Types of agricultural land loans
Banks offer distinct credit structures based on the intended purpose and repayment tenure.
- Kisan Credit Card (KCC) Crop Loans: Short-term seasonal working capital credit up to three lakh rupees with central interest subvention and prompt repayment incentives.
- Land Purchase Scheme (LPS): Long-term term loans designed to help small and marginal farmers purchase cultivable agricultural land to expand unviable holdings.
- Agricultural Land Development Loans: Medium to long-term credit for land leveling, fencing, soil reclamation, and irrigation infrastructure installation.
- Mortgage / Agri Term Loans: Loans secured against agricultural land for purchasing tractors, constructing polyhouses, or setting up dairy units.
Factors determining interest rates and loan terms
Interest rates vary across financial institutions based on benchmark rates, collateral, and farmer category.
- Benchmark Linkage: Most commercial bank agriculture term loans are linked to the RBI Repo Rate or external benchmark lending rates.
- Loan Tenure: Land purchase and farm development term loans typically have repayment tenures of 7 to 15 years with suitable moratorium periods.
- Margin Money: Borrowers generally contribute 10% to 25% of the land purchase or project cost as their equity margin.
- Credit Profile: Transparent land titles, CIBIL credit score, and prompt past repayment history influence bank approval terms.
Eligibility criteria and documentation checklist
Preparing clear revenue documents ensures faster appraisal without legal delays.
- Identity & Address Proof: 12-digit Aadhaar card, PAN card, and active bank account passbook.
- Land Title Deeds: Encumbrance certificate (typically for past 13 to 30 years), registered sale deed, and legal search report from bank empanelled advocates.
- Revenue Records: Updated 7/12 extract, Khatauni, Jamabandi, or Pattadar passbook with no-dues verification.
- Repayment Capacity: Evidence of agricultural income, cropping patterns, or supplementary dairy/allied farm earnings.
- Apply through digital platforms like JanSamarth (jansamarth.in) or visit your nearest public sector bank branch.
Official source
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National Bank for Agriculture and Rural Development (NABARD) ↗Related on KisanPe
Common questions
What is the difference between a KCC loan and an agricultural land purchase loan?
KCC loans are short-term crop loans carrying government interest subvention, whereas land purchase loans are long-term term loans (7 to 15 years) linked to commercial bank lending rates.
Can small and marginal farmers get loans to buy new agricultural land?
Yes, public sector banks provide Land Purchase Schemes specifically designed to assist small and marginal farmers in purchasing cultivable land to make their holdings viable.
What is an Encumbrance Certificate (EC) in land loan processing?
An Encumbrance Certificate verifies that the agricultural property is free from prior legal liabilities, unpaid mortgages, or court attachments.
General guidance, not personal advice. For your farm, ask your local Krishi Vigyan Kendra or agriculture officer.
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