Agriculture Advances. Quick Success Series. 1 Quick Success Series Remittance & Collection. KUMAR UMESHWAR SINGH Director, SBILD Deoghar

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1 1 Quick Success Series Remittance & Collection Quick Success Series Agriculture Advances QUICK SUCCESS SERIES, an initiative of SBILD Deoghar to facilitate the preparation of promotion seeking personnel of our Bank, appears to have succeeded in its objective to a large extent, as the readers are still approaching us for its revision/updation despite availability of plenty of other study materials. We would not have been able to sustain this unique effort of ours, without the active support and continuous encouragement of our CGM&Head(STU) Shree P.C.Kandpal and his team and Circle CDO,Shree Paresh Chandra Barik. We are deeply indebted to him for his co-operation and guidance. Sri Kumar Priyank, Chief Manager (Training), Vineet Kumar Das, Chief Manager (Training), Smt. Sarita Gupta, Chief Manager (Training), Sanjay Kumar Chief Manager (Training),Jitendra Kumar Arun Chief Manager (Training) and S.K.Sharma, Manager (Training) at this SBILD have owned up this project and have taken pains to keep it relevant to the users by updating & improving it at half yearly interval. Though every care has been taken while updating the contents, we request our readers to point out any lapses at the earliest. Needless to mention this book is not a substitute of circular instructions issued by the Bank from time to time. For detailed guidelines please refer to Bank s latest circulars. Soft copy of this edition is available on our ftp:// in QSS 2019 folder and on SBI TIMES>PATNA CIRCLE>SBILD Deoghar site. Team SBLC Deoghar is humbled by the response and recognition, it is receiving from the readers within and beyond the circle. We wish the readers grand success in their endeavours. KUMAR UMESHWAR SINGH Director, SBILD Deoghar director.sbilddeoghar@sbi.co.in Compiled and updated By J. K. ARUN C.M. (Training), SBILD Deoghar Mobile jitendra.arun@sbi.co.in [Type text] 1 Updated as on

2 As per RBI guidelines, banks have to achieve the target of priority sector lending at 40% of their Adjusted Net Bank Credit (ANBC) per cent of ANBC should go towards agriculture lending. -Within the 18 percent target for Agriculture, a target of 8 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher is prescribed for Small and Marginal Farmers and indirect lending in excess of 4.5% of ANBC will not be reckoned for computing performance under 18 per cent target. AGRI BUSINESS: RBI GUIDELINES-PRIORITY SECTOR LENDING UPWARD REVISION IN LIMITS OF PML TO RS 50 LACS AND AGRI INPUT DEALER LOANS TO RS 5 CR (e-cir ) Limits sanctioned to dealers/sellers of fertilizers, pesticides, seeds, cattle feed, poultry feed, agricultural implements and other inputs, up to Rs 1 cr were earlier classified under indirect agri advances. This limit has now been raised to Rs 5 cr per borrower. Ground Water Availability: a) White Blocks- exploitation of ground water is less than 70% of the available water. b) Grey Blocks - 70% to 90% of the available water has already been exploited. c) Dark Blocks More than 90% of the available water is already over-exploited. Spacing norms for wells : a) Between two dug wells 180 meters b) Between two dug wells with pump sets 180 meters c) Between two bore wells with pump sets 250 meters d) Between a dug well and a bore well 215 meters Tractor Loan - The tractor should have 600 hrs of productive work in agriculture. -The Central Farm Machinery Training and Testing Institute (CFMTTI), Budni, M.P., Farm Machinery Training and Testing Institute ( FMTTI), Hisar (Haryana) issues test certificate for various makes of the tractor. - The maximum repayment period is 5 yrs and the usual life of a tractor is 10,000 hrs. The service charges payable to tractor dealers are paid by debit to interest account. Service Area Approach had been recommended by the Ojha committee in Now it is applicable to Government sponsored schemes only. The operational area of the branches for financing under schemes other than GSS, should bei) ADBs/DBDs Within a radius of 50 km. ii) Other branches- within a radius of 20 km. The Branches have to submit LBR (Lead Bank Return) LBR 1- Annual statement showing annual target under the plan LBR 2- Month wise disbursement under the credit plan LBR 3- Half yearly recoveries and outstanding loans LBR U1/U2/U3 are submitted by branches located in urban areas SELF HELP GROUPs: Recommended by Kalia Committee. -A voluntary association of persons with common interest to improve their economic and social status. -Finance up to a max of 4 times the savings of SHG.( The branches may consider higher quantum of loans beyond four times of Group s corpus to SHGs availing repeat loans / renewals (up to Rs /- per SHG member), considering the quality, credit absorption capacity, managerial ability, etc of SHGs as reflected in its rating score.) (ecir- 353 dt 12/07/2012) -The minimum number of members in an SHG may be reduced to 5 in case of difficult areas, disabled persons and minor irrigation schemes. - The finance to Self help Groups is classified as direct agriculture advances as long as bank is able to maintain such segregated data on SHG/ microfinance portfolio. In other cases, finance to SHG is classified under indirect finance to agriculture. - The advances made to NGOs for on-lending to Self Help Groups where all members are undertaking SME activities or majority, say, 90% members are taking up SME activities are to be under SME segment. 2

