Introduction

Purchasing agricultural land can be a significant investment for farmers, agribusiness entrepreneurs, and even urban investors. However, not everyone has enough liquidity to pay upfront. That's where a loan to buy agricultural land comes into the picture. In 2025, several financial institutions are offering attractive loan options tailored specifically for buying farm or agricultural land. This comprehensive guide will walk you through everything you need to know about these loans, from eligibility to the application process, interest rates, top lenders, and government schemes.

What is a Loan to Buy Agricultural Land?

A loan to buy agricultural land is a specialized financing solution provided by banks, non-banking financial companies (NBFCs), and cooperative institutions to assist individuals or organizations in purchasing land for farming or agricultural activities. Unlike residential property loans, these loans often come with different eligibility criteria, lower interest rates for farmers, and flexible repayment options.

In 2025, agricultural land loans are becoming more accessible, especially with the rise of digital lending platforms and initiatives from the Indian government and state-level agriculture departments.

Types of Loans for Agricultural Land

There are various types of agricultural land loans available based on the borrower's needs and profiles:

• Direct Agricultural Loans: These are offered directly to farmers for purchasing land, seeds, fertilizers, and equipment.
• Indirect Agricultural Loans: Provided to organizations that support agricultural activities (e.g., farming cooperatives).
• Land Purchase Loans: Specifically for the acquisition of agricultural land.
• Development Loans: To improve existing agricultural land (e.g., irrigation, fencing, soil improvement).
• Government-Subsidized Loans: Loans with interest rate subsidies under government schemes like PM Kisan Credit Card (PM-KCC) or NABARD programs.

Eligibility Criteria

Eligibility for agricultural land purchase loans generally depends on several factors:

• Age: Between 18 and 70 years.
• Occupation: Primarily farmers, agri-business owners, or individuals engaged in allied activities like dairy or poultry farming.
• Income: Proof of agricultural income or repayment capacity.
• Land Ownership: Some banks require the borrower to already own agricultural land to apply for additional land purchase.
• Credit Score: Minimum CIBIL score of 650–700 is preferred for better loan terms.
• Nationality: Indian residents and NRIs engaged in agriculture (in some cases).

Documents Required

Common documents necessary to apply for an agricultural land loan:

• Proof of Identity (Aadhaar card, PAN card, Passport)
• Proof of Address (Voter ID, Utility bills)
• Land Documents (Title deed, RTC Extract, 7/12 Extract)
• Income Proof (Bank statements, sale receipts, Form 16A)
• Proof of Agricultural Activities (Certificate from Tehsildar or Gram Panchayat)
• Passport-size Photographs

Step-by-Step Process to Get a Loan

The process to apply for an agricultural land loan is relatively simple and involves the following steps:

1. Step 1: Check Eligibility – Ensure that you meet the eligibility criteria mentioned by the bank or financial institution offering the loan.
2. Step 2: Research Loan Offers – Compare loan offers from various banks and NBFCs to find the one with the best terms and interest rates.
3. Step 3: Gather Documents – Collect all the necessary documents, such as identity proof, address proof, land documents, and income proofs.
4. Step 4: Apply for the Loan – You can apply online or at the branch. Fill out the loan application form with accurate details.
5. Step 5: Loan Assessment – The bank will assess your application, including a credit check, and verify your land and income details.
6. Step 6: Sanction and Disbursement – Upon approval, the loan amount will be sanctioned, and the disbursement will take place, either in full or in installments.
7. Step 7: Repayment – Repay the loan in monthly installments as per the terms and conditions of the loan agreement.

Interest Rates and Tenure

Interest rates on agricultural land loans vary based on the lender, your creditworthiness, and the loan type. Here is an overview of typical interest rates and loan tenure:

• Interest Rates: Typically range from 7.5% to 12% annually. Some government schemes may offer subsidized rates starting from 4%.
• Loan Tenure: Agricultural land loans typically have a repayment tenure ranging from 5 to 20 years depending on the loan amount and the lender's terms.
• EMI Calculation: Most banks allow loan repayment in monthly installments (EMIs) with options for part prepayment and full prepayment.

Below is an example of how the EMI could look based on the loan amount and tenure:

Top Banks and Institutions Providing Agricultural Loans

In 2025, several banks and financial institutions offer agricultural land loans in India. Some of the leading ones include:

• State Bank of India (SBI): Offers agricultural land loans with interest rates starting from 7.75% for a maximum tenure of 20 years.
• HDFC Bank: Provides agricultural land loans with flexible repayment options and interest rates starting from 8.25%.
• ICICI Bank: Offers agricultural loans with a tenure of up to 15 years and interest rates starting from 8.50%.
• Punjab National Bank (PNB): Offers subsidized loans under government schemes with interest rates starting from 7% under schemes like PM Kisan Credit Card.
• Axis Bank: Provides loans for purchasing agricultural land with an interest rate of 8.75% and flexible EMIs.
• Bank of India (BOI): Offers agricultural land purchase loans with terms up to 20 years and interest rates from 8.25%.

