Breadcrumb

iob_bank_farm_mechanization

Last Updated:07/02/2026
FARM MECHANIZATION

FARM MECHANIZATION – (For Farm Automation)

   

Objective

Financing for Farm Mechanization-Agri. Machinery, Accessories, Tools & equipment's

Nature and
Purpose of
Advance

Financing for Purchase of Farm machinery like, Tractors/ Power Tillers/ Combined Harvesters /Mini Tractors etc.

Farm implements/equipment's/tools either Tractor drawn, Power tiller drawn or independently operated for various farm operations etc.

Loan for renovation and repairs of Tractors

Quantum of Loan

Minimum- No minimum

Maximum- No minimum

Eligibility

For Tractors: 35 HP & Less - At least 4 acres of land having perennial irrigation facilities

Above 35 HP - At least 6 acres of land having perennial irrigation facilities

For Power Tillers (10-15 HP): Minimum acreage is 6 acres land with perennial irrigation source

Combine Harvesters Following custom service per combine harvester Should be available & minimum cropped area of 500 Ha (1250 acres) of Wheat &300 Ha (750 acres) of Paddy in Wheat/Paddy rotation Region or Minimum cropped area of 300 Ha (750 acres) of Paddy per harvesting season in Paddy-Paddy crop rotation Region.

Security

Up to Rs. 2.00 Lakhs:  Hypothecation of assets created out of loan. Nil Collateral

Above Rs. 2.00 Lakhs: Loan should be adequately secured by way of immovable property whose value is not less than/ equal to the loan amount.

Margin

Up to Rs. 2.00 Lakhs: Nil

Above Rs 2.00 Lakhs: 15% to 25%

Minimum 25% margin for Combine Harvester

Repayment

For Tractors, the loan should be repaid within a period of 9 years.

For Power Tiller, the loan should be repaid within a period of 7 years.

For other machinery/ equipment's, the repayment period may be fixed between 3 to 7 years.

For Combine Harvester, the loan amount should be repaid within a maximum period of 7 years in half yearly instalments coinciding with the seasons of harvest.

For Renovation/Repairs of Tractors, repayment period should not exceed five years and the repayment schedule should be fixed depending on the nature of repairs, life of machine, repayment capacity etc.

Rate of Interest

Internal rating

Benchmark

Strategic Premium

Risk Premium

Total Spread

Effective ROI*

Rating-IOB 1

1 Y MCLR

0.20%

1.10%

1.30%

10.15%

Rating-IOB 2

1 Y MCLR

0.20%

1.20%

1.40%

10.25%

Rating-IOB 3

1 Y MCLR

0.20%

1.40%

1.60%

10.45%

Rating-IOB 4

1 Y MCLR

0.20%

1.60%

1.80%

10.65%

Rating-IOB 5

1 Y MCLR

0.20%

2.00%

2.20%

11.05%

Rating-IOB 6 and above

1 Y MCLR

0.20%

2.25%

2.45%

11.30%

*1Y MCLR - 8.85% at present

Externally rated accounts:

Externally rated accounts

Benchmark

Strategic Premium

Risk Premium

Total Spread

Effective ROI*

AAA

1 Y MCLR

0.20%

0.70%

0.90%

9.70%

AA

1 Y MCLR

0.20%

0.80%

1.00%

9.85%

A

1 Y MCLR

0.20%

1.10%

1.30%

10.15%

BBB

1 Y MCLR

0.20%

1.25%

1.45%

10.30%

Processing Charges

Up to Rs. 50,000/- - Nil

Above Rs. 50,000/- up to Rs. 3 Lakhs - 0.30% of the loan amount

Above Rs. 3 Lakhs - 0.71% of the loan amount