3 An amount of Rs. 750 per SHG can be given if the NGO is registered and in existence for 3 years for their efforts in formation of SHGs. 50% on formation and opening of S/B A/C, remaining 50% after 3 months from the date of credit linkage. The concept of weaker sections was evolved by Ghosh Committee. Small farmer- Land holding up to 2 hectare( 5 acres ) Marginal farmer- Land holding up to 1 hectare (2.5 acre). Agricultural labourer- Land holding up to 0.5 acre of land or having a home-stead; should have income of more than 50% by way of agricultural wages. DOCUMENTATION AB-1: Hypothecation Agreement (Invariably for Rs 1 lac and above) (e-cir ) AB-1 (Simplified): Hypothecation Agreement AB-2: Guarantee Deed AB-3: Mortgage Deed AB-4: Revival letter (Borrower) AB-5: Revival letter (guarantor) AB-6: Notice to borrower if loan is not paid on due date. AB-7: Conversion of crop loan into term loan on account of crop failure. It is obtained as an unstamped document signed by both borrower and guarantor. Simplified and uniform documents are obtained now as recommended by RV Gupta Committee (1999). GREEN CHANNEL PROGRAMME FOR EXCELLENCE (GCPE) This is a special initiative introduced by the Bank in the area of Agri Business during the year to recognize, motivate and reward, every financial year, those officers who have excelled in Agri Business. AGRICULTURAL TERM LOAN: OBTENTION OF POST DATED CHEQUES (PDCs) Post-dated cheques should be obtained for Agricultural Term Loans and Government Sponsored Schemes loan sanctioned beyond Rs lacs under Agricultural Term Loans. Atleast 20 cheques or cheques covering the full / remaining repayment period, whichever is less or as per schemes should be obtained at the time of sanction of loan. Important Culture: 1)Aquaculture- Shrimp/Prawn farming 2)Apriculture- Mushroom cultivation 3)Apiculture- Bee keeping 4)Floriculture- Flower production 5)Horticulture- vegetable,fruits,flowers 6)Olericulture- Vegetable production 7)Moriculture- Mulberry cultivation 8)Pisciculture- Fish farming 9)Sylviculture- Forest tree cultivation 10)Vermiculture- Rearing of Earthworm 11)Sericulture- Silk Production 12)Tissue Culture- Plant propagation Revolutions: 1)Blue- Fish production 2)Green- Food production 3)Red- Meat production 4)Yellow- Oil seeds production 5)Black- Rubber production 6)Brown- Cocoa production 7)Rainbow- Flower production 8)White- Milk production Agri Business: Implementation of Credit Scoring Models (e-circular Sl.No.: 187/ dated ) Credit Scoring Model Applicability Activity in Agri Below Rs.50 lakhs 1 Crop Loans 2 Tractor Loans and Other Farm Mechanisation Loans 3.Horticulture and Plantation Loans Rs.50 lakhs 4 Other Loans (Investment Credit) Over Rs.10 lakh and below Rs.50 lakhs 5. Dairy and Poultry Loans Allied Agri a) For Crop loan limit up to Rs.3.00 lacs Good Loans - Clear Sanction Above 50% Sanction may be considered a) After credit enhancement or b) Application to be referred to next higher authority : Not applicable Bad Loans - Decline Less than 50% 3

4 b) For Crop loan limit over Rs.3.00 lacs below Rs lacs Good Loans - Clear Sanction Above -70% Sanction may be considered c) After credit enhancement or d) Application to be referred to next higher authority - 50% 70% Bad Loans - Decline Less than 50% -CRISIL Risk and Infrastructure Ltd (CRS) has worked out scoring models for Crop Loans, Tractor Loans, Dairy and Poultry Loans, Horticulture and Plantation loans. PRODUCTS & SCHEMES KISAN CREDIT CARD (KCC) (ecir 472/ dated ) Eligibility: i. All farmers-individuals/joint borrowers who are owner cultivators; ii. Tenant farmers, Oral lessees and Share Croppers etc; iii. SHGs or Joint Liability Groups of farmers including tenant farmers, share croppers etc. Fixation of limit : A. Other than Marginal farmers: KCC limit (Maximum Permissible Limit) shall be sanctioned based on the short term loan requirements and Investment credit requirement of small value in the nature of farm implements/ equipments etc (For every successive years (2nd, 3rd, 4th,and 5th year), the limit will be stepped term credit limit sanctioned for 5th year will be about 150% of the first year limit allowed to farmers). B. Marginal farmers: A flexible limit of Rs. 10,000 to Rs. 50,000 be provided as Flexi KCC based on crops grown including post harvest, warehouse storage related credit needs and other farm expenses, consumption needs + small term Loan (payable in 1 year) investments like purchase of farm equipment, establishing mini dairy/back-yard poultry without relating to value of land fixed for a period of 5 years. Quantum of Loan : Min-No Limit, Max-No Limit MDL (Maximum Drawing Limit) -Short term loan limit assessed for the first year or for the 2nd to 5th year plus the estimated investment credit limit required will be the MDL. MPL : The short term loan limit arrived for the 5th year plus estimated investment loan requirement (highest among the five years) will be the MPL. Limit : Minimum - No ceiling Maximum - No ceiling Margin: No separate margin need be insisted for crop loan as the margin is built while fixing SOF % investment credit requirement of small value and repayable within a period of 1 year, which can be included in KCC limit. Collateral security : i. Collateral security is waived for a. KCC limit of up to Rs.1 lac In case of Renewal of Limit Collateral is waived upto Rs.1.5 lacs b. KCC limit up to Rs.3 lacs for loans with tie-up arrangement for recovery. Repayment : Fixed repayment due dates given for KCC accounts are assessed based on cropping pattern: Mono crop - Kharif : 31st January or date fixed by SLBC/DLTC. Mono crop - Rabi : 31st July or date fixed by SLBC/DLTC.. Double / Multiple crops/long term Crop : Date fixed by SLBC/DLTC or 12 month from date of sanction. (e Circular SNo.593/ dated ). Nature of account : KCC will be in the nature of revolving account. Credit balance in the account will be eligible for interest at savings bank rate. Validity: 5 years, subject to annual review. Processing charges : Processing charges, inspection charges and other charges should be recovered on the basis of Maximum Drawing Limit (and not on Maximum Permissible Limit) Interest subvention : The rate of interest will be linked to One Year MCLR (Marginal Cost of Funds Lending Rate) of the Bank. At present, rate of interest for raising short term crop loans up to Rs.3.00 lacs per season / per farmer will be p.a (fixed) as per Government of India (GoI) directives. It is subject 4

