Agriculture Advances :
The credit needs of cultivators fall into three broad categories:
i. Crop Loan or Short Term – mainly for financing current expenditure in connection with the raising of crops.
ii. Medium Term – for meeting outlay relating to the replacement and maintenance of assets and for capital investment designed to increase the
output from land. Such loans are generally repayable in 3 to 5 years. They are sanctioned for purposes such as deepening of wells, sinking of new
wells, installation of pump sets, purchase of agricultural machinery or a pair of bullocks, etc.
iii. Long Term – for capital investments in agriculture such as sinking of new wells, construction of tube wells, land levelling, bunding, terracing, purchase of tractors, power tillers and other costly machinery, electrical motors, purchase of land, etc. Such loans are generally repayable over a period of 5 to 15 years and in exceptional cases in 20 years.
As per the extant RBI guidelines, “long duration” crops would be crops with crop season longer than one year and crops, which are not “long
duration” crops would be treated as “short duration” crops. The crop season for each crop, which means the period up to harvesting of the crops
raised, would be as determined by the State Level Bankers’ Committee in each State depending upon the duration of crops raised by an agriculturist.