HOW TO APPLY FOR BANK LOAN TO START LIVESTOCK OR ANIMAL HUSBANDRY BUSSINESS IN INDIA
Even decades after independence, India predominately is an agrarian economy. For many people, the term agriculture means only working on the field and growing crops. This is a limited meaning of the term agriculture. In reality, the term agriculture includes many other streams and segments.
Loan for Animal Husbandry
India has always put emphasis on farm livestock resources, with agriculture aptly complemented with animal husbandry practices. There are several schemes from various public and private sector companies that deal with animal husbandry and Agriculture Loans. These loans are primarily aimed at the rural populace so as to enable them to adopt animal husbandry practices without worrying about the finances involved.
Animal husbandry loans are generally offered for purchase or creation of assets and infrastructure related to poultry, sericulture, piggery, dairy development, fisheries development and apiculture etc. The loans are usually secured against mortgage of land, hypothecation of acquired assets or third party guarantee.
A key segment of agriculture is animal husbandry. Animal husbandry refers to the raising and selective breeding of livestock. The farmer, in this case, the person taking care of the animals uses the farm animals for the supply of milk, meat, eggs, wool, hides.
There are a number of farmers in India associated with animal husbandry. These farmers like many others in India suffer from many hardships and a constant need for funds to maintain their occupation. In order to support these farmers and to ensure that they get timely access to funds, the Government has initiated many welfare schemes. Apart from these schemes, there are many lenders that provide specific loans for animal husbandry.
What is the eligibility for an animal husbandry loan?
Animal husbandry loans are part of the agricultural loans and schemes provided by the lenders and the Government of India. These loans are a popular loan segment under this category and have been used by many farmers across the country to ensure a steady profession.
Every lender has its own unique set of eligibility guidelines that are to be met by the applicants to be eligible for animal husbandry loans. Some of the common eligibility criteria for animal husbandry loans are mentioned below.
Eligible applicants
The eligible applicants are any of the following entities,
- Farmers
- Dairy/ poultry farmers
- Individual or joint borrowers (including tenant farmers)
- Joint Liability Groups (JLG)
- Self Help Groups (SHG)
- Private companies
- MSME
- Farmer Producer Organizations
- Section 8 companies
Eligible occupations
The eligible occupations for animal husbandry loans are rearing dairy animals, meat processing, or animal feed plans.
What are the common features of animal husbandry loans?
The animal husbandry loans are provided to give financial help to the farmers in their occupation. The features of the loans provided by the lenders are different based on their guidelines. Some of the common features of these loans are provided hereunder.
| Category | Details |
| Quantum of loan | The loan amount given by lenders depends on the credit profile of the applicant and the guidelines of the lender. Usually, the loan amount ranges from 75% to 100% of the cost of asset or project cost. |
| Tenure of loan | Animal husbandry loans are long term loans with an average tenure of 7 years to 10 years. These loans can be repaid in easy and flexible EMIs as per the arrangement between the lender and the borrower. |
| Rate of Interest | The rate of interest is another important factor to be reviewed by the applicants. The rate of interest is usually between 7%to 12% per annum. The rate of interest is dependent on the amount of loan, credit profile of the applicant and the lender’s cost of lending. |
| Processing Fees | Processing charges are the nominal charges that are levied by the lender in relation to the sanction of the loan. The maximum processing charges are usually up to 5% of the loan amount approximately. These charges are based on the amount of loan and are subject to minimum and maximum charges as per the bank’s guidelines. |
| Part-payment and Foreclosure of loan | Lenders allow the borrowers to prepay or partly pay the loan based on certain restrictions like completion of minimum EMIs. These part payments and the foreclosure are subject to certain penalties ranging from 2% to 5% of the outstanding loan amount or the amount prepaid depending on the bank’s guidelines. |
What are the documents required for the animal husbandry loan?
The lenders require the applicants to meet all the eligibility parameters set by them as well as submit the relevant documents that support their eligibility.