5 to GoI providing 2% p.a interest subvention to Bank on such advances. -Additional subvention of 3 per cent per annum for prompt/timely repayment farmers as per GoI directive reduces the effective interest rate charged to 4 per cent per annum. -Rate of interest for raising short term crop loans above Rs.3.00 lakhs is determined by the Bank from time to time which is linked to One Year MCLR rate + applicable spread Disbursement: KCC borrowers shall be issued an ATM cum Debit card (State Bank Kisan Card), to enable them to withdraw from KCC accounts from ATMs of our SBI group, in addition to the disbursements at branches. DIGITAL KCC (e Cir. Sl. No. : 1613/ dated ) Objective /Purpose : To empower the farmers to embrace technology for conducting their banking transactions in cashless way through alternate digital delivery channels while bringing attitudinal and behavioral changes among farmer borrowers. To lower the cost of acquisition, cost of transactions and the risk of transaction To decongest branches for better customer experience Eligibility : All farmers individuals /joint borrowers who are owner cultivators. Tenant farmers, Oral lessees and Share croppers etc. SHGs or Joint Liability Groups of farmers including tenant farmers, share croppers etc. Farmers who are banking with us are including new farmers with good repayment track record Quantum of loan : Minimum loan : Rs.1.01 lakh Maximum Loan : No ceiling Disbursement : Only 20% of the digital KCC limit is allowed to draw in cash component to meet the contingencies and the remaining portion should be in cashless transactions only Benefits to Borrower :. Concession in interest rate (0.5% P.a ), 50% Crop Insurance premium (Kharif/ Rabi) Free PAIS upto Rs.2.00 lakhs, No need of visiting the branch for review of KCC Limits ( Through SMS Alerts/ ) Docs /Margin /Limit : Same as KCC. AGRI BUSINESS : AGRI GOLD LOANS ACCOUNTS IN SINGLE BORROWER / CIF Aggregate limit of the gold loans for single borrower/ CIF should be restricted to Rs lakhs which is auto ensured if processed through LOS. Gold loans numbering more than 5 accounts per borrower / CIF should be referred to the next higher authority before sanction for approval Sl.No.: 727/ dt AGRICULTURAL GOLD LOAN (With subvention) RBI has also reduced the risk weight on loans up to Rs. one lac against gold and silver ornaments from 125% to 50%. Advances against security of gold coins (issued by SBI & Associate Bank) per customer to gold coins weighing up to 50 gms only. However, these instructions are not applicable to loan against gold ornaments and jewellery. (e-cir ) Objective: To enable farmers to meet their shortterm agricultural credit needs. Eligibility: All farmers individuals /joint borrowers who are owner cultivators. -Tenant farmers, Oral lessees and Share croppers, etc. -Any person engaged in agriculture and allied activities as well as persons engaged in activities permitted by RBI to be classified under agriculture. -The applicant should be in the age group of years Type of Loan: Agricultural Cash Credit/Over draft. Demand Loan Quantum of loan : Crop loan requirement = SOF (Scale of Finance)x Crop grown acreage = X Net weight of Gold ornaments X Advance value of Gold ornaments( As advised by Precious Metal Department, Mumbai time to time) = Y Loan amount : =Lower of X / Y Min. No Ceiling Max lakh Interest The rate of interest will be linked to One Year MCLR (Marginal Cost of Funds Lending Rate) of the Bank. 5

6 - At present, rate of interest for raising short term crop loans up to Rs.3.00 lacs per season / per farmer will be p.a (fixed) as per Government of India (GoI) directives. It is subject to GoI providing 2% p.a interest subvention to Bank on such advances. - Additional subvention of 3 per cent per annum for prompt/timely repayment farmers as per GoI directive reduces the effective interest rate charged to 4 per cent per annum. -Rate of interest for raising short term crop loans above Rs.3.00 lakhs is determined by the Bank from time to time which is linked to One Year MCLR rate + applicable spread. LTV Ratio - 75 % Collateral : Collateral value of loans has to be recorded at 135% of the advance value Assessment and Security valuation : Assessment of gold ornaments should be generally done by Cash Officer / Cash In Chargers.For loans above Rs 50,000, ornaments are to be assessed by reputed gold appraiser, specially identified for this purpose for its quality and value. However, for Hyderabad, Chennai and Kerala Circles, assessment by an appraiser has to be done for loans above Rs 1,00,000/. However, the responsibility towards the a. quality/purity of gold ornaments rests with Cash Officer/Cash In Chargers b. Weight & no of items of ornaments rest with Joint custodian Repayment: a. Cash Credit / Overdraft: Like KCC, it is a running account for a period of 3 years, subject to review at annual intervals. b. Demand Loan / Term Loan: the repayment period of the loan should be fixed so as to coincide with the harvesting and marketing season. The total period will not generally exceed one year from the disbursement of the loan in the case of short-term loan / production credit and 36 months in other of gold can be ascertained by using the following methods. a) Touch stone method b) Nitric Acid method c) Specific gravity Loans granted against gold & silver ornaments are not to be taken into account for computation of DCB (Demand, Collection & Balance) prepared as on 30 th June every year. Documents : SIM-GL/1 -Application and appraisal for loan against gold/silver ornaments SIM-GL/2 -Gold Silver Ornaments Take Delivery Letter SIM-GL/3 - Witness Letter SIM-GL/4 - Arrangement Letter SIM-GL/5 - Letter of Authority (not to be stamped) SIM-GL/6 - Letter of Indemnity SIM-GL/7 - Letter to the defaulting borrower SIM-GL/8 - Final notice to the borrower SIM-GL9 - Memorandum in respect of gold and silver ornaments deposited as security SIM-GL/10- Gold Loan Ledger Part Delivery of ornaments : On written request of the borrower(s), part delivery of ornaments may be given against part repayment of the loan, provide the advance value of the ornaments still in the Bank s possession fully cover the outstanding in the account. The borrower s acknowledgement for receipt of ornaments delivered to him / she/they should be obtained in the Gold Loan Ledger. MULTI PURPOSE AGRI GOLD LOAN ( NON- INTEREST SUBVENTION) Purpose : To meet the short term production / investment credit needs of a. the farmers, engaged in agriculture, cultivating own and /or leased land or engaged in cultivation of crops b. Farmers in allied activities like Dairy, Poultry, Fisheries, Piggery, Sheep, etc. c. entrepreneurs and famers who needs investment credit for acquiring farm machinery, undertaking land development, irrigation, horticulture, transportation of agri produce, etc d. All other farming activities which are permitted to be classified under agriculture as per RBI/GoI/NABARD guidelines and not covered under the Agri interest subvention scheme. Eligibility : a. All farmers: Individuals who are owner cultivators, agri entrepreneurs. b. Tenant farmers, Oral lessees & Share croppers c. Any person engaged in any agriculture or allied activities and who wants to repay loans availed from non institutional lenders as well as persons 6

