A crop loan is a short-term credit facility provided to farmers to meet their agricultural expenses. It enables them to purchase inputs like seeds, fertilizers, and equipment and manage other farming-related costs.
1. Definition of Crop Loan
- A crop loan is a short-term loan offered to farmers for meeting the working capital requirements of agricultural activities.
- It is tailored to cover the cost of inputs such as seeds, fertilizers, pesticides, labor, and irrigation.
2. Purpose of Crop Loan
- To provide financial support for cultivating crops.
- To help farmers avoid dependency on informal credit sources like moneylenders.
- To promote sustainable agricultural practices by making credit accessible.
3. Eligibility Criteria
- Farmers engaged in agricultural activities, including:
- Landowners and tenant farmers.
- Sharecroppers and oral lessees.
- Applicants must provide proof of their agricultural activity, such as land records or lease agreements.
4. Loan Amount
- The loan amount is determined based on:
- The scale of finance (SoF) set by the District Level Technical Committee (DLTC) for different crops.
- The size of the landholding and input costs.
- There is no upper limit for the loan amount, but it must align with the borrower’s repaying capacity.
5. Interest Rate and Subsidy
- The interest rate for crop loans is typically subsidized under government schemes.
- Under the Interest Subvention Scheme (ISS), crop loans up to ₹3 lakh are provided at 7% per annum.
- Additional 3% interest subvention is offered for timely repayment, effectively reducing the interest rate to 4% per annum.
6. Repayment Period
- Repayment is linked to the crop cycle and typically ranges from 6 to 18 months.