RBI's ₹2L Farm Loan Rule: Is Your Collateral Back?

RBI now requires banks to give agricultural loans up to ₹2 lakh without asking for any collateral. If you or your family pledged gold for such a loan, that pledge cannot be treated as a rule violation — but you have the right to a collateral-free loan.

Here's what happened: RBI has directed banks to waive collateral requirements on all agricultural loans up to ₹2 lakh per borrower, making such loans accessible without pledging assets.. If a farmer voluntarily offers gold or silver as security for a loan within this ₹2 lakh limit, banks cannot treat that as a violation of the collateral-free lending rule.. This move builds on India's existing priority sector lending norms, strengthening protections for small and marginal farmers who often face pressure to pledge assets unnecessarily..

What you should do: Check if your existing agricultural loan under ₹2 lakh has any collateral attached — approach your bank branch and request removal if you were not informed of the collateral-free entitlement.. Ask your bank for a written loan sanction letter clearly stating the collateral-free status, so you have proof if any dispute arises later.. Compare Kisan Credit Card (KCC) offers from SBI, Bank of Baroda, and cooperative banks — KCC loans up to ₹2 lakh now fall under this collateral-free protection..

Banks cannot legally demand collateral for agri loans under ₹2 lakh — if yours did, file a complaint at RBI's online portal sachet.rbi.org.in within 30 days.