7 engaged in activities permitted by RBI to be classified under agriculture. d. Evidence of land holding record and agri activities. e. KYC compliance is essential f. Loan can be granted against the security of specially minted gold coins sold by SBI/e-ABs weighing up to 50 grams per customer only g. In the case of item, a declaration has to be obtained from the applicant that he is engaged in Agri and allied activities and that the loan availed against the pledge of Gold ornaments is for repayment of higher interest rate loans availed from non institutional lenders. -For sanction of MPGL up to the limit of Rs 2.00 lacs, self-declaration to be obtained from the applicant. (e Cir. Sl.No.: 1089/ dated ) Quantum of loan : a. Loan availed from non-institutional lenders = Rs. (A) b. investment credit needs of various agri activities as per the unit cost //Project cost of various agri activities = Rs. ( B) c. Crop loan/production credit if any = Rs. C d. Total lona amount required ( A+B+C) = Rs..(D) e.net weight of Gold ornaments X Advance value of Gold ornaments ( As advised by Precious Metal Department, Mumbai time to time) = Rs. E f. The eligible loan amount :Lower of D/E Repayment Period : a. Cash Credit/ Over Draft: It is a running account for a period of 3 years subject to review at annual intervals. b. Demand Loan: 12 months from the date of disbursement of the loan in case of short term loan/production loan Interest : 1 Yr MCLR + Spread (1.25) LTV Ratio : 75 % Gold appraiser charges RUSU to 0.10% of loan amount with a minimum of Rs.50/- and maximum of Rs.300/- URMET to 0.10% of loan amount with a minimum of Rs.50/- and maximum of Rs.600/-. The appraiser fee should be paid by Gold loan borrower from his SB a/c to the Gold Appraiser s SB/CA a/c in all such cases where engagement of gold appraiser Agri gold loan safe keeping charges Charges to be charged 30 days after the expiry of the prescribed tenure of gold loan, presently 12 months. At present, Rs.843/ per annum. Delivery of ornaments to a third party -Delivery of ornaments to a third party, who must be identified, may be made on complete repayment of loan only in very exceptional circumstances and on undoubted authority of the borrower. -The letter of authority (SIM-GL/5) contains an undertaking by the borrower absolving the Bank from responsibility in the event of dispute or loss arising from the delivery of ornaments to the party named therein. -If necessary, the undertaking may be taken in the form of letter of Indemnity as per SIM-GL/9. -The receipt of the third party will be taken on the letter of authority as well as the Gold Loan. Ledger. -The borrower should be advised separately of the delivery of the ornaments to the third party and requested to send to the bank an acknowledgement on form COS 49 which should be sent to him along with the request letter. On receipt of the COS 49 necessary remarks should be made in the Gold Loan Ledger. -The letter of authority / indemnity Bond and the acknowledgement on COS 49, when received, should be filed in a separate file and retained in the strong room. Auction of gold ornaments Branches should put in a system to declare every 3 rd Friday of the month for conducting monthly auction for sale of gold ornaments to realize and recover the dues of NPA. The total auction process should be completed in 45 days by giving first and final notices. (e-circular 1,581/ dated 31st March,2018) 7

8 Branches to tally the gold bags with the CC/OD, Loan balance files yearly by an officer other than the Joint Custodian. The Controllers to ensure compliance by maintaining a proper record of the data verification and name of official who carried out the verification and confirm AOs the compliance (e Cir Sl.No.: 297/ ) PRODUCE MARKETING LOAN Objective: To help farmers avoid distress sale of their produce. To offer the facility of loan against the stocks stored in farm houses, in addition to loan against warehouse receipts. Eligibility: Farmers including group of farmers who have availed crop production loans from the branch or who have availed crop loan from other Bank or who have not availed crop loan from any Bank. Non-individuals like Partnership firms, Corporate etc engaged in agriculture and allied agri-activities. Type of Loan: Demand Loan Sanction limit: 60 % of values of produce depending upon the place of storage, subject to a maximum limit of Rs. 50 lacs. Margin: 40% Security: 1.Loan sanctioned against goods stored in Farmer s godown: Primary: Pledge of stocks. Collateral: Mortgage of land for loans above Rs. 1,00,000/-. 2. Loans sanctioned against Warehouse Receipts (WHR): Primary: Pledge of stocks. Collateral: No collateral is required for loans up to the maximum permitted limit of Rs.10 lacs under the scheme. Repayment: Loan has to be repaid within a maximum period of 12 months. Inspection: 1. Loans up to Rs.25 lakh once in two months and for loans above Rs. 25 lakh monthly (if produce is stored at the farmer s own house/warehouse). 2. When produce is stored in a warehouse/cold storage, the Branch Manager will inspect the warehouse(s) every quarter. (e cir-389 dt ) *with effect from , loans to individual farmers up to 50 lakh against pledge/hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding 12 months, irrespective of whether the farmers were given crop loans for raising the produce or not are classified as direct agriadvance. Produce Marketing Loans, when sanctioned to non-individual entities (as mentioned above), like corporate, partnership firms and institutions engaged in Agriculture and Allied Activities are now classified as indirect agri advance up to Rs 50 lakh. (ecir- 389 dt 22/07/2013) KISAN GOLD CARD SCHEME (KGC) A general-purpose loan meant for meeting credit needs of farmers for productive and consumption purposes. Eligibility: Farmers having good track record of repayment in their ACC/ATL/KCC accounts for the last two years. New borrowers who maintain sizeable deposit with our branches for the last 2 years. Purpose: Investment credit: 80% of the eligible limit can be utilized for creation or purchase of any productive assets other than for i) Purchase of land, ii) Construction of farm house and iii) Purchase of tractor & its accessories. Consumption loans: To meet domestic expenses like education, marriage, medical expenses etc., 20% of the eligible KGC limit. Limit: Five times the annual farm income or 50% of the value of land (to be) mortgaged as collateral security, whichever is less, with a maximum of Rs. 10 lacs minus term loan outstanding if any at the time of application. This is in addition to KCC limit. Margin: Investment Purpose: 10% Consumption Purpose: 30%. Period: One year from the date of sanction. Repayment: Each loan will have its own repayment schedule, subject to the usual norm of a maximum of 6-7 years for the repayment of AT L ( 9 years for Horticultural orchards). Security: As per ATL. # A single set of loan documents may be obtained for the entire KGC limit sanctioned A separate a/c to be opened for each purpose and separate repayment schedule for each a/c stipulated. Maximum number of accounts permissible is five. Treated as ATL accounts. Cash disbursals are allowed to the full extent of credit limit as in the case of KCC. 8

