If you want to buy an agricultural land and live in a city, you cannot get a loan to buy the land. Loans for land are exclusively meant for the purchase of plots for residential purposes.
Who can get a loan?
Under the agricultural policy of India, some banks provide loans to farmers for purchasing land.
Where can you get a loan?
If the land you are purchasing is within the municipal limits, banks may give you a loan. However, if the land is agricultural and is within the municipal limits, some banks add restrictive clauses that require the purchaser to begin construction on the land within six months to a year.
Why the restriction?
Generally, it is perceived that there is ambiguity over the title of an agricultural land. Moreover, during a particular season, the crop is often grown collectively, involving two or more agricultural lands. Therefore, often there is no demarcation of the land. It becomes difficult to ascertain boundaries of the land resulting in ambiguity over the calculation of the area of the plot. There is no way out as such to get a loan for such a property and you would need to take personal debt if you want such a land.
Things to keep in mind
Use of agricultural land for non-agricultural purposes is not permitted, unless the land has been converted first as a residential land in revenue records of the local development authority. If you are able to buy an agricultural plot, you still will not be able to construct any house on it.
Often builders sell agricultural land for housing under the banner of farmland. Such fraudulent practices mostly happen in rural India, where a local builder sells land terming it as residential land to gullible buyers. A builder can sell farmland only after obtaining the necessary permission from the local authority.