergrowth, irrigation, and building boundary walls.
Agricultural Loan Eligibility
Eligibility for agricultural loans depends on the purpose and the lender, but in general:
• You must be an Indian citizen.
• You must be an individual farmer, group of farmers, or a registered agricultural organization.
• Land ownership documents are typically required.
• Tenant farmers and sharecroppers may also be eligible with proper agreements.
Banks also check your repayment capacity and credit history. Some loans don’t need collateral up to a certain amount.
Agricultural Loan Interest Rate
Interest rates for agricultural loans in India are typically lower than regular loans because they are considered priority sector lending. On average, the agricultural loan interest rate ranges between 8.00% to 16.05% depending on the bank, state, and type of loan.
Why Are Agricultural Loan Interest Rates Lower for Farmers?
Unlike salaried individuals with fixed monthly incomes, farmers face unpredictable weather, fluctuating crop prices, and seasonal cycles that directly affect their earnings. Recognizing these challenges, the government and financial institutions offer lower interest rates, subsidies, and flexible repayment terms to support those working in agriculture. These measures aren’t just about loans—they’re about sustaining the hands that feed the nation. Even salaried individuals investing in agriculture can sometimes access these benefits, helping further boost the sector’s resilience and growth.
Loan Mafi (Loan Waiver)
The Government of India introduced the Kisan Credit Card Loan Waiver Scheme, which has provided significant help to farmers across the country.
This initiative is for farmers who have been in debt for a long period. The goal of this program is to help farmers overcome the financial crisis and encourage them to make new investments in agriculture.
Objective Behind the Scheme
• Debt relief: It aims to relieve farmers from agricultural loans.
• Economic empowerment: It aims to make farmers self-sufficient and raise their revenue.
• Investment in farming: Once debt-free, farmers can make fresh investments in their operations.
• Reduction in mental stress: Eliminating debt will alleviate farmers’ mental stress.
• Promoting the rural economy: Improving farmers’ economic conditions will result in rural development.
Important Reminder: Always steer clear of predatory lenders, including unlicensed loan agents and loan sharks. For your safety and financial well-being, only borrow from government-approved or registered financial institutions.
Read this guide on How to Avoid Predatory Lending!
Government Loan Schemes for Farmers
There has been a proactive stance in offering government subsidy schemes for farmers. These agricultural loan schemes help lower the agricultural loan interest rate and sometimes offer complete subsidies.
1. PM Kisan Samman Nidhi Yojana
The Indian Department of Agriculture is undertaking a National Mission on Micro Irrigation to assist small and marginal farmers in installing micro irrigation devices.
These devices are heavily subsidized to improve water efficiency and boost farm productivity. Sprinklers and drip irrigation equipment will be given with a 90% subsidy.
2. The Pradhan Mantri Fasal Bhima Yojana
It is one of the subsidy schemes for farmers in Karnataka. It was implemented in Karnataka Raitha Suraksha Pradhan Mantri Fasal Bima Yojana from 2016-17 to assist farmers amid crop loss due to floods, drought, unseasonal rainfall, and other natural catastrophes.
3. The National Food Security Mission (NFSM)
NFSM-Coarse Cereals, which is part of Rice, Pulses, and Commercial Crops, focuses on maize and barley, with a sub-mission on Nutri-Cereals aimed at increasing paddy and pulse production.
4. Krishi Navodyama – Agri Start-ups
The initiative’s goal is to give financial support for the formation of agri-enterprises that use modern technologies, improving farmers’ access to technology and markets while also encouraging innovation in agriculture and associated activities.
Agricultural Loan Interest Rate in Maharashtra
The agricultural loan scheme in Maharashtra are:
• Agricultural loan interest rates in cooperative banks range from 7% to 13.75%.
• NABARD-refinanced loans through District Central Cooperative Banks (DCCBs) offer loans starting from 4%.
• Special schemes in drought-prone areas may offer lower rates with government backing.
Agricultural Loan Interest Rate in Kerala
Agricultural loan interest rate in Kerala are very farmer-friendly:
• Kerala agricultural loan interest rate in Gramin bank is around 6% to 13%.
• Kerala State Cooperative Bank sometimes provides loans at 4% with interest subsidies.
• Schemes for rubber, coconut, and spice farming attract special interest rates.
Agricultural Loan Interest Rate in Karnataka
Several banks in Karnataka offer competitive agricultural loan interest rates:
• Karnataka Vikas Grameena Bank (KVGB) offers crop loans at around 9.04% (can go as low as 4% with subsidy).