9 Financing Joint Liability Groups ( JLGs) Bhoomi Heen Kisan (e Cir Sl. No. : 1108/ dated ) Objectives: To augment flow of credit to tenant farmers cultivating land either as oral lessees or sharecroppers and small farmers who do not have proper title of their land holding through formation and financing of JLGs. -An informal group compromising preferably 4 to 10 individuals (may be considered upto 20) engaged in similar economic activity like crop production, coming together for purpose of availing bank loan either singly or through group mechanism against mutual guarantee. Who can form JLG : JLGs can be formed by NABARD, Bank Branches, NGOs, Farmers Clubs, Farmers Associations, Panchayat Raj Institutiions, Krishi Vikas Kendras, State Agricutlure Universities, Agriculture Technology Management Agency,PACs, other Cooperatives, Govt Departments, Individuals, Input Dealers/MFIs. Incentive for promotion of JLGs NABARD will provide grant assistance to Banks for formation, nurturing and financing of new Rs.2,000 per JLG. JLG Models for financing Model A- Financing individuals in the JLG. Model B- Financing the JLG as a Group. Activities to be financed Production and investment credit ( KCC/ATL) Amount of Loan :Rs.50,000 per individual under both models. MODIFIED NEW TRACTOR LOAN SCHEME (Modified NTLS) (ecir- 748/ dt ) Eligibility: Any individual or group of individuals i.e., JLGs/SHGs, institution or organization are eligible for finance which will have sufficient and regular income either from own farm activity or custom hiring incomes from the tractor proposed to be purchased and its accessories. Minimum land holding: Borrower should possess a minimum land holding of 2 acres. Quantum of Loan: a. The total cost of tractor, cost of accessories and implements (As per the dealer net price invoice obtained from reputed dealers of tractors of the approved tractor companies for the approved models) b. Add: Additional amount for insurance and registration c. Less: Margin to be brought in by the applicant d. Net Bank Loan: Minimum of loan amount: No Minimum, Maximum of loan amount : No ceiling. Margin: 25% of tractor and accessories (including insurance registration charges. Security: a. Loan limit Upto Rs.1,00,000 Primary: Hypothecation of Tractor, Accessories and Implements purchased out of Bank finance. Collateral: NIL b. Loan limit Above Rs.1,00,000 Primary: Hypothecation of Tractor, accessories and Implements purchased out of Bank finance. Collateral: Registered/equated mortgage of land for Value not less than100% of the loan amount or third party guarantee, good for the amount involved. If there are genuine difficulties in the creation of mortgage/charge on lands wherever required, branch may take Third Party Guarantee after obtaining permission from the Controlling Authority. Credit Scoring : -Credit Score of 71 & above are considered Good Loans for sanction, -Credit Score of 40 and above but up to 70 may be considered after credit enhancements or to be referred to the next higher authority. -Credit Score of 40 and below should not be considered for sanction TAT : 3 days Upfront : 0.50% of the loan amount DSCR : 1.5:1 9

