Farms loans and its procedural steps
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Loans can be classified based on time as short term (6-18 months), medium term (15 months-5 years), or long term (5-20 years). They can also be classified based on purpose. Common sources of farm loans include relatives, moneylenders, traders, cooperatives, and commercial banks. For a farm loan to be sanctioned, a farmer must submit an application providing details of their farm and finances, which the bank will verify by visiting the farm and checking records. If found eligible based on character, repayment ability, and other criteria, the loan will be sanctioned upon submission of documents and disbursed in phases, with follow up visits to ensure proper use.
Farms loans and its procedural steps
- 1. Presented By :- Avinash kumar )
- 2. Loans are certain amount of money provided for certain purpose on certain condition with some interest ,which should be repaid sooner or later.
- 3. CLASSIFICATION OF LOAN Based on time a. Short term loan = 6 – 18 Months Eg- crop loans
- 4. b.Medium term loan = 15 months – 5 years Eg.- for purchasing implepents,el-motor,live stock loan etc.
- 5. c. Long term loan = 5 – 20 years Ex - construction of farm building,tractor loan etc.
- 9. SOURCES OF FARM LOANS Relatives Agricultural moneylenders Professional moneylenders Traders Cooperatives & commercial Banks.…
- 10. COMMERCIAL BANKS
- 11. HOW A FARM LOAN IS SANCTIONED ? Step – 1 Interview with the farmer The banker studies the farmer –borrower in the interview regarding his credit characteristics like- honesty - frankness -progressive thinking - repayment capacity etc
- 12. Step – 2 Submission of loan application by the farmer Farmer filled up following details in the form: - location of farm - purpose of the loan - farm budget - financial statements etc…
- 14. Step – 3 Scrutiny of records The ownership and extent of land as indicated in the relevant certificates are verified by the bank officials with village revenue officials.
- 15. Step - 4 Visit to farmers field before sanction of loan - To verify the particulars given by the farmer. - To verify the credit -worthiness . - To verify the trust-worthiness. - Take a look on technical feasibility etc..
- 16. Step-5 Criteria of loan eligibility 1.He should have sound character. 2. He should not be a defaulter in the past. 3.He must be progressive outlook. 4.He should ensure proper use of credit etc……
- 17. Step-6 Sanction of loan After examining all the aspects like -technical feasibility -economic viability -bankability of proposed projects like-repayment capacity,risk – bearing abilities etc. * After satisfying all these the loan is sanctioned.
- 18. Step-7 Submission of requisite documents Following documents are obtained by banking institution : * Demand promissory note * Guarantee letter * Mortgage deeds * Installment letter etc… Note: type of requisite documents vary with bank to bank.
- 23. Step-8 Disbursement of loan As soon as execution of documents is completed ,the loan amount is credited to the borrower account. Note :The loan amount is disbursed in phased manner.
- 24. Step-9 Post credit follow -up measures A.O/B.M pays a visit to the farmer to ascertain the proper use of the credit; Provide technical advise if any.
- 27. ENDING STROKES : Farm loans solve the finance problem of farmer Farms activities are enhanced Increase in farm production More income generate Farmers are happy All peoples are happy India is happy………