For updated loan rates and eligibility details, it's always advisable to check with the respective bank's official website or visit their nearest branch.

Pros and Cons

While taking a loan for agricultural land can be beneficial, there are also risks involved. Below are the pros and cons to consider:

Pros:

• Financial Assistance: Provides the necessary capital to buy agricultural land without requiring upfront payment.
• Long Repayment Tenure: Extended loan tenures allow for affordable monthly payments.
• Flexible Usage: Can be used for land acquisition as well as development activities such as irrigation and infrastructure building.
• Government Subsidies: Some government schemes offer lower interest rates and subsidies.

Cons:

• High EMI: Monthly payments can become a financial burden, especially during bad harvest seasons.
• Risk of Default: If you fail to repay the loan, your agricultural land can be seized by the lender.
• Collateral Requirement: In many cases, the agricultural land itself may need to be pledged as collateral.

Tips for Getting Better Loan Deals

Here are some tips to help you secure the best agricultural land loan terms:

• Maintain a Good Credit Score: A higher credit score increases your chances of securing a loan with better terms and lower interest rates.
• Compare Loan Offers: Don't settle for the first loan offer you receive. Compare different banks and NBFCs for the best deal.
• Consider Government Schemes: Look into government schemes that offer interest rate subsidies and other benefits.
• Ensure Proper Documentation: Complete all required documentation and ensure its accuracy to avoid loan rejection or delays.

Government Schemes for Agricultural Land Purchase

The Indian government has several schemes to support the agricultural sector, including loans for purchasing agricultural land. Some key schemes include:

• Pradhan Mantri Kisan Credit Card (PM-KCC): A government scheme that offers credit at subsidized rates for purchasing agricultural land and inputs for farming.
• NABARD Agri-Loan Scheme: National Bank for Agriculture and Rural Development (NABARD) provides funding for farmers to purchase land and develop it for agricultural use.
• Rashtriya Krishi Vikas Yojana (RKVY): Provides financial assistance for land purchase and infrastructure development in agriculture.
• Land Development Bank Loans: Offers loans for purchasing and developing agricultural land, with flexible repayment terms and low-interest rates.

Frequently Asked Questions (FAQs)

1. What is the minimum age required to apply for a loan to buy agricultural land?

The minimum age to apply for an agricultural land loan is typically 18 years, though some banks may require applicants to be at least 21 years old. The maximum age limit is generally around 65-70 years at the time of loan maturity.

2. Can I apply for an agricultural land loan if I don't have any prior farming experience?

Yes, in many cases, non-farmers can apply for agricultural land loans, especially if they plan to start farming or have a stable income source. However, you may need to show a viable business plan or proof of income to demonstrate your repayment capacity.

3. How much loan can I get to purchase agricultural land?

The loan amount will depend on several factors, including the type of loan, your eligibility, income, and the value of the land you wish to purchase. Most banks offer up to 80-90% of the land's market value as a loan.

4. Are there any prepayment penalties on agricultural land loans?

Some banks may charge a prepayment penalty if you repay the loan before the end of the tenure. It’s important to check the terms and conditions regarding prepayment with the respective lender.

5. How long does it take to process an agricultural land loan?

It generally takes anywhere between 15 days to 2 months for loan approval and disbursement, depending on the bank and the complexity of your application. Timely submission of documents can help speed up the process.

6. What happens if I default on my agricultural land loan?

If you default on your agricultural land loan, the lender may initiate legal proceedings to recover the outstanding amount. This may include selling the agricultural land that was used as collateral to recover the loan amount. It's essential to communicate with your lender if you're facing repayment difficulties.

Conclusion

Taking a loan to buy agricultural land can be a game-changer for farmers and entrepreneurs looking to expand their agricultural activities. With favorable interest rates, flexible repayment terms, and government schemes, agricultural land loans are more accessible than ever in 2025. However, it is important to thoroughly research and compare loan offers to choose the best one for your needs.

By following the steps outlined in this guide, you can navigate the process of securing a loan, ensure that you meet the eligibility criteria, and understand the repayment terms. Remember to stay updated with government schemes, as they may provide further financial assistance and reduced interest rates.

Whether you're a seasoned farmer or a newcomer to the agricultural sector, securing the right loan can provide the financial flexibility you need to build and expand your farming operations. Good luck with your agricultural land purchase!