10 Repayment: Maximum repayment in 5 years. Minimum amount of Rs.1,000 per month per lakh of loan limit should be recovered to maintain connectivity with the borrower. Negotiated Repayment instalments may be fixed at Quarterly/ Half Yearly /Yearly for the remaining interest and principal amount synchronizing with cash flows / harvesting period of corps Interest : 1 Yr MCLR +3.30% For prompt repayment, further concession of p.a by way of incentive is extended to the borrower. Concessions will be extended in the month of July and will be on the basis of installment recovered between 1st July to 30 th June of every year. Penal interest during the irregularity period: 1.00% p.a Penal interest for failure to get the vehicle registered within one month from the date of delivery: for the period of default for the borrower (to be recovered by branches) Inspection : Half yearly TATKAL (MORTGAGE FREE) TRACTOR LOAN (TTL) (e-circular Sl No.882/ dated ) i) Target group High Net worth farmers who are capable of purchasing tractor with cash (who secures 70 & above under Tractor Credit Scoring Model) Existing farmers New farmers Good borrowers banking with other banks. ii) Eligibility Farmer minimum land holding of 2.00 acres. All farmers-individuals/joint borrowers who are owner cultivators. iii) Purpose To meet the cost of purchase of Tractor (including insurance + registration charges) iv) Quantum of loan: 100% The total cost of the tractor including insurance and registration charges ( As per the dealer net price invoice obtained from reputed dealer of tractors of the approved tractor companies for the approved models). Cost of accessories not to be included. v) Margin Minimum 25% of the cost of tractor including insurance and registration charges. The margin have to be deposited in the form of TDR in the branch with Zero rate of interest and lien have to be marked on TDR for the entire tenure of tractor loan. vi) Security Primary: Hypothecation of Tractor purchased out of Bank s finance. Collateral: Lien on TDR accepted as a Margin Money. vii) Credit Scoring Model Application of revised Tractor Credit Scoring Models for appraisal of loan and to fix the differentiated EMIs. The scoring model will serve as a credit decision making tool and will strengthen the existing system of sanction or reject of loan. Credit Score of 61 & above are considered for sanction. xiii) Repayment : There will two types of repayment period i.e. 48 months when the installments are calculated on the basis of net loan (Loan Margin kept in TDR) and 60 months when the installments are calculated on the basis of total loan without netting. Frequency of installment will be based on the total scores awarded under the parameters Hiring potential + Percentage of income from allied activities under Tractor Credit Scoring Model will be adopted to determine the repayment schedule of the tractor loan. xiv) Interest rate :Interest rate is linked to margin/ Base Rate xv) DSCR : 1.5 :1 xvi) Inspection : Quarterly interval 10

11 Stree Shakti Tractor Loan (SSTL) With Collateral (e Cir. Sl.No.: 749/ dated 3 rd Oct 17) Eligibility: -The loan should be sanctioned with women as co borrowers -Borrower should possess a minimum land holding of 2 Acres in the name of borrower (s). - Minimum Net Annual Income of applicant/ coapplicant together to be Rs.1.50 lacs from farm activity/custom hiring/other sources. - EMI/NMI shall not exceed 60% - Branches should verify and ensure that cost of accessories purchased, if any, along with the tractor is reasonable and whether they are actually required by the borrower (s) -The borrower (s) should maintain Savings Bank account with SBI & account should be at least 6 months old. Credit Scoring : -Credit Score of 56 & above are considered Good Loans for sanction, Credit Score of 40 and above but up to 55 may be considered after credit enhancements or to be referred to the next higher authority. Credit Score of 40 and below should not be considered for sanction Margin: 10% of loan limit ( Cross check the invoice prices with company rates) Quantum of Loan : -The total cost of tractor, cost of accessories and implements Add: Additional amount for insurance and registration Less: Margin to be brought in by the applicant(s) Minimum of loan amount : No Minimum, Maximum of loan amount : No ceiling. SECURITY Primary: Hypothecation of the Tractor, accessories and Implements purchased out of Bank finance. Collateral: 30% of loan limit should be in the form of time deposits/nscs/gold ornaments (as per advance value) 6 Postdated cheques (PDC)/ECS D.S.C.R. : 1.5 :1 Interest : 3.10 above 1 Year MCLR Upfront Fee : 0.5 % T.A.T : 3 days Inspection : Half Yearly Penal intt. : 1 % p.a. ( irregularity period) -Penal interest for failure to get the vehicle registered within one month from the date of delivery attracts: 2% for the period of default for the borrower (to be recovered by branches). STREE SHAKTI TRACTOR LOAN SCHEME ( SSTL WITH OUT COLLATERAL) -The loan should be sanctioned with women as co borrowers -Borrower should possess a minimum land holding of 2 Acres in the name of borrower (s). - Minimum Net Annual Income of applicant/ coapplicant together to be Rs.1.50 lacs from farm activity/custom hiring/other sources. - EMI/NMI shall not exceed 60% - Branches should verify and ensure that cost of accessories purchased, if any, along with the tractor is reasonable and whether they are actually required by the borrower (s) -The borrower (s) should maintain Savings Bank account with SBI & account should be at least 6 months old. Credit Scoring : -Credit Score of 56 & above are considered Good Loans for sanction, - Credit Score of 40 and above but up to 55 may be considered after credit enhancements or to be referred to the next higher authority. -Credit Score of 40 and below should not be considered for sanction MARGIN : Where only Tractor is being financed : Margin will be 25% to 50% which is linked to interest rates. - Where implements are also being financed, the margin for tractor component -25% to 50% and for accessories- 50%. Quantum of Loan : -The total cost of tractor, cost of accessories and implements Add: Additional amount for insurance and registration Less: Margin to be brought in by the applicant(s) Minimum of loan amount : No Minimum, Maximum of loan amount : No ceiling. 11

