Loan against agricultural land can be beneficial as it helps in leveraging the potential of the land. This blog is particularly important as it lays down the steps involved in obtaining a loan against agricultural land, and explains in detail one of the most important aspects even before applying for a loan i.e., what are the factors that need to be fulfilled to become eligible to obtain the loan against agricultural land. Now, let’s look at the steps involved in obtaining a loan against agricultural land.
How to Get a Loan Against Agricultural Land
Steps involved in getting a loan against agricultural land include determining the eligibility criteria, ensuring all documentation required for obtaining the loan is ready, applying for the loan, determining the valuation of the agricultural land, loan approval, disbursement of the loan and repayment of the loan
Of all the steps mentioned above, determining the eligibility criteria is the most important as this criterion alone determines whether the other steps would be applicable or not.
Determining the Eligibility Criteria for a Loan Against Agricultural Land
Eligibility for loan against agricultural land includes the following:
Loan Against Agricultural Land Eligibility: Loan against agricultural land is not available for everyone. Only certain people can apply for such loans. These people include farmers, dairy owners, people involved in horticulture and owners of any orchard. This means any person involved in the activity of farming or related activity can apply for a loan against agricultural land.
Age Criteria: Normally, banks approve loans for people in the age range of 35–65 years. Some banks give loans even to people who are 18 years of age. This differs from institution to institution and is also dependent on the condition of the person, the type of land, the crop cycle etc.
Land Ownership: Before the process of loan approval starts, the banks and institutions determine the ownership of the land. If the land is owned by more than one person, the co-owner's name also becomes mandatory to apply for a loan as a co-applicant.
Title of the Land: Before applying for a loan, it is mandated by the borrower to have a clear title for the land. That is, if the borrower is pledging his agricultural land, his land should be free of any disputes, should have no lien on the land and should not have any other issues that might jeopardise the ownership of the land at the time of applying for a loan.
Residential Stability: The majority of lenders prefer giving out a loan against agricultural land if the proposed borrower is a regular resident of the country. That is, lenders consider it feasible if the borrower has been staying in the country for at least 2 years or more.
Size of the Agricultural Land: The majority of the banks give out loans based on the size of the land pledged. The lenders also prefer that the borrower has a certain minimum acre of land to his name before becoming eligible for applying for a loan.
Documentation: Before applying for a loan, it is necessary to keep documentation like ID proof, address proof, income proof, land ownership documents, land title documents, a survey report of the agricultural land and documentation determining the estimated value of the land.
Conclusion
As discussed, some crucial steps must be completed to establish eligibility for a loan against agricultural land. By fulfilling these requirements, you're on the path to securing a seamless loan process. It is also important to note that it is always advisable to contact the bank or a financial institution directly to know the exact steps or documentation needed as every bank and financial institution has their way of determining the eligibility for obtaining the said loan. Visit Tata Capital to check your eligibility to obtain a loan against agricultural land.
FAQs
Q1. What is a loan against agricultural land?
As the name suggests, it is a loan that is taken against the value of the agricultural land. This loan can be taken only by people who are farmers, orchard owners, dairy owners, etc. This kind of loan helps the borrower to grow or scale their agriculture occupation.
Q2. Who is eligible for a loan against agricultural land?
As mentioned above, this type of loan is available only for certain persons. These persons include farmers, dairy owners, people involved in horticulture and owners of any orchard.
Q3. Who should not apply for a loan against agricultural land?
This type of loan can only be availed by people who are involved in agriculture or related activities. Any businessman or a professional who is not connected to any kind agricultural activity cannot and should not apply for a loan against agricultural land.
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