Owning farmland is a dream nurtured by countless farmers, agri-preneurs, and even urban investors who want to return to their roots. As land becomes an appreciating asset and agriculture remains a vital economic activity in India, getting a loan to buy agriculture land is one of the smartest ways to secure your future.
Similarly, for those who already own land, a loan on agriculture land provides much-needed liquidity to finance farm operations, invest in equipment, or simply manage seasonal cash flows. With banks, NBFCs, and government schemes offering these loans with favorable terms, understanding how they work can be a game-changer for your agricultural ambitions.
What is a Loan to Buy Agriculture Land?
A loan to buy agriculture land is offered to individuals or organizations for purchasing land meant exclusively for agricultural purposes. These loans are generally extended to those actively engaged in farming and recognized as agriculturists under land revenue records.
This type of loan plays a critical role in improving agricultural productivity by allowing farmers to:
- Expand their cultivated area
- Buy more fertile or irrigated land
- Move from leasing to owning farmland
- Reduce dependence on moneylenders
Most banks evaluate the borrower’s repayment ability based on existing farm income, land records, and the quality/location of the land being purchased.
What is a Loan on Agriculture Land?
A loan on agricultural land is a secured loan where the borrower uses their existing farmland as collateral to access funds. This credit facility is ideal for farmers who already own land but need money for:
- Seasonal crop expenses
- Purchasing seeds, fertilizers, or machinery
- Building fencing, irrigation, or borewells
- Clearing high-interest debts
These loans are often sanctioned quicker than unsecured loans and may come with lower interest rates, given the collateral involved. However, failure to repay could lead to loss of ownership, so it’s important to plan repayment carefully.
Benefits of Agricultural Land Loans
Applying for a loan to buy agriculture land or a loan on agriculture land offers a range of financial and strategic benefits.
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Long-Term Asset Creation
Land is a permanent asset. By buying land through a loan, you’re investing in an appreciating resource that can benefit generations.
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Financial Independence
With access to formal credit, farmers can avoid dependence on informal lenders who often charge exorbitant interest rates.
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Eligibility for Other Schemes
Land ownership through loans makes farmers eligible for other government benefits like crop insurance (PMFBY), subsidy schemes, and Kisan Credit Cards (KCC).
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Land Development Support
Many banks offer bundled products where land development, fencing, or irrigation projects are also financed under the same loan.
Eligibility Criteria in Detail
Getting a land loan requires you to meet specific criteria laid out by lenders and local government rules.
Common Criteria:
- Must be a resident Indian citizen
- Should be engaged in agriculture or allied activities
- Applicant’s name must be present in land records or tenancy documents
- In some states, only individuals with a farming background can apply
Non-Farmers:
States like Karnataka, Tamil Nadu, and Telangana allow non-farmers with lower income brackets (usually < ₹25 lakhs/year) to buy farmland with proper legal approvals. However, in states like Maharashtra or Uttar Pradesh, stricter rules may apply.
Always verify eligibility with your local land revenue office and financial institution before proceeding.
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Read also: The Legal aspects of buying and selling Farmland
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Documents Required – Detailed Breakdown
Documentation plays a vital role in quick loan processing. Here’s what’s typically required:
Identity & Address Proof:
- Aadhaar Card
- PAN Card
- Voter ID or Driving License
Land-Related Documents:
- Sale Agreement or Sale Deed
- 7/12 Extract (Maharashtra), Patta (Tamil Nadu), Khata (Karnataka), or equivalent
- Land Tax Receipts
- Encumbrance Certificate
Income & Financial Records:
- Agricultural Income Proof (Mandi Receipts, J-Forms)
- Bank Statements (last 6–12 months)
- Previous loan repayment records (if any)
For loans above ₹10 lakhs, some banks may also ask for a credit score (CIBIL) and a field inspection report.
Government Schemes that Support Agriculture Land Financing
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NABARD Land Purchase Scheme:
This scheme supports small and marginal farmers in purchasing land by offering refinance to banks. NABARD doesn’t directly give loans but works behind the scenes to lower interest burdens.
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PM-KISAN Yojana:
While it doesn’t offer direct loans, PM-KISAN provides income support of ₹6,000/year to landholding farmers, helping them manage EMIs or related expenses.
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State-specific Benefits:
Each state may offer different subsidies, such as:
- Stamp duty waivers for agricultural land
- Interest subvention on prompt repayment
- Special assistance for SC/ST farmers or women
Always check with your local Krishi Vigyan Kendra or district agriculture office to explore available schemes.
Bank-wise Comparison of Agricultural Land Loans
Here’s a more detailed look at what leading banks in India offer:
State Bank of India (SBI)
- Product: Krishi Land Purchase Scheme
- Max Amount: ₹10 lakhs+
- Margin: 15–20%
- Repayment Tenure: 9–15 years
- Additional benefit: Field officers guide applicants at the branch
Punjab National Bank (PNB)
- Product: Agriculture Term Loan
- Features: Customizable depending on land size and purpose
- Benefit: Flexibility to include fencing or irrigation equipment
ICICI Bank
- Product: Rural Loan Against Property
- Type: Loan on agriculture land
- Fast processing, but higher income documentation may be needed
BOB, HDFC, Canara Bank
Also offer similar products with region-specific customizations.
State-wise Laws You Must Know
The ability to buy land or mortgage it for loans is governed by state land revenue acts. Some notable restrictions include:
Examples:
- Maharashtra: Only agriculturists can buy; non-farmers not allowed
- Karnataka: Non-farmers allowed with income < ₹25L
- UP & Bihar: Only farmers can purchase agri land
- Punjab: No major restrictions; market is open
Always verify with a local tahsildar or land revenue officer to avoid rejection.
Pro Tips for Loan Approval
Boost your chances with these practical steps:
- Keep your credit score above 650
- Choose land with irrigation or road access
- Get encumbrance certificate to ensure clean title
- Avoid applying for too many loans simultaneously
- Approach banks with experience in rural/agri financing
Expert Advice: Why Land Loans Matter
“A loan to buy agriculture land not only helps you become a landowner but also brings financial discipline and credit history, which is crucial for rural upliftment. Always plan your EMI structure around your crop income cycle.”
— Harisharan Devgan, Founder of Organic Monk LLP
FAQs – Answering Your Common Questions
Final Thoughts
Agricultural land loans provide a gateway to independence and growth for India’s rural population. Whether you’re seeking a loan to buy agriculture land or a loan on agriculture land, knowing the processes, paperwork, and pitfalls can help you take confident steps.
Investing in land is not just about owning soil — it’s about cultivating a secure future, financially and emotionally. Explore available schemes, consult with bank officials, and choose wisely.
More read: Loans for purchasing agricultural land