12 Security : Primary: Hypothecation of the Tractor, accessories and Implements purchased out of Bank finance. Collateral: NIL 6 Postdated cheques (PDC)/ECS to be obtained Inerest Rate : Linked to margin brought by applicant. D.S.C.R : 1.5 :1 T.A.T : 3 days Inspection : Half Yearly Upfront Fee : 1.25 % Penal interest during the irregularity period : 1.00% p.a. -Penal interest for failure to get the vehicle registered within one month from the date of delivery attracts: 2% for the period of default for the borrower (to be recovered by branches). TRACTOR LOAN UNDER TIE-UP (TLT) Corporate Tie up : Loan is sanctioned under Corporate Tie-up with Tractor Manufacturer s FLDG ( First Loss Default Guarantee) of minimum 2% from the Corporate Designated Branches : Tractor finance is restricted to Identified branches by the Circles based on the skill set of staff / potential Eligibility : Farmer should possess a minimum land holding of 2.00 acres. -All farmers-individuals/joint borrowers who are owner cultivators. -Only applicants from the list of relatives as specified by the bank may become as coapplicants. -Cap on income from custom hiring should not exceed 50% of the repayment obligations while calculating eligibility Purpose : To meet the cost of purchase of Tractor ( including insurance + registration charges) Quantum of loan Total cost of the tractor Less Margin : 20% Bank Loan : 80% Min loan : Rs.1.00 lakh Maxi loan : Rs lakh Cost of accessories not to be included Corporate Tie up : Loan is sanctioned under Corporate Tie-up with Tractor Manufacturer s FLDG ( First Loss Default Guarantee) of minimum 2% from the Corporate. Security : Primary: Hypothecation of the tractor purchased out of Bank s finance. Collateral: NIL Credit Scoring Model : Credit Score of 70 & above are only to be considered for sanction. D.S.C.R : 1.5 : 1 Upfront fee: 0.50% of the loan Margin: 20% of cost of tractor (Invoice + Insurance+ Registration) POWER TILLERS (e Cir. 860/ dated ) Purpose: Purchase of power tillers along with accessories. Eligibility: Small and Marginal farmers who have one acre of perennially irrigated land. Branches should finance only for approved models of power tillers Loan Amount: Minimum : No ceiling Maximum : No ceiling Security: Primary: Hypothecation of power tiller and accessories, Collateral: No collateral up to Rs.10 lakhs Interest rate: 275 bps above One Year MCLR Processing charges : 0.50% of the loan + GST D.S.C.R : 1.75 : 1 Repayment: Repayable in five years in 10 half yearly instalments including grace/gestation period.. T.A.T 7 days FINANCING PUMPSET PRODUCT (e Cir 859/ dated ) Purpose: Purchase of irrigation pump sets /oil engines along with accessories. Eligibility: Individual farmers, companies /partnership firms /JLGs/SHGs of farmers. Minimum economic holding acreage: 1.25 acre owned land. However, loans can be considered even if the benefitting area is less than 1.25 acres provided the farmer is able to sell surplus water or viability of the project is ensured. Any person 12

13 engaged in agriculture activity, owning the land under cultivation. Loan Amount: Minimum: No ceiling Maximum: No ceiling Margin : 15% to 25% of the project cost Collateral security: No collateral security to be obtained for all loans up to Rs.1,00,000 Interest rate: One Year MCLR rate + spread. Facility: Agricultural Term Loan Repayment: Negotiated Repayment. Repayable in 9 years or 18 half yearly instalments including grace/gestation period Processing charges : 1.40% of the loan + GST Turn Around Time : 7 days Inspection : Inspection is stipulated at quarterly intervals FINANCING FOR COMBINE HARVESTERS (e Cir. SL Sl.No.: 861/ dated ) Eligibility : Minimum acreage: 6 acres irrigated (dry land 15 acres). Project cost :Minimum: No ceiling Maximum: No ceiling Margin :25% of project cost excluding insurance and registration charges Interest rate : 350 bps above One Year MCLR( floating Penal interest : 2% p.a above the normal interest rate for the period of overdue. Margin : Up to Rs.50,000 Nil Above Rs,50,000:10% Security Primary : Hypothecation of combine harvester and accessories Collateral : Mortgage of land /charge on land or liquid collaterals Repayment : Negotiated Repayment. Repayable in 9 yearly or 18 half yearly instalments including grace/gestation period. T.A.T. - 7 days Inspection : Inspection is stipulated at quarterly intervals Other features: Advance only for new harvesters. Models approved by CFMTTI, Budni /FMTTI, Hissar. SCHEME FOR FINANCING MICRO FINANCE INSTITUTIONS (MFIs) / NON GOVERNMENT ORGANISATIONS (NGOs) (ecir-1283 dt. 26/03/2013) To enable the Bank to lend to MFIs/NGOs for on lending to SHGs /JLGs/ Individuals and to increase the outreach by financing large number of SHGs in cost effective manner, supplementing the efforts of the branches in financing SHGs. Eligibility: NGOs/ MFIs should any one Regd Society/ Regd Trust/ Regd Company/ Non Banking F Is or any Institution engaged in micro-finance. NGO/ MFI having minimum partnership of SHG/JLG 50 and individuals In cluster financing min membership of Federation should be 30 SHGs. Existing for last 12 months and running micro credit programme for last 6 months, continuous profit making, maintains a satisfactory & transparent accounting, MIS and Internal Audit System, not be defaulter, having risk portfolio less than 5% etc. Rating: Loan below Rs 25 lacs Specific Scoring model min 60 marks. For loan of Rs.25 lacs and above - CRA rating is compulsory as applicable to NBFC model and guidance note on banking exposure to be followed i.e, SB 5 and above for new connections and SB 7 for enhancement. Rating from external rating agency Facility: MTL or CC. Margin: Nil. TOL/TNW: Maximum permissible TOL/TNW to be 5 and additionally Debt /Equity is capped at 5:1. Repayment: TL Monthly/ Quarterly/ HY installments on the basis of project/ purpose, max 3 yrs. CC renewal annually. Security: Primary Hypo of Book debts, Collateral: For Non-NBFCs -Nil, however, Guarantee of Promoters and charge over available assets to be explored. For NBFCs/ NBFC-MFIs - The collateral security to be obtained from NBFCs / NBFC-MFIs under the scheme shall be as per the guidelines for collateral security applicable for NBFCs Sanctioning Authority: Not below AGM. 13

