MODALITIES FOR AGRICULTURAL TERM LOANS (ATL) TO BE
FINANCED BY COOPERATIVE INSTITUTIONS
Several activities in agriculture and related sectors require larger capital
investment usually amortized over a longer period of time. The availability of
suitable agricultural term finance, spread over a longer repayment period
helps in enhancing the ability of farmer members for creation of agricultural
assets to increase the scale of their farming operations and generate higher
incremental cash flow from farming.
However, in recent past, it is observed that term lending for agriculture and
allied activities by Short Term Credit Cooperative Structure (STCCS)is not
picking up to the desired extent so as to sustain enhanced production and
productivity and raise farm income.
Agricultural Term Lending (ATL) contains inherent risks like - Credit risk,
Systemic risk, Risk of technical failure etc. which have prompted Cooperative
Banks to adopt restrictive collateral requirement, which many farmers cannot
meet. In addition, possibility of portfolio risk due to higher default in
repayment of term loans leading to higher loss provisioning and diversion of
short-term resources of Banks to long term finances with longer repayment
period, makes agricultural term lending a challenging proposition.
It is therefore, imperative that the OSCB, DCCBs and PACS/LAMPCS adopt
a very pragmatic approach to agriculture term loans and follow
comprehensive lending modalities with professional portfolio management
facilitating optimum flow of term loans to farmers for creation of farming
assets in order to achieve the programs/targets fixed by the Government for
agriculture term loan financing.
INDICATIVE SCHEMES COVERED UNDER AGRICULTURE TERM LOAN
Some of the Schemes under which term finance shall be extended by the
Banks are indicated below. The list is indicative and not exhaustive.
1.FINANCING UNDER ANIMAL RESOURCES DEVELOPMENT SECTOR:
• Dairy (2 animal unit to 10 animal unit size and Commercial Dairy also)
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• Goat Rearing
• Pig Rearing
• Poultry
• Sheep Rearing
• All other activities under Animal Husbandry
2.FINANCING UNDER FISHERIES SECTOR
• Inland Fisheries, Mastya Pokhari Yojana (Mo Machha Pokhari, including
Boats and Nets)
• Marine Fisheries
3.FINANCING UNDER HORTICULTURE
• Plantation
• Nursery
• Floriculture
• Plantation Crops- Cashew, Coconut, Betel Vine, Mushrooms and Spices
• Protected Cultivation
• Pack House and Value addition Infrastructure
4.FARM MECHANIZATION
• Tractor, Power tiller, Combined Harvester, Thresher
• Pump-sets
• Drones
5.AGRICULTURE DEVELOPMENT
• Land Development
• Private Lift Irrigation
• Dug Well
• Shallow Tube-Well
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• Deep Bore-Well
6. Establishment of Agro Service Centres/ Agri-Clinics
7. Financing under Mukhya Mantri Krushi Udyoga Yojana (MKUY).
BENEFICIARIES
The Beneficiaries shall include Individual farmers, Self Help Groups
including Women Self Help Groups (WSHG), Farmer Producer Organisations
(FPO) and PACS/LAMPCS.
SPONSORING, SCRUTINY, VRIFICATION, APPRAISAL AND SANCTION
OF LOAN APPLICATION
The OSCB, DCCBs and PACS/LAMPCS should be proactive in mobilizing
viable ATL proposals from the beneficiaries and different sponsoring
Agencies/Government Departments/Offices for consideration at their level.
Loan applications so received directly from intending farmers or so
sponsored by the sponsoring Agencies/Government Departments/Offices
shall be processed and appraised at the level of concerned Branches of
OSCB/DCCBs or PACS/LAMPCS, as the case may be, promptly with
required scrutiny of documents and field verification. Loan proposals
processed at the level of PACS/LAMPCS shall be placed before the
Managing Committee after due scrutiny/verification/appraisal by the CEO for
consideration of sanction by the Committee. The Committee on being
satisfied on the viability /feasibility of the proposal for sanction will
recommend the same to the DCCB through the concerned Branch of DCCB
for approval. However, where PACS/LAMPCS itself is a beneficiary, the
proposal shall be processed for finance by the DCCB or Branch of OSCB.
On receipt of loan proposal from PACS/LAMPCS, there should be proper
scrutiny/ verification/ appraisal of the proposal at the Branch level before
recommending the same to the DCCB Head Office for approval. The DCCB
will consider approval of the proposal at their level after proper appraisal. On
being so approved, approval of the loan proposals should be communicated
to the concerned PACS/LAMPCS through the respective Branches for
sanction by the PACS/LAMPCS. After receipt of approval, the
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PACS/LAMPCS will sanction the loan with prior pre-sanction formalities like-
field visits and documentation.
In respect of loan proposals processed directly at the level of the Branches
of DCCBs/OSCB, scrutiny, field verification and appraisal of the proposal
shall be done at the Branch level. Proposals duly appraised/evaluated by the
Branches shall be recommended to the head office of DCCB/OSCB for
scrutiny, appraisal and sanction by the Bank.
APPRAISAL COMMITTEES
OSCB and DCCBs shall constitute Appraisal Committee involving subject
matter Experts/Resource Persons at their level. In the event of non-
availability of such Experts/Resource Persons at their level, hiring the
services of Experts/Resource Persons from Empanelled /Reputed Agencies
may be resorted to. The Loan Committee/Managing Committee of OSCB and
DCCBs will act on the recommendations of the Appraisal Committee while
considering sanction of loans.
FINANCING LIMITS
PACS and LAMPCS will take up financing of the ATLs up to the limit of Rs
10 lakhs (Including Subsidy) each after approval of the concerned DCCB.
Loan proposals up to Rs 50 lakhs (Including Subsidy) shall be approved
and sanctioned at the level of DCCBs.
Loans beyond Rs 50 lakhs (Including subsidy) shall be recommended by
the DCCBs to the OSCB for appraisal and approval of sanction. Such
proposals will be scrutinized and appraised at the level of DCCBs with proper
field verification before recommending the same to the OSCB for approval of
sanction.
MARGIN
i. Loan up to Rs 10,000/- no margin would be required
ii. The minimum down payments to be collected from the beneficiaries
shall 15% in all other cases.
SHARE LINKAGE
The revised share linkage and requirement of collateral as specified vide
order No.2820 dated 12.04.2018 of the Government of Odisha, shall be
scrupulously followed.
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The share requirement has been stipulated for Agricultural Term Loan
(ATL) in various slabs as under:
i. Loan up to Rs.5.00 Lakh Rs.500/-
ii. Loan above Rs.5.00 Lakh and up to Rs.10.00 lakh Rs.750/-
iii. Loan above Rs.10.00 Lakh and up to Rs.15.00 lakh Rs.850/-
iv. Loan above Rs.15.00 Lakh Rs.1000/-
SECURITY
Instead of collateral in shape of mortgage of immovable properties from the
borrower/ guarantor, the Agricultural Term Loan shall be secured as follows:
○ The asset created shall be hypothecated as primary security by
executing a Hypothecation Deed.
○ Charge shall be created on the immovable properties owned by the
borrower under section 34(2) of the OCS Act,1962 as collateral security.
○ Personal surety by the borrower/guarantors by executing guarantee
deed.
In case of all Agricultural Term Loan proposals above Rs.10.00 Lakh
(including both loan and subsidy component), Borrower shall provide
additional security in shape of liquid collateral like LIC Policy, Postal
Certificate, Fixed Deposit etc. (of maturity value 50% of the loan amount
excluding subsidy) for sanctioning of loan amount. In case of immovable
property offered as security, the same shall be valued by a Registered and
Empanelled Valuer and legal opinion needs to be obtained from Empanelled
Advocate regarding the title deed and marketability of security. While
processing the loan application the CEOs of PACS/LAMPCS/DCCB/OSCB
should thoroughly check the subsidies and credit guarantee available as
Government support for the proposed project and decide the level of
collateral accordingly. The interest subvention provided by Department of
Cooperation, Government of Odisha towards ATL finance shall be availed
and the benefits be transferred to the farmers.
The Subvention shall be applicable for net loan up to Rs 50.00 Lakh (
excluding subsidy) @ 4% and there will be Prompt Repayment Incentive @
3% on the above loan, over and above the normal interest subvention. The
subvention amount shall be calculated only on the net loan (excluding
subsidy).
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DISBURSEMENT OF LOANS
After proper field verification and documentation, disbursement of loans
shall be done phase-wise/by instalments based on progress of execution of
projects. Proper post sanction visits/appraisal should be made before
disbursement of the loans by the PACS/LAMPCS and the financing Banks.
COLLECTION/ RECOVERY OF LOAN
Collection/Recovery of the ATL sanctioned and disbursed shall be
reviewed regularly by the MD, OSCB; CEO, DCCB and Branch Managers of
DCCB in respect of loans sanctioned by OSCB, DCCBs and PACS/LAMPCS
respectively. The Departmental officials shall also be involved in such reviews
and periodical reports be submitted to RCS.
IMPLEMENTATION AND MONITORING
RCS, Odisha will monitor implementation of these Operational Guidelines
on quarterly basis and furnish reports on the working of the Scheme to
Cooperation Department regularly.
Commissioner-cum-Secretary,
Co-operation Department.
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