FINANCING TO FARMER’S PRODUCER ORGANIZATION

To meet the financial needs of the Farmers Producers Organisationby way of Term Loan or Working Capital as per the requirement.

To improve the income and reduce the poverty of the small and marginal farmers and making their livelihood sustainable through agribusiness ventures.

Economically viable, democratic and self governing Farmer Producers Organisations
Members and stake holder of the FPOs are to be only Farmers and the company should be owned by them.
FPOs to be a registered company.

Board of the company should be from Farmer members. In exceptional cases they may engage professional Directors/Nomine Directors for smooth functioning till the farmer members are acquainted and self sufficient to run the company.

Nature of Limit	Term Loan Acquiring farm machinery, equipments, refrigerated vehicles, transport vehicles and any other implements, machinery required for cultivation, production, post harvest processing etc Construction of storage godown or any structure useful for the common use of the Farmers Society for productive purpose which will be of long term use. Working Capital To meet cultivation expense of member farmers based on the scale of finance for cultivable area. To procure the farm produce from the farmer members and storage wherever necessary. To finance against the Warehouse receipts issued by FPOs after ensuring that there is no double finance and adhering to all existing scheme guidelines. To meet the storage/Warehousing expenses and transportation expenses. To meet the working capital needs of FPOs in the value addition process of farm produces.
Quantum of Finance	Term Loan: As per the prevailing guidelines based on the purpose – 90% of the project cost to be financed subject to compliance of other lending norms / guidelines. Working Capital: As per Scale of Finance (SoF) for cultivable area, if working capital is extended for meeting cultivation expenses of member farmers 50% of value of farm produce stored if finance is extended for procurement of agricultural produce of member farmers or finance is made against NWR as per the extant guidelines of the Bank Two months projected operative expense of the FPO, if working capital is extended to meet storage/warehousing expenses/ transportation expense/other routine expenses. As applicable to SME loans, if working capital is requested for value addition/processing. Maximum loan quantum to the FPO (excluding TL for creation of immovable assets) should not exceed 10 times of its NOF/TNW for the working capital limit beyond Rs 3 Crores.
Margin	Term Loan : 10% of the project cost. Working Capital : 10 % of the assessed amount.
Security	Prime Security: Assets created out of the finance made by Bank. In case of Working Capital limit wherever finance is for crop cultivation, hypothecation of Crop of all the farmer members of the FPO for which all the Farmer members to authorize the Company to execute document on their behalf. The detailed / disaggregated data of those farmers should be available at FPO. 3. In case of post harvest finance where the FPO will procure the produce of the farmer members and store at the godown or market yard till it fetches good price and FPO makes the payment as per the prevailing market price on the day of procurement, in such cases hypothecation of such produce to be taken as prime security. In no case the limit should be clean. The Working capital financed to the FPO for the benefit of the Farmer Members should be having DP every time either by standing crop value or by the value of farm produce collected by the FPO and stored/kept for marketing. Collateral Security: No collateral security shall be obtained except in case of the following. If the FPO creates collaterals from their operations, the same shall be offered as collateral security to the loans availed. Where the working capital limit exceeds Rs 3 Crores, 10 times NOF will be applicable for eligible quantum or as per assessment, whichever is less. Wherever the FPO cannot satisfy 10 times NOF norm, collateral security by way of mortgage of land and building to be obtained for loans over and above 10 times of NOF. Third Party Guarantee: Personal Guarantee of shareholder directors, if any shall be obtained.
Repayment Period	Term Loan: To be repaid within a period of maximum 5 to 7 years based on the income generation. Short Term Loan: Repayable within period of maximum 36 months. Loans sanctioned against NWR or for procurement of produce of member farmers shall be cleared with 12 months or on sale of the produce whichever is earlier. Working Capital: Running limit tenable for a period of 12 months.
CGSFPO	Credit guarantee Scheme for Farmer Producer Organisation. The maximum credit guarantee cover will be 75% of the sanctioned credit facility with a maximum ceiling of Rs. 1.50 Crores (ie. Loans sanctioned upto Rs. 2.00 Crores). Guarantee cover will be applicable for a period of 5 years.