14 SCHEME FOR DEBT SWAPPING OF BORROWERS To extend finance to farmers for paying off loans taken from non institutional lenders (e.g. money lenders etc.) and to enable such farmers in distress, meet their crop production needs. Eligibility: All existing farmer borrowers as well as other farmers in the operational area of the branch. Classification: Direct Agriculture. Quantum of loan: The loan granted shall be 100% if the debt is on account of cultivation or agri activity or Rs.1,00,000/- (ecir dt ) whichever is lower. Simultaneously, the applicant shall be financed Kisan Credit Card which includes additional 20% of the production limit to meet contingent requirements or / and Agriculture Term Loan. The amount of debt of the farmer is assessed based on the stamped affidavit given by the applicant. Method of assessment: a. Debt being financed will be given as an ATL repayable in 3 to 5 years b. Gross DSCR of 1.75 will be maintained. Sanctioning authority: The Branch Manager/Division Manager only should sanction loans under this scheme strictly. Disbursement: disbursed preferably to the money lenders, an appropriate receipt for the discharged debt from the money lender should be obtained and kept with the loan documents. Security: All the existing security available with us both primary & collateral should be extended to cover the loan. Collateral security by mortgage of agriculture property. Repayment: Repayable in yearly/half yearly installments in three to five years. LAND PURCHASE SCHEME To assist Small & Marginal farmers, Tenants Cultivators, Share Croppers and landless agricultural labourers for purchase of land. Eligibility: The borrowers should have a record of prompt repayment of the loan for at least two years. Good borrowers of other Banks may also eligible provided they liquidate their outstandings to other banks. Quantum of loan: Maximum Rs. 5 lacs. (Excluding development charges) Loan may be considered for: Cost of land. Provision of irrigation facilities & land development (shall not exceed 50% of the cost of land). Purchase of farm equipments. Registration charges & stamp duty. Farmers assisted under the scheme may also be given crop loans (KCC only) Margin: As per ATL. Gestation period: 1-2 years: If it is to be developed. 6 Month-1year: Developed land Repayment: Max years beginning after the expiry of gestation period, with half-yearly installments. Security: To be secured by way of mortgage of land to be purchased. SETTING UP OF AGRI-CLINIC & AGRI BUSINESS CENTRES SCHEME (ACABC Scheme) To provide self employment opportunities to technically trained persons. Eligibility: Persons having technical degree in Agricultural or allied to agriculture like horticulture, animal husbandry, forestry, dairy, veterinary, poultry, pisciculture and other activities. The subsidy would be admissible only in respect of agricultural graduates trained under ACABC scheme on or after 1st April, Project cost: Individual Activity Rs.20 lacs. Group Activity Rs.100 lacs. In case of group projects, if the group consists of 5 or more persons, all except one of them would have to be agriculture graduates trained under the scheme and the remaining could be non-agri graduate with experience in business development and management. Margin: Upto Rs lacs NIL. Above Rs lacs % Facility: Ag. Term Loan (Indirect Finance) Security: Upto Rs lacs: Primary: Hypothecation of assets created. Collateral: NIL Above Rs lacs. Primary: Hypothecation of assets created. Collateral: Mortgage of land or Third party guarantee with the permission of controller. Repayment: 5-10 years with grace period of maximum 2 years. Training: MANAGE (National Institute for Agricultural Extension Management) in Hyderabad is responsible for providing training. Refinance: 100 % By NABARD. Soft loan assistance: 50 % of margin to be contributed by the applicant is provided by NABARD as Soft loan without any interest. 14

15 Subsidy: There is a provision for enhanced composite 36% of total fund outlay (44% in the case of women/ SC/ST candidates from NE and hilly states). Agricultural Marketing Infrastructure (AMI) [Gramin Bhandaran Yojana & Scheme for Development/ Strengthening of Agriculture Marketing Infrastructure, Grading and Standardization (AMIGS) Subsumed in Scheme for Financing Agriculture Marketing Infrastructure (AMI)] (Please refer e-circular Sl No. 402/ dated ) It has been advised by NABARD that the two aforesaid Schemes have been subsumed with effect from into a new Scheme named Agricultural Marketing Infrastructure (AMI) for implementation during the 12th Plan period. The objective of the captioned Scheme is to encourage creation of post harvest storages and primary processing value chain in agriculture, from post-harvest management to the stage of primary processing, by transfer of direct benefit to farmers. Particulars: Gramin Bhandaran Yojana is being implemented since April 2001 and the Scheme for Development/ Strengthening of Agriculture Marketing Infrastructure, Grading and Standardization (AMIGS) is being implemented since It has now been decided that the existing two schemes be subsumed with effect from In respect of all the projects sanctioned under the previous guidelines (sanctioned till ), claims of Subsidy ha to be submitted to the concerned Regional Office of NABARD, as per the then prevailing guidelines of the Schemes viz Gramin Bhandaran Yojana and AMIGS. Objectives of the scheme: i. To develop agricultural marketing infrastructure including horticulture, dairy, poultry, fishery, livestock and minor forest produce. ii. To promote innovative and latest technologies in agricultural marketing infrastructure. iii. To promote direct marketing. iv. To promote creation of scientific storage capacity for storing farm produce, processed farm produce and agricultural inputs etc. v. To provide infrastructure facilities for grading, standardization and quality certification of agricultural produce. vi. To promote Integrated Value Chains (confined upto primary processing stage only) to provide vertical integration of farmers with primary processors. vii. Primary processing means adding value to the produce without change in its form and may include washing, sorting, cleaning, grading, waxing, ripening, packaging, labeling etc. Eligible Marketing infrastructure: The activities eligible for financial assistance under the Scheme are the following: i. Creation of scientific storage capacity like godowns, including standalone silos for storage of food grains with necessary ancillary facilities like loading, unloading bagging facilities etc. (Assistance for storage infrastructure will be available on capital cost of project including cost of project including cost of allied facilities like boundary wall, internal roads, internal drainage system, weighing, grading, packing, quality testing and certification, fire fighting equipments etc.) ii. Cold storages as a part of a permissible integrated value chain prject will also be admissible provided the cold storage component is not more than 75% of the Total Financial Outlay. iii. Creation of Marketing infrastructure upto primary processing stage like: Cleaning, Cutting, Depodding, De cortication,bleaching, Grading, Sorting, Packing, Labeling, Waxing, Ripening Chilling, Pasteurization, Homogenization, freezing, Refrigeration. iv. Common facilities in the market yard like: platform for auctioning of the produce, loading, un loading, assembling, drying, cleaning, grading, weighing, mechanical handling equipments etc including ancillary supporting infrastructure Primary processing in value chain, Functional infrastructure for collection/ assembling/, drying, cleaning, grading, standardization, sanitary & phytosanitary measures, quality certification, 15