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NABARD -- a few details about Refinance

Short and Medium Term Loans
Modern agriculture, as distinguished from traditional cultivation, involves substantial investment of recurring nature for using high yielding varieties of seeds, fertilisers, insecticides and costly agricultural implements. In such a situation, arrangements for credit should go much beyond the simple provision of credit and must be linked operationally with productivity and other services. Production and productivity, marketing and raising the level of surplus and savings must, therefore, be the major functions of credit. The benefit of modern technology, the advantages of institutional credit, infrastructural arrangements etc., should accrue to all classes of farmers. Besides, on the supply side, there must be an arrangement for assessing the requirements of funds on the basis of actual cost and raising the resources therefor. It was in this context, the crop loan system or the production oriented system of lending was evolved and concerived as the most appropriate mechanism for mass disbursement of production credit.
Production Credit Department (PCD) deals with short term refinance facilities, for various types of production, marketing and procurement activities, being provided to client institutions, as detailed below:
Short Term (Seasonal Agricultural Operations)
Refinance is provided for production purposes at concessional rate of interest to State Cooperative Banks (SCBs) and Regional Rural Banks (RRBs) by way of sanction of credit limits. Each withdrawal against the sanctioned credit limit is repayable within 12 months.
Short Term Refinance to RRBs, PSBs and CCBs (directly) for financing PACS for their Seasonal Agricultural Operations
A new refinance product for financing of PACS through PSBs & RRBs, whereever Cooperative Banks are weak or not in a position to lend to PACS adequately, was introduced during last year. (2011-12)
Short Term ( Others )
The ST ( Others ) limit would consist of different purposes viz. ST- Agriculture and Allied Activities, ST - Marketing of crops, ST- Fisheries Sector,ST- Industrial Cooperative Societies (other than weavers), ST- Labour Contract and Forest Labour Cooperative Societies including collection of Minor Forest produce. ST- Rural artisan including weavers members of PACS/LAMPS/FSS, ST- Purchases, Stocking and Distribution of Chemical Fertilisers and other Agricultural Inputs on the basis of bank wise RLP for respective purposes. The limit is sanctioned to SCBs and RRBs.
MT Conversion.
NABARD provides relief to farmers whose crops are damaged due to natural calamities, by way of conversion of current short term agricultural loans into medium term loans and rephasement / reschedulement of existing MT (Conversion) loans. Consolidated limit will be sanctioned to RRBs and SCBs in respect of eligible DCCBs.
ST (Weavers)
Refinance support is available under ST (Weavers) as under :
  1. Working Capital requirement of Primary/Apex/Regional Weavers Coop Society - through State Coop Banks/DCCBs
  2. Working Capital requirement of Primary Weavers Coop Society – through Scheduled Commercial Bank
  3. Working Capital requirement of State Handloom Development Corporation – through Scheduled Commercial Banks & State Cooperative Banks
  4. Working Capital and Marketing requirement of Individual Weavers, Handloom Weavers Groups, Master Weavers, Mutually aided Coop Societies, Societies outside Coop fold and Producer Group Companies – through Scheduled Commercial Banks & RRBs

ong Term Loans
Investment credit leads to capital formation through asset creation. It induces technological upgradation resulting in increased production, productivity and incremental income to farmers and entrepreneurs.This is a long-term refinance facility. The credit is normally provided for a period of 3 to 15 years. It is intended to create income generating assets in the following sectors:
  1. Agriculture and allied activities
  2. Artisans, small scale industries, Non-Farm Sector (Small and Micro Enterprises), handicrafts, handlooms, powerlooms, etc.
  3. Activities of voluntary agencies and self help groups working among the rural poor
  1. Eligible Institutions
  2. The Institutions Eligible for Refinance are :
    1. State Co-operative Agriculture & Rural Development Banks (SCARDBs)
    2. Regional Rural Banks (RRBs)
    3. State Co-operative Banks (SCBs)
    4. Commercial Banks (CBs)
    5. State Agricultural Development Finance Companies (ADFCs)
    6. Scheduled Primary Urban Co-operative Banks (PUCBs)
    7. North East Development Finance Corporation (NEDFC)
    8. Non-Banking Financial Companies (NBFCs)

  3. Purposes :

    1. Farm Sector :
    2. Agriculture and allied activities such as minor irrigation, farm mechanisation, land development, soil conservation, dairy, sheep/goat rearing, poultry, piggery, plantation/horticulture, forestry, fishery, storage and market yards, bio-gas and other alternate sources of energy, sericulture, apiculture, animals and animal driven carts, agro-processing, agro-service centres, etc.
    3. Non-Farm Sector :
    4. Artisans, Small & Micro Enterprises, handicrafts, handlooms, powerlooms, etc
  4. Loan Period :
  5. The loan period is upto a maximum of 15 years

Eligible schemes for Refinance under Non-farm Sector
Automatic Refinance Scheme (ARF)

The various schemes formulated over the years have been categorized into five distinct and co.mpact schemes.
  1. Composite Loan Scheme (CLS)
    Under this scheme refinance is given to meet the block and /or working capital requirements of small/micro enterprises.  Max. refinance of 10 lakh per unit.
  2.  Integrated Loan Scheme (ILS)

    Under this scheme refinance is given to block capital and working capital for one operating cycle.  Max. Refinance of 15 lakh per borrower.

  3. Self Employment Scheme for Exservicemen (SEMFEX)
    The scheme has been in operation since 15 January 1988 which is specially designed to provide a comprehensive package of credit for encouraging ex-servicemen to undertake agricultural and allied activities or to set up non-farm units in rural areas to earn their livelihood for leading a dignified life.  NABARD provides refinance assistance under  Automatic Refinance Facility (ARF) to eligible banks for a wide spectrum of manufacturing, processing and service sector activities under RNFS (Investment Credit).
  4. Soft Loan Assistance for Margin Money (SLAMM)
    The scheme is to provide financial assistance to the prospective entrepreneurs who have the requisite talent and skill of entrepreneurship but lack necessary monetary resources to meet the margin requirements stipulated under relevant NABARD refinance schemes.
  5. Small Road and Water Transport Operators (SRWTO)
    Under this scheme the facilities for acquisition of transport vehicles, which are to be used for transportation of farm produce/industrial products to rural/urban marketing centers including passenger transport vehicle and water transport units.  Margin money assistance will be extended on a very selective basis up to 10% of the cost of the vehicle.
Rural Housing
Housing in the rural areas, both agriculturist and  non-agriculturists, combine the business as well as dwelling needs and thereby leads to overall rural development, NABARD is giving refinance (investment credit) to the eligible banks.
Renewable Energy
While addressing India’s energy security challenges, Ministry of New and Renewable Energy (MNRE), Government of India and the Jawaharlal Nehru National Solar Mission (JNNSM). In order to achieve this objective, the MNRE has launched a capital cum interest subsidy scheme for creation of off-grid, decentralised solar powered energy harvesting devices through application of photo voltaic technology for the purpose of lighting, heating, etc. at the level of domestic and mini commercial applications.  NABARD is the nodal agency for giving feasibility and Refinance for eligible projectS

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