The usual set of documents required by lenders is the KYC documents. Some of such documents are mentioned below.
Identity proof
The applicant can submit any of the following documents as identity proof
- Aadhar card
- voter’s card,
- ration card,
- PAN Card, etc.
Address proof
Following documents can be used as address proof.
- Aadhaar card
- Ration card
- utility bills
- bank statements
- Sales Tax Certificate
- Trade License
- Rent agreement or house deed, etc.
Age proof
Applicants can submit any of the following documents as age proof
- Passport
- PAN card
- Aadhar card, etc.
Income Proof
Income proof is required to check the repayment capacity of the borrower and to safeguard the interest of the lender. Borrowers can provide any of the following documents as part of income proof
- ITR for the past 2 years
- Bank statements
Quotation for the cost of the project for the asset
FAQs – Animal Husbandry Loan
- Where can a person get an animal husbandry loan?
- Animal Husbandry loans can be available from any private or public sector bank.
- What are some of the schemes launched by the Government for animal husbandry?
- The State Government and Central Government of the country has launched several schemes to help the farmers and eligible applicants get the required financial and other forms of assistance for their occupation. Some of the popular schemes launched by central or state governments are mentioned below.
- Rashtriya Gokul Mission
- National Kamdhenu Breeding Centre
- Special Package for Idukki District of Kerala
- Centrally Sponsored Scheme Livestock Health Disease Control During 2013-14
- Dairy Entrepreneurship Development Scheme
- Livestock Insurance Scheme
- Farmers Training Programme
- Fodder Development Scheme
- Kendriya Bhed Palak Bima Yojane
- Milk Incentives to Milk Producers
- Can a person prepay the animal husbandry loan?
- Yes, the loan taken for animal husbandry can be prepaid like any other loan provided such provision is available as per the4 guidelines of the lender. The borrower will have to pay a nominal penalty for such prepayment.
- Is the loan moratorium facility applicable to animal husbandry loans?
- Yes. Borrowers can avail of the facility of loan moratorium for a maximum period of 2 years (subject to lender’s guidelines) provided it is approved by the respective lenders.
- Can animal husbandry loans be applied online?
- Yes. Eligible applicants can apply for the animal husbandry loan online (by visiting the website of the lender) as well as offline (by visiting the nearest branch office of the lender) as per their convenience.
- Does the applicant need to provide any security or collateral for an animal husbandry loan?
- Yes, some lenders require the applicants to provide security or collateral for the animal husbandry loans. The primary security for these loans is the assets created out of the loan as well as the mortgage of land if required by the lender.
- How can the animal husbandry loan be repaid?
- The animal husbandry loans can be repaid through
- Post-dated cheques
- Standing instructions to the bank
- Automated payment through ECS
- Internet banking
- Mobile banking
Procedure to avail benefits
| DAIRY DIVISION (APPLICATION FOR INTEREST SUBVENTION ) | |||
| • The eligible Participating Agency shall submit application to NDDB in a prescribed format for availing interest subvention within 45 days from the date of sanction. | • In case of loans sanctioned prior to date of launch of the scheme, un-repaid part from 1st April 2020 will be eligible for interest subvention. | • The Participating Agency shall submit sanction letter issued by the Bank/Financing Institution and copy of loan agreement along with the application. | • NDDB, after verifying from the concerned Bank/FI, will approve the proposal for interest subvention. |
| DAIRY DIVISION (RELEASE OF INTEREST SUBVENTION) | ||
| • For claiming interest subvention, the PA shall submit “Request for release of interest subvention” to NDDB every month in a prescribed format, enclosing the Interest Certificate from the Bank/ Financing Institution, relevant Bank Statement and Stock Statement of the conserved commodities. | • The outstanding loan will be reconciled by the Bank/Financing Institution with the stock of eligible conserved commodities available with the Participating Agency. | • NDDB shall release interest subvention on back ended basis every month to the Financing Institution for onward transfer to the working capital loan account of the Participating Agency. |
| DAIRY PROCESSING AND INFRASTRUCTURE DEVELOPMENT FUND (DIDF) | |||||
