Agriculture Loan: For farmers, money is the biggest tool after soil and water. Whether it’s buying seeds, fertilizers, a tractor, or repairing irrigation systems, funds are always needed at the right time. To support them, the government and banks provide Agriculture Loans at subsidized rates. In 2025, farmers can get up to ₹3 lakh at affordable interest, but with certain conditions. Let’s understand clearly how this works.
Interest Rate on Agriculture Loan
As per the government scheme, the normal interest rate on agricultural loans is 7% per annum. But here comes the real benefit if the farmer repays on time, the government provides an interest subvention (rebate) of 2% to 3%.
- Instead of 7%, the farmer effectively pays only 4% interest per year.
- This facility is available on short-term crop loans up to ₹3 lakh.
Read more: Top 5 Banks ₹10 Lakh Gold Loan Comparison: Which One Has the Lowest EMI and Best Interest Rate?
EMI Calculation for ₹3 Lakh Loan
Let’s assume a farmer takes ₹3 lakh for 1 year under the agriculture loan scheme.
| Loan Amount | Interest Rate | Tenure | EMI (Approx) | Total Interest | Total Payment |
|---|---|---|---|---|---|
| ₹3,00,000 | 7% (without subsidy) | 12 Months | ₹26,015 | ₹12,180 | ₹3,12,180 |
| ₹3,00,000 | 4% (with subsidy) | 12 Months | ₹25,530 | ₹6,360 | ₹3,06,360 |
You can see the difference clearly. With subsidy, a farmer saves almost ₹5,800 in interest in just one year.
Conditions to Get the Loan
Banks usually provide agriculture loans to farmers with proper KYC and land records. The conditions are:
- The loan must be used for agricultural purposes like seeds, fertilizers, or machinery.
- Repayment should be done on time to get the subsidy benefit.
- In many states, Kisan Credit Card (KCC) is linked, which makes borrowing and repayment easier.
Why This Loan Matters for Farmers
For farmers, taking money from local moneylenders often means paying 24–36% interest. But through agriculture loans, the rate comes down to just 4% with government support. This directly improves income and reduces debt burden.
Conclusion
In 2025, farmers can get up to ₹3 lakh agriculture loan at 7% interest, which effectively reduces to 4% if repayment is done on time. This makes it one of the cheapest loan options available in India. With the right use, this scheme can save thousands of rupees for every farmer and help them grow their income with less financial stress.
Disclaimer
This article is only for educational and general knowledge purposes. Interest rates, subsidy rules, and eligibility conditions may differ from bank to bank and can change with government policies. Please check the latest official guidelines before applying for any loan.
