How tractor financing helping farmers grow in India
Tractors are not solely valuable to farmers; they also serve as essential tools for various businesses involved in agriculture
Tractors are key components of farming. PTI
Agriculture has long been the backbone of India’s economy, providing a livelihood to around 151 million people. Farm equipment, especially tractors, is often hailed as one of the indispensable tools within agriculture. It equips farmers to carry out day-to-day farming tasks like plowing, tilling, sowing, and harrowing with much ease, thereby improving agricultural output. However, not all farmers possess the financial capability to purchase tractors outright. Thankfully, banks and financial institutions understand this.
More banks and financial institutions nowadays offer a range of transformative financial solutions like tractor loans with custom-made EMI options. Interestingly, they have also initiated tie-ups with last-mile banking platforms to make sure these financial solutions reach geographies that are beyond their reach. This, in turn, has been gradually equipping farmers residing in different villages across India.
Having said that, some Indian farmers are unaware of the benefits of tractor loans. Let’s look at the power and multi-fold benefits of tractor financing:
Simple processing and purchase:
Tractor loans are secured debts, with the tractor itself serving as collateral. This security-centric arrangement streamlines the processing and disbursement of tractor loans, ensuring that farmers can swiftly acquire the necessary machinery. By simplifying the loan application and approval process, financial institutions and non-banking financial companies (NBFCs) make it easier for farmers to access funds and purchase tractors.
Online Transactions:
In today’s digital age, banks are embracing technology to offer convenience to farmers with online tractor financing. Borrowers can apply for loans online, saving them time and effort. While physical verification may still be required for documentation purposes, communication between the lender and the borrower can be efficiently conducted via phone or email. This digitalization of loan processes enhances accessibility and expedites the loan disbursal process.
Lower interest rates:
Tractor loans typically come with low-interest rates since they fall under the umbrella of priority sector loans. Given their direct link to the agricultural sector, it is only natural that the interest rates for tractor loans are lower than those for car loans. The favorable interest rate makes financing a tractor a more affordable and viable option for farmers, allowing them to optimize their agricultural practices without incurring excessive financial burdens.
Simple documentation:
Tractor loans, being priority sector loans and secured in nature, have a simple documentation process. Usually, applicants are required to give standard identification, address, and income proof to establish their eligibility. The simplified documentation requirements enable farmers to navigate the loan application process with ease, reducing bureaucratic hurdles and ensuring swift access to funds.
Conclusion
Tractors are not solely valuable to farmers, they also serve as essential tools for various businesses involved in agriculture. Recognizing this, tractor financing is not limited to farmers alone. Business owners fulfilling commercial needs within the agricultural sector can also avail of these loans. The government has issued eligibility criteria for farmers and business people, and financial institutions and NBFCs offer distinct interest rates and incentives for each group. Therefore, farmers and businesses must assess various loans offered by different lenders before finalizing one. The agricultural sector in India will continue to benefit from tractor finance, which is expected to reach $24 billion by 2025.
The author is Head – Sales and Distribution, SahiBnk, Powered by Manipal Business Solutions. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views.
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