Modern agriculture depends heavily on mechanization, and tractors remain the backbone of farm productivity across India. However, purchasing a tractor involves significant capital investment, often beyond the reach of small and marginal farmers. The Kisan Tractor Loan Scheme bridges this financial gap by offering structured, low-interest loans tailored specifically for agricultural needs.
Supported by leading public and private sector banks and guided by agricultural finance policies from the Reserve Bank of India and National Bank for Agriculture and Rural Development, tractor loan schemes are designed to accelerate farm mechanization while promoting rural economic growth.
Table of Contents
What Is the Kisan Tractor Loan Scheme?
The Kisan Tractor Loan Scheme is a specialized agricultural financing product that enables farmers to purchase new or used tractors through affordable EMI-based repayment plans. The scheme supports:
• Purchase of new tractors
• Financing for second-hand tractors
• Additional farm equipment and implements
• Insurance coverage for machinery
Most agricultural loans fall under priority sector lending norms, ensuring easier approval processes and competitive interest rates.
Overview Table
| Particulars | Details |
|---|---|
| Scheme Name | Kisan Tractor Loan Scheme |
| Target Beneficiaries | Farmers & agricultural landowners |
| Loan Coverage | Up to 90% of tractor cost |
| Interest Rate | Varies (bank-dependent) |
| Repayment Tenure | 3 to 7 years |
| Collateral Requirement | Based on loan size |
Key Objectives of the Scheme
The primary goals of tractor loan schemes include:
- Promote farm mechanization
- Increase agricultural productivity
- Reduce dependency on manual labor
- Enhance rural income levels
- Strengthen agricultural infrastructure
The initiative aligns with broader rural development efforts supported by the Ministry of Agriculture and Farmers Welfare.
Eligibility Criteria
Eligibility varies slightly by lender, but common requirements include:
• Applicant must be an Indian citizen
• Must own cultivable agricultural land
• Minimum age typically 18–21 years
• Maximum age generally 60–65 years at loan maturity
• Satisfactory credit history
Tenant farmers may also qualify under certain conditions, depending on bank policies.
Loan Amount & Margin Requirements
Banks generally finance:
• Up to 85–90% of the tractor’s on-road price
• Additional funding for accessories or implements
• Insurance and registration costs included in financing
The borrower contributes the remaining margin amount, usually 10–15% of total cost.
Interest Rates and Repayment Tenure
Interest rates depend on:
• Bank or financial institution
• Applicant’s credit profile
• Loan amount
• State-level agricultural policies
Typical features include:
• Competitive agricultural interest rates
• Flexible EMI structures aligned with crop cycles
• Repayment tenure between 3 to 7 years
• Seasonal repayment options
Subsidized interest rates may apply under certain state-sponsored programs.
Documents Required
Applicants generally need:
• Aadhaar Card
• PAN Card
• Land ownership documents
• Income proof (if available)
• Bank account statements
• Passport-size photographs
• Quotation for tractor purchase
Some lenders may require guarantors for higher loan amounts.
Application Process
Step 1: Choose a Bank or Financial Institution
Major banks such as State Bank of India, Punjab National Bank, and regional rural banks offer tractor financing options.
Step 2: Submit Application Form
Provide personal, financial, and agricultural land details.
Step 3: Document Verification
Bank officials verify land records and repayment capacity.
Step 4: Loan Sanction
Upon approval, the loan amount is disbursed directly to the tractor dealer.
Step 5: EMI Repayment
Borrowers repay through structured EMIs or seasonal installments.
Government Subsidy Support
In some states, tractor loans may be combined with agricultural subsidy programs that reduce the effective cost. Subsidy availability depends on:
• State agricultural department guidelines
• Farmer category (SC/ST, small & marginal farmers)
• Availability of budget allocations
Farmers should verify subsidy details through their local agriculture office.
Economic Impact on Farmers
Access to tractor financing offers several long-term benefits:
• Faster ploughing and sowing
• Reduced labor costs
• Higher cropping intensity
• Improved harvest efficiency
• Increased overall farm income
Mechanization can significantly enhance yield per acre, leading to better profitability and repayment capacity.
Additional Benefits
Many tractor loan packages include:
• Comprehensive tractor insurance
• Accidental coverage
• Flexible foreclosure options
• Balance transfer facilities
• Tax benefits under agricultural income rules
Some banks also provide bundled Kisan Credit Card facilities.
FAQs
What percentage of tractor cost can banks finance?
Banks typically finance up to 85–90% of the tractor’s total cost.
Is collateral required for tractor loans?
Collateral requirements depend on loan size and bank policies.
Can small farmers apply for tractor loans?
Yes, small and marginal farmers are eligible subject to land ownership and credit criteria.
Final Thoughts
The Kisan Tractor Loan Scheme plays a vital role in strengthening India’s agricultural backbone. By making tractors financially accessible, the scheme empowers farmers to enhance productivity, reduce operational costs, and increase long-term profitability.
As rural modernization continues to accelerate, structured agricultural financing solutions like tractor loans will remain central to India’s sustainable farming future and economic resilience.