| • Borrower to consult NDDB/NCD. | • Appraisal of project by NDDB/NCDC | • Sanctioning of project by SPSRC/PSC/NABARD | • NABARD raises funds from the market , which it lends to NDDB/NCDC | • NDDB/NCDC, in turn, lends it to the Eligible end Borrower at appropriate interest rate. | • DAHD provides interest subvention to NABARD. |
| NATIONAL LIVESTOCK MISSION |
| An applicant need to apply to the Banks for loan on the projects as mentioned in the scheme guidelines. The bank will process their application and sanction the loan amount. After Sanction the loan amount bank will claim 25% back ended subsidy from the NABARD through online portals. The Department is providing the budget amount to the NABARD with regard to the subsidy. |
https://www.indianbank.in/departments/ind-pashudhan-mitra-the-animal-husbandry-infrastructure-development-fund-ahidf/#!:~:text=Target%20Group%3A,In%20Home%20Page
Major Banks offering Animal Husbandry and related Loans
Punjab National Bank, State Bank of India, Bank of Baroda, Federal Bank, HDFC Bank and several other banks offer animal husbandry and agriculture loans.
Features of Animal Husbandry Loan
- Loans are available for up to 100% of cost of asset or project cost.
- Typically longer repayment tenures.
- Minimal paperwork and quick loan processing.
- Flexible repayment options that include cheques, ECS, internet banking, standing instructions and automated loan recovery, among others.
- Loans are generally disbursed at low interest rates.
Documents required for Animal Husbandry Loan
There are minimal documentation requirements for applying for an animal husbandry loan.
- One identity proof among PAN card, passport, driving license, voters ID.
- One address proof among passport, lease agreement, sales tax certificate, electricity or telephone bill, ration card etc.
- Quotation for the acquiring assets may be asked for by the lender.
Types of Animal Husbandry techniques covered under loans
These loans can be used for a variety of purposes such as dairy development programmes, milk production activities such as buying and maintenance of milch animals, rearing of female calves, cattle breeding through artificial insemination, milk house constructions, milk processing facility financing, pasture development financing and lots more in the dairy side of financing.
The loans also cover other avenues of animal husbandry such as fishery, piggery, poultry, apiculture, sericulture and many other techniques.
Choosing an Animal Husbandry Loan
Each bank has its own criteria for offering animal husbandry loans and you are advised to contact banks individually to know what their loan product actually covers. Most of the public sector banks are involved in some form of agriculture and agriculture allied loans, so you should look at your requirements and make a choice accordingly. There are also some subsidies available from the government for people of backward categories to acquire assets related to animal husbandry. As such, you should also enquire about the related benefits of an animal husbandry scheme while applying for a loan.
Agricultural Loans in India
Agriculture is the backbone of Indian economy and it definitely comes as no surprise to see financial institutions offer monetary aid to farmers all across the country. Agricultural loans are available for different kinds of farming-related activities.
Types of Agricultural Loans in India
One can avail a loan for the following activities related to agriculture:
- Running day to day operations
- Buying farm machinery such as tractors, harvesters, et cetera
- Purchasing land
- Storage purposes
- Product marketing loans
- Expansion
Moreover, these financial aids can be offered in form of grants and subsidies too, which are usually meant to protect the farmer in an event of crop damage or loss of crops.
Agricultural loans in India are not only offered to farmers working towards the cultivation of food crops, but they are available to anyone who is engaged in other agriculture-related sectors like horticulture, aquaculture, animal husbandry, silk farming, apiculture and floriculture.
National Bank for Agriculture and Rural Development (NABARD)
In India, all premier banking and financial organisations, at all levels, offer a great deal of financial help to farmers. However, this trend of boosting the rural economy and agriculture through financial credit was started by the National Bank for Agriculture and Rural Development (NABARD) back in the early 1980s. When it comes to credit in the field of agriculture, all other banks throughout the country fall under the purview of the NABARD.
