Agriculture Gold Loan Scheme & its Eligibility

India is primarily agricultural land and employs roughly 60% of India’s population. Farmers across the country have been receiving various benefits under various government schemes like PM-Kisan Samman Nidhi, wherein subject to exclusion, landholding farmers get ₹6000 annually through Direct Benefit Transfer. The other scheme launched by the government is the Micro Irrigation Fund (MIF), which will help the states mobilize resources for expanding coverage of micro irrigation. Various schemes like Pradhan Mantri Kisan Maan Dhan Yojana (PM-KMY), Pradhan Mantri Fasal Bima Yojana (PMFBY), etc, are in force by the government to support farmers.

What is an Agricultural Gold Loan?

With the central and state governments launching various schemes to support farmers, most banks and financial institutions in India have started lending Agricultural Gold Loans to meet farmers’ individual needs. Agricultural Gold Loan Schemes are just like other gold loan schemes, offering farmers loans against gold at attractive interest rates. Farmers may use the loan amount for any farming activity, such as buying seeds, fertilizers, machinery, and tools or meeting other operational costs.

Agricultural Gold Loan Benefits

Almost every trustworthy bank or financial institution offers higher agricultural gold loan limits, so that the farmers can meet diverse expenses easily. The agriculture loan process is also fairly simple and has a convenient repayment structure with attractive interest rates. Institutions provide customized loans for specific agricultural loan requirements. What’s more, the gold loan accounts can be renewed easily and conveniently if the need arises. The gold pledged as collateral is also always safe in a secure vault.

Features and Benefits of Agriculture Gold Loan

Most of the banks and financial institutions recognize the varied needs of farmers. Hence they have made the agriculture gold loan process extremely straightforward and hassle-free. Let’s look at some of their top features and benefits:

• Agricultural gold loans offer higher amount limits compared to regular loans. This facilitates the farmer to address agricultural expenses such as seeds, fertilizers, irrigation, purchase of equipment etc.

• The application process does not require an extensive list of documents. Just basic papers such as aadhaar card, pan card, ration card would suffice. This helps them obtain the necessary funds quicker.

• Repayment options are made flexible as farming is a seasonal affair and the farmer cannot afford to pay instantly at any given point of time. This flexibility offers them peace of mind and also avoids the risk of defaultiong payments

• Agricultural gold loans are comparatively a more affordable option as the interest rates are often lesser that traditional gold loans. This in turn reduces the burden of borrowing costs.

• Customized loan options are made available so that the farmers can align as per their line of agricultural business, like poultry farming, goat farming, dairy farming or crop cultivation.

• In cases where farmers require an extension on their loan term, agricultural gold loans can often be renewed easily and conveniently.

Eligibility for Agriculture Gold Loan

Eligibility plays an essential role in any loan disbursement. Similarly, every farmer must be eligible for the Agricultural Gold Loan Schemes. The basic criteria are

1. Status of the farmer: Every applicant must be engaged in farming or farm-related activities. The individual must be a businessman, trader, farmer, or self-employed professional.
2. Possession of Gold: When enrolling for the loan, the applicant must possess gold in jewelry or any other form. Banks and institutions may verify the gold’s authenticity through various tests and demand receipts for it. The gold pledged as security must have a purity of 18-22 carat, which may vary for different institutions.
3. Loan-to-value (LTV) ratio: A maximum of 75% of the gold’s value will be given as a loan. However, it’s best to check with the bank, as this may vary.
4. Age Limit: Banks and other institutions generally have an age limit for applying for loans. This typically includes being between 18 and 75, but it may vary from bank to bank.
5. Legal supporting documentation: A farmer or individual in related activities is eligible for the loan against gold through online or offline mode if they have valid proof of identity (Aadhaar card, valid passport, PAN card, or driver’s license), proof of address (besides proof of identity, bank statement, rent agreement, voter’s ID, and electricity bill are acceptable documents), land records, gold ownership documents like receipts, or bullion that can be pledged as collateral against the loan.

Once the applicant fulfills all these criteria, they must thoroughly verify all the terms and conditions, including interest rates and processing fees, repayment terms, etc.

FAQs

Q1. What are the objectives of agriculture gold loan?

Ans. Here are some of the objectives of an agriculture gold loan:

• Increased Access to Capital as they offer higher loan amounts in comparison to standard gold loans allow farmers to borrow more for various agricultural needs.
• Reduced Borrowing Costs as competitive interest rates make them a more affordable financing option for farmers.
• Improved Cash Flow Flexibility as they can be tailored to specific needs, potentially easing cash flow fluctuations throughout the agricultural cycle.

Q2. Can I pre-close my agriculture loan before the completion of the loan tenure?

Ans. It depends on the terms and conditions set by the lender. Most of them provide the option to prepay the outstanding loan balance and pre-close the loan amount before the completion of the loan tenure. However you will be expected to pay a pre-closeure penalty fee to the lender

Q3. How long do lenders take to process agriculture loan applications?

Ans. Every lender has their own set of rules when it comes to the agriculture gold loan process. The process can vary anywhere between 2 to 7 days depending on their terms and conditions.