• Cooperative societies provide short-term loans at 3%-5%.
• State government often announces interest-free crop loans up to ₹3 lakh.
Agricultural Loan Interest Rate in Tamil Nadu
Like Karnataka, agricultural loan interest rate in Tamilnadu are also very beneficial:
• Short-term crop loans through PACCS (Primary Agriculture Cooperative Credit Societies) at 0% interest (up to ₹3 lakh if repaid on time).
• Nationalized banks like Indian Bank and Canara Bank offer loans starting at 7%, with subsidies reducing effective rates.
Comparing Interest Rates by Banks
Here’s a handy table to compare agricultural loan interest rate in Indian banks and institutions:
Banks/NBFCsInterest Rates in %
Axis Bank11.25% onwards
IndusInd Bank10.49% onwards
IDFC First Bank10.99% onwards
HDFC Bank10.85% onwards
ICICI Bank10.85% onwards
Kotak Mahindra Bank10.99% onwards
Tata Capital11.99% onwards
Federal Bank11.49% onwards
DMI FinanceUp to 24%
L&T Finance11.00% onwards
Kreditbee16.00% – 29.95%
MoneyTap13.00% onwards
Piramal Finance12.90% onwards
Aditya Birla10.99% onwards
Moneyview14%-36%
Cashe33.50% onwards
Note: Interest rates are subject to change based on location, loan type, and your credit profile. Always confirm the latest terms with your lender.
Kisan Gold Loan
Agriculture gold loans issued by banking institutions begin at a 7.00% annual interest rate and increase up. Interest rates, eligibility requirements, terms of repayment, fees, and taxes for agriculture gold loans will differ from bank to bank.
However, the following is some additional significant data about gold loans for agriculture.
Features
• Quick processing with minimal documentation.
• Funds can be used for any farming-related activity.
• Offered by most nationalized and private banks.
Eligibility
• must work in agriculture or related fields.
• Must own cultivable land or proof of farm activity.
• Age: Usually 18 to 70 years.
Documents Required
• Aadhaar Card
• PAN Card
• Land documents or proof of farming
• Gold ownership proof
• Passport-size photographs
Interest Rates
Interest rates start at 7% and depend on factors such as:
• Bank policies
• Loan tenure
• Loan-to-value ratio (LTV)
• Gold quality
Some banks offer loan for agricultural land purchase at lower interest rates than regular gold loans.
FAQ
Q1. What is the interest rate for agricultural gold loan? The interest rate for agricultural gold loans typically starts at 7% per year, however, this might vary based on the bank and loan terms.
Bank of Maharashtra’s interest subvention initiative gives loans up to ₹3 lakh at a fixed rate of 7% per year. Other banks, such as Union Bank of India and Indian Overseas Bank, provide rates of around 7.20% and 8.75%, respectively.
Q2. What is the interest rate for agricultural loan? It varies from 8.00% to 16.05% per annum. Subsidized loans for crop production can be as low as 8%, while others may go up to 16% depending on the bank and borrower profile.
Q3. What is the interest rate for agricultural loan in SBI? SBI offers agricultural loans with interest rates beginning at 7% per annum. Crop loans have an interest rate of 8.00% per annum. Tractor loans start at 9.00% per year.
Q4. How to check crop loan status in Telangana? Visit the official Crop Loan Waiver website and enter your login, password, and captcha code to view the status of your Telangana crop loan. Additionally, you may verify the progress of your application and manage loan data, such as outstanding amounts and repayment schedules, using the S3WaaS portal.
Q5. What’s the latest dairy farm loan interest rates in 2025? Dairy farm loan interest rates in 2025 differ depending on the lender and loan plan. While the Central Bank of India offers rates up to Rs. 50,000. Bankbazaar reports prices ranging from 7% to 14% annually, with certain loans under the Pradhan Mantri Mudra Yojana giving rates as low as 7.55% p.a.
Final Thoughts
Agriculture loans can be a game-changer if you understand your options well. Whether you’re in Maharashtra or Tamil Nadu, whether you’re looking for a crop loan or a gold-backed option, comparing the agricultural loan interest rate is the first step toward making the right financial decision.
Always ask about government subsidy eligibility and look for local schemes offered by cooperative banks in your state. A few percentage points of interest can make a big difference in your repayment burden.
If you’re ready, go ahead and talk to your nearest bank or cooperative society. Help is closer than you think—and cheaper too!