This financial institution is working in conjunction with the Government of India to boost agriculture sector. It is credited with several innovative schemes that have immensely aided the farmers throughout the country. The most notable scheme launched by the NABARD is the Kisan Credit Card (KCC).
Kisan Credit Card Scheme
The Kisan Credit Card is a scheme launched by the Indian banks back in 1998, as a way to fulfill the financial necessities of the agricultural sector. This is done by giving monetary support to farmers, which in turn comes with various features and benefits. The quantum of the loan depends on several factors like cost of cultivation, farm maintenance cost, et cetera.
This has been particularly beneficial for those farmers who are not aware of the banking practices. Moreover, it is meant to protect farmers from harsh and informal creditors, which may land them in a massive debt.
The farmers can use the KCC card to withdraw funds for the purpose of crop production and domestic requirements.
Applying for the Kisan Credit Card is a simple, hassle-free process that requires minimal documentation. It also offers crop insurance coverage, along with subsidies on interest payments. Speaking of interest, farmers applying for loans under the KCC scheme can borrow funds at 7 percent per annum, for amounts up to Rs. 3 lakh.
The Kisan Credit Card is linked to the farmer’s savings account and all the transactions are done under a single account. Additionally, any credit balance in the KCC account earns interest. All farmers can apply for a KCC and if you are looking to apply for one, then visit your nearest bank for more information.
Other Similar Types of Agricultural Loan Schemes
The NABARD has also helped greatly in developing a couple of other schemes, targeting specific sectors. A few of them are listed below:
- Dairy Entrepreneurship Development Scheme:This scheme is meant to promote the dairy sector, specifically by setting up modernized dairy farms, promoting calf rearing, provide infrastructure, upgrading logistical operations to improve the product on a commercial scale, and generate self-employment.
- Rural Godowns:The main objective of this scheme is to help farmers throughout the country by providing them with godowns. This will, in turn, improve their holding capacity drastically and as a result, they will be able to sell their produce at fair rates, rather than selling them under distress. In addition to this, with a nationalised warehouse system in place, the marketing of agricultural produce becomes simpler.
- Loan Against Warehouse Receipts: Warehouse receipt financing serves as a foolproof way to prevent distress sales. When a farmer needs funds, post-harvest, all he has to do is store his produce in a Warehousing Development and Regulatory Authority (WDRA) accredited warehouse, which in turn issues him a receipt. This warehouse receipt mentions important details like quality and quantity of the produce, and can be used to get credit from banks, up to 70 percent of the collateral value.
- Solar Schemes: These schemes were implemented in order to reduce dependence on grid power by promoting the use of solar equipment. The idea here is to replace diesel pumps with solar ones, considering that they have low operating costs and are environment-friendly.
The official website of NABARD can be visited for more details on these schemes, along with the information on how to apply for them. Since many of these are subsidy based schemes, your bank will adjust your loan repayments against the corresponding subsidy you are entitled to, through the funds released by NABARD.
Leading Banks that offer Agricultural Loans in India
Coming to the public-sector banks in India, there are several leading financial institutions who are known for their exceptional credit services in agriculture-related sectors. Some of these banks are mentioned below.
State Bank of India Agricultural Loans
State Bank of India is a leader in financing projects in the agriculture sector. They have helped millions of farmer across the country through their 16,000 plus branches. They offer a variety of products like Kisan Credit Card, gold loan for crop production and multi-purpose gold loan for agriculture activities.
SBI also offers agriculture loans for mechanisation of farms. The funds from these loans can be used to purchase combine harvesters, tractors and install drip irrigation. Moreover, loans for activities related to dairy, poultry or fisheries can also be availed. Credit can be taken against warehouse receipts.
