Dairy Farm Loans in India: Learn About Interest Rate, Eligibility and Repayments

Aug 16, 2020

Milk is a necessity in most Indian households. Moreover, dairy products, such as butter, ghee and paneer, are staples in the kitchen. Thus, it is hardly a wonder that the country houses more than 7.5 crore dairy farms, as per a Quartz report. India is also the highest producer of milk in the world.

If you are planning to cash in on this ever-increasing market with a demand for milk products, a dairy farm loan can help set up such a venture.

Listed below are some of the common purposes to avail such a loan from leading lenders.

  • To acquire funds for the purchase of mulching animals like cows.
  • For establishing a dairy farm business anew or expanding an existing venture.
  • Acquiring machinery and equipment necessary for a modern dairy farm.
  • To construct or renovate cattle sheds within such a farm.

A dairy business loan can finance other needs associated with running the business as well. Nevertheless, you must comply with your lender’s eligibility criteria to avail this credit.

Common Eligibility Criteria to Opt for a Dairy Farm Credit

Dairy farm business loan eligibility varies across different lenders. Nevertheless, you must possess a broad idea regarding some of the common requirements across banks and NBFCs.

  • Farmers who possess prior knowledge and experience regarding dairy farm activities are eligible for such loans.
  • Any group belonging to the organised or unorganised dairy farm sector in India.
  • An entrepreneur who possesses the experience and expertise to handle dairy farm activities.
  • NGOs, milk federations, self-help groups and cooperative societies.

Interest Rates Applicable on Dairy Farm Loans

The rate of interest is yet another factor for such loans that tend to differ between various financial institutions. Nevertheless, it can range between 2% and 6%. The dairy farm business loan loan repayment tenure can range between 3 years and 7 years, in most cases.

Apart from typical loans for your dairy farm, you can also seek financial assistance through the DEDS initiative. This Dairy Entrepreneurship Development Scheme is a credit-linked subsidy program to encourage the establishment of milk farms across the country. Any individual who can apply for a dairy farm loan can also look for this DEDS subsidy.

You can follow the application procedure mentioned below to apply for a DEDS subsidy on your business loan for opening a dairy farm.

  • Determine the exact dairy farm activity that your enterprise would focus on before sending your DEDS application, like selling milk, cheese production, churning butter and ghee or ‘clarified butter’, etc.
  • Prepare a business proposal or plan of action.
  • Next, register your firm or enterprise.
  • Create an excellent draft of the plan, including your business loan application as well.
  • Submit this application at any bank or NBFC that can refinance from NABARD. With loan approval, you will also receive DEDS approval on the principal sum.

While the process to avail a dairy farm loan is more or less similar with various lenders, sans the refinancing process, other simpler forms of financing are available too.

A gold loan can be exactly what you need in this circumstance. Acting as a dairy business loan, such a form of funding can ease your repayment burden via low interest charges. Additionally, you can avail this loan via a simplified procedure.

Gold Loans – A Suitable Funding Option for Your Dairy Business

Every household in India has gold as an idle asset with minimum utility. Gold jewellery and ornaments possess high sentimental value, preventing you from risking them to acquire funds. However, an easier option to acquire funding by utilising such gold jewellery is to pledge them for financing a loan.

In this way, the pledged asset remains in your name, while allowing you to avail financial assistance through it as well. Rupeek Fintech Private Limited has taken several steps to ensure a speedy approval for gold loans as well. Thus, this accelerated mode of financing can benefit dairy businesses significantly during financial shortfalls.

But, why gold loans?

Features of a Gold Loan that Make It a Suitable Funding Alternative

In most aspects, a gold loan serves suitably as a dairy farm loan. If you still have doubts regarding the same, take a look at gold loan’s bountiful benefits listed below –

  • Loan at your doorstep with fast approval

Rather than spending countless hours at the lender’s branch seeking approval, you can avail gold loans with ease from home. After applying for such a loan using Rupeek Fintech Private Limited’s mobile app or web portal, a loan manager is sent to your home. This individual weighs the gold and evaluates its purity to confirm the loan amount.

Based on the results, he/she sends a request for approval, which is provided immediately and the loan amount is disbursed to your bank account, all of which takes only 30 minutes to complete. This industry-first loan at your doorstep service from Rupeek also ensures that you do not need to carry your gold jewellery anywhere.

Instead, the lender comes to collect it from your house, thereby ensuring security. Also, the representative leaves your house along with the pledged gold only after the amount is credited.

  • Highest loan to value ratio

Gold loans offer an impressive loan to value ratio or LTV when compared to other secured funding options. It means that lenders provide a significant portion of your pledged gold’s market value as loan.

According to a Reserve Bank of India directive, financial institutions can offer up to 75% of the pledged gold’s value as your loan. This increased loan quantum can be crucial when starting a dairy farm business, with Rupeek offering the highest LTV on gold loan.

  • Minimal interest rates

Rupeek Fintech Private Limited is a preferred lending institute due to its favourable loan terms. Apart from flexibility in repayment, the lender further eases the burden of borrowers by charging extremely low rates of interest on these loans. Since gold loan tenures tend to be short – generally up to one year – decreased rates ensure that you need to pay limited interest on the advance.

  • Secure storage for the pledged gold

What if you lose your gold items while your lender handles it during the pledge term, you ask?

Well, the best lenders have a plan of action to prevent such a thing from happening. With Rupeek, it involves carrying the gold in a GPS-trackable bag and storing it in secure vaults at a partner bank’s nearest branch from your home.

An insurance policy for the pledged gold serves as supplementary protection, along with these measures. Thus, the risk of loss or theft is minimised.

Avail a dairy farm loan that does not burden your finances too much. Otherwise, it may severely restrict your business’s ability to grow and prosper. In such a scenario, thus, gold loans with their low interest, easy repayment and other favourable features serve as a typically ideal alternative to fund a dairy farm business.