Tamil Nadu to lend farmers up to Rs 5 lakh for farm businesses via cooperative banks
Representative image: rupixen / Pixabay
Tamil Nadu will lend farmers up to Rs 5 lakh each for farm-related businesses through cooperative banks, with a Rs 5,000 crore 2026-27 target, announced October 16.
What Happened
Tamil Nadu farmers who run farm-related businesses will be able to borrow up to Rs 5 lakh each from cooperative banks under a rural business loan scheme, the state's Cooperation Minister Gandhirajan announced on Friday, October 16, 2026. The state has set a target of Rs 5,000 crore in such loans for 2026-27. The loans will be given through District Central Cooperative Banks and Primary Agricultural Cooperative Credit Societies, must be repaid with interest within 36 months, and can carry a grace period of three to six months before instalments begin.
Key Facts
- Scheme: rural business loans for farmers through Tamil Nadu's cooperative banks.
- Announced by: Cooperation Minister Gandhirajan, on October 16, 2026.
- Maximum loan: Rs 5 lakh per beneficiary.
- Target: Rs 5,000 crore in loans in 2026-27.
- Repayment: within 36 months of disbursal, with interest; a grace period of three to six months can be allowed.
- Interest: 9% a year, according to one report.
- Who can borrow: farmers, including small and marginal farmers, who run agriculture-related businesses.
- Lenders: District Central Cooperative Banks and Primary Agricultural Cooperative Credit Societies.
Why It Matters
Most farm credit in India is tied to growing a crop: a crop loan is taken at sowing and repaid after harvest. But many farm families earn part of their income from businesses linked to farming, such as dairy, poultry, small processing units, selling seeds and inputs, renting out machinery or running a small shop. These activities often struggle to get affordable credit, and many families turn to private moneylenders at high interest. A dedicated loan of up to Rs 5 lakh through cooperative banks, with a grace period and three years to repay, is aimed at that gap.
The scheme also gives the state's cooperative network a bigger role. Primary Agricultural Cooperative Credit Societies are present in villages across Tamil Nadu and already handle crop loans for many farmers. Using them for business loans keeps credit close to where farmers live.
The announcement comes after a period of strain over farm credit in the state. Earlier this month, on October 3, the government reiterated that recovery of overdue crop loans from cooperative societies remains temporarily suspended and asked farmers to report societies that kept pressing them for repayment. Offering new, structured business loans alongside that relief signals that the state wants to keep credit flowing rather than freeze it.
| Feature | Detail |
|---|---|
| Maximum loan | Rs 5 lakh per beneficiary |
| Repayment period | 36 months |
| Grace period | 3 to 6 months |
| 2026-27 target | Rs 5,000 crore |
| Interest | 9% a year (one report) |
Impact
Short-term: Farmers with farm-linked businesses can approach their cooperative society or district cooperative bank for loans once the scheme is rolled out. Details of documents and eligibility will be set by the cooperation department.
Long-term: If the loans reach small and marginal farmers and are repaid on time, the scheme could help farm families earn more from activities beyond crops and depend less on moneylenders. High defaults, however, would strain the cooperative banks.
Who is affected: Small and marginal farmers in Tamil Nadu who run farm-related businesses; cooperative banks and credit societies; and rural traders, dairy and poultry units that depend on farm families.
Key Takeaway
Tamil Nadu will lend farmers up to Rs 5 lakh each for farm-related businesses through cooperative banks, with 36 months to repay and a Rs 5,000 crore target for 2026-27, Cooperation Minister Gandhirajan announced on October 16, 2026.
Questions and Answers
How much can Tamil Nadu farmers borrow under the new cooperative loan scheme?
Farmers can borrow up to Rs 5 lakh each for agriculture-related businesses through District Central Cooperative Banks and Primary Agricultural Cooperative Credit Societies, Cooperation Minister Gandhirajan announced on October 16, 2026.
What are the repayment terms?
The loan, with interest, must be repaid within 36 months of disbursal, and a grace period of three to six months can be allowed before instalments start. One report puts the interest at 9% a year.
Who is eligible?
Farmers, including small and marginal farmers, who are engaged in agriculture-related businesses. Exact eligibility rules will be set by the cooperation department.
How big is the scheme?
The state has set a target of Rs 5,000 crore in such loans for 2026-27.
Disclaimer: Prepared by the Peepals newsroom from publicly available sources with AI assistance. Information is accurate to the best of our knowledge at the time of publication and may change. Images may be representative. Not professional advice. Report an error via our contact page.
Sourced and fact-checked by the Peepals Global Editorial Team
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