The bank also offers Debt Swapping Scheme, wherein financial aid is offered to farmers to help them clear their dues that have been produced by taking loans from non-institutional lenders like loan sharks, money lenders, et cetera. The main goal of this scheme is to help farmers become debt free and clear their loans coupled with atrocious interest rates.
Lastly, one can look to SBI for financial help if they are looking to boost their agricultural marketing, establish agribusiness and agri clinic centres or purchase land.
State Bank of India offers these loans and services through their parent branches, as well as their seven associate subsidiaries – State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, State Bank of Travancore, State Bank of Indore and State Bank of Saurashtra.
If you are looking to avail any of these agricultural loans offered by the State Bank of India, then all you have to do is visit your nearest SBI branch for more details and application.
HDFC Bank Agricultural Loans
The HDFC Bank offers a variety of agriculture loans for farmers and agriculturists. The purpose of these loans varies across a broad spectrum, starting from installation of orchards and plantations to promotion of commercial horticulture and production of field crops. Furthermore, the HDFC bank also offers warehouse receipt financing to all farmers and small traders.
Allahabad Bank Agricultural Loans
Allahabad Bank is another nationalised bank in India which offers the Kisan Credit Card under its Akshay Krishi scheme. Needless to mention, the features of the plan are the same as that of the KCC scheme. All farmers, tenant farmers, and cultivator owners, et cetera.
In fact, Allahabad Bank has gone the extra mile to come up with its own version of Kisan Credit Card. This one is known as the Allahabad Bank Potato Growers Credit Card Scheme and its main objective is to provide sufficient financial support in a timely manner to farmers, to help them meet their cultivation requirements.
Just like the State Bank of India, Allahabad Bank offers other services like warehouse receipt financing, debt swapping scheme, construction of rural godown, et cetera.
Bank of Baroda Agricultural Loans
Bank of Baroda is another leading name people look to when it comes to availing loans for agricultural purposes. They have various schemes, covering almost all the sectors in agriculture.
For instance, one can take loans to purchase tractors and heavy machinery needed for day to day operations. Moreover, Bank of Baroda also offers working capital and funds required for either setting up units, or running units occupied with dairy, pig farms, poultry, sericulture, rearing of sheep and goat, et cetera.
Farmers can also look to the bank if they are in need of a four-wheeler to help them manage their farm activities better. Bank of Baroda offers four-wheeler loans with a maximum quantum of Rs. 15 lakh.
Punjab National Bank Agricultural Loans
Punjab National Bank has myriad financial products related to agriculture. For example, one can avail loans from the PNB to establish biogas units, develop wastelands, set-up minor irrigation apparatus, et cetera. In addition to this, people who are interested in pursuing the field of apiculture (beekeeping) can approach Punjab National Bank for financial support.
The bank also offers warehouse receipt financing, along with insurance coverage and financial support to farmers in the event of crop failure, owing to natural disasters, diseases, and pests. This scheme is known as Pradhan Mantri Fasal Bima Yojana. All of this is in addition to the regular financial services offered to farmers like Kisan Credit Card, debt swapping, et cetera.
Axis Bank Agricultural Loans
Axis Bank has done well to earn a splendid reputation in the world of agricultural finance. Over the years, they have greatly helped farmers through their diversified financial products such as gold loans, Kisan Credit Card, tractor loans, warehouse receipt financing, loans for developing rural godowns and many more.
Axis Bank also offers a product known as Contract Farming, wherein loan agreements are made between farmers and corporates. The amount is provided by the lender instantly for production and supply of the produce, and all of it is governed by the Fair Practices Lending Code.
Before taking any kind of loan, it is recommended that you research carefully and figure out the type of loan works best for you. Since a huge variety of agricultural loans are offered, finding the one that fits suits your purpose is absolutely crucial.
GUIDELINES OF GOVT. FOR AGRICULTURE/ANIMAL HUSBANDRY INFRASTRUCTURE DEVELOPMENT FUND:
