Farmer Gold Loan
A Farmer Gold Loan is a short-term credit facility offered to farmers and rural borrowers by banks and financial institutions against pledging their gold ornaments.
It provides instant funds for agricultural and allied purposes such as buying seeds, fertilizers, machinery, irrigation, or livestock.
Types of Farmer Gold Loan
Below are the main types available for farmers across India
Short-Term Agricultural Gold Loan
Provides instant credit to farmers for meeting seasonal agricultural expenses like seed purchase, fertilizer costs, and crop maintenance.
Long-Term Agricultural Gold Loan
Offered for capital investments such as farm development, machinery purchase, or irrigation setup.
Gold Loan Under Kisan Credit Card (KCC)
Interest is charged only on the amount utilized, making it cost-effective for managing fluctuating farming expenses.
Gold Loan for Allied Agricultural Activities
Covers dairy, poultry, fisheries, sericulture, horticulture, and other non-crop farming purposes, providing flexibility for diversified agri-income generation.
Bullet Repayment Gold Loan
In this type, farmers repay the principal and interest in one lump sum at the end of the loan tenure, offering convenience during seasonal income cycles.
EMI-Based Gold Loan
Suitable for longer-tenure needs, where repayment is made through monthly or quarterly EMIs, easing the repayment burden.
Why Is Farmer Gold Loan Important?
Instant Access to Funds
Farmers get quick approval and disbursal, often within hours, to meet urgent cultivation needs.
No Credit History Required
Even farmers without prior loans or formal credit scores can avail this loan against their gold ornaments.
Lower Interest Rates
Since the loan is secured by gold, interest rates are significantly lower (around 7–10% p.a.) compared to personal or informal loans.
Flexible Repayment
Repayment schedules are customized as per crop cycles, making it farmer-friendly.
Collateral Security
Gold acts as security, so no land documents or income proof are required for most borrowers.
FAQs
What is a Farmer Gold Loan?
It is a secured agricultural loan where farmers pledge their gold ornaments or coins to access funds for farming or allied activities.
Who is eligible for a Farmer Gold Loan?
Any farmer, tenant cultivator, or rural entrepreneur engaged in agriculture or allied activities can apply.
What is the maximum loan amount I can get?
Typically ranges from 3 to 15 years, depending on the project size and income cycle.
What is the interest rate for Farmer Gold Loans?
Interest rates range from 7% to 10% per annum, with additional 3% subsidy for timely repayment under government schemes.
What documents are required?
- Aadhaar and PAN card
- Land ownership or cultivation proof (if applicable)
- Recent passport-size photograph
- KYC documents and gold valuation details