Agri loans: What banks are doing to make credit easier for farmers

Access to affordable credit remains central to improving farmers' incomes. At the India Today Kisan Tak Conclave 2026, representatives from NABARD, SBI and the agricultural warehousing sector discussed how banks and financial institutions are working to make agricultural loans easier to obtain, reduce borrowing costs and support investment in farms.Prakash Kumar Mishra, Deputy General Manager at NABARD, highlighted the role of the Kisan Credit Card (KCC) scheme in making loans more affordable. Under the arrangement he outlined, farmers can access KCC loans at an interest rate of 7%. Those who repay their loans on time receive a 3% incentive from the government, bringing the effective interest rate down to 4%.Mishra also spoke about the Joint Liability Group (JLG) model, which helps farmers who may not have collateral to offer when applying for loans. Through this model, farmers can access credit by forming groups and taking joint responsibility for repayment.NABARD also provides funds to smaller banks that may not have sufficient resources to lend to farmers. Mishra said strengthening these institutions is important to ensure agricultural credit reaches more people, particularly in rural areas. SBI'S FOCUS ON FARM INVESTMENTVikram Jha, Deputy General Manager, AgriBusiness, State Bank of India, outlined the range of credit facilities available to farmers. These include Kisan Credit Card loans as well as investment credit for farm mechanisation and other agricultural requirements.Jha also pointed to loans for food processing under the Pradhan Mantri Formalisation of Micro Food Processing Enterprises (PMFME) scheme, along with financing that helps farmers store their produce for longer and sell it when they can get a reasonable price. Banks are also supporting agricultural infrastructure through investment credit and the Agriculture Infrastructure Fund. However, Jha flagged the need to simplify banking procedures. Repeated KYC requirements and paperwork can make the borrowing process difficult for farmers. He also stressed the importance of improving digital literacy, as many farmers remain wary of online fraud and scams.USING STORED CROPS TO ACCESS CREDITAtul Chhura of Star Agri Warehousing and Collateral Management spoke about another route through which farmers can raise funds: loans against stored agricultural produce.Farmers can deposit their produce in a warehouse and use the warehouse receipt as collateral to secure a loan. According to Chhura, banks can lend up to 80% of the value of the stored commodity. With the process digitised, including farmer KYC, loan account opening and disbursal, the loan can be processed within 24 hours.However, the facility is used more by traders and processors than by farmers, pointing to a gap in awareness and adoption.The discussions highlighted that making agricultural credit accessible is not just about offering loan schemes. Smaller banks need adequate funding, farmers need simpler procedures, and more awareness is needed about financing options that can help them avoid distress sales and invest in their farms.- Ends