The Government Information Center

Krushi Navodaya Loan Scheme

Introduction

The implementation of this special Loan Scheme, introduced through the 2007 , with the intention of improving the income generating Sources of small farmers and the self-employed engaged in varied economic activity in the field of agriculture.

Project Implementation Area

• All districts in the island

Quantum of Loan

• Maximum per person is Rs.100,000/- while the minimum is Rs. 10,000/-

Repayment Period

• Should be between 09 to 36 months. (Any grace period allowed also should be within the stipulated 3 year period.)

Securities

• Two Personal Guarantors acceptable to the Bank or
• Mortgage over movable or immovable property or
• Other securities acceptable to the Bank.

Forward Sales Contract

Forward Sales Contract is a contract of sale of goods between the farmer who agrees to sell their agro-products of certain amount with quality and the buyer agrees to purchase the goods as agreed on a future date with the agreed price, at an earlier stage.

For Whom

• Buyers/Sellers entered into the Forward Sales Contracts for marketing of agricultural commodities and falling into one of the following categories are eligible to receive credit facilities under the scheme.
• Individual Farmers/ Individuals
• Farmer Organizations
• Farmer Companies
• Partnerships
• Co-operative Societies
• Limited Liability Companies?

Maximum Credit Limit

• The upper limit of loan for paddy purchase subject to Forward Sales Contract under the New Comprehensive Rural Credit Scheme is Rs. 50 M.

Repayment Period

• Maximum repayment period for Yala and Maha Seasons is 180 days for paddy and 270 days for the other crops.

Securities

• Guarantors and pledge over paddy stocks to be purchased?? or
• Mortgage over immovable properties / Securities acceptable to the Bank

Product Features

• Buyers and sellers entered into a Forward Sales Contract to sell any agro products that belongs to the under mentioned category, are entitled to apply for this facility.
• The People's Bank function as a facilitator in the business activity.
• Loan facilities available for Yala and Maha seasons.
• Paddy, potato, Chilli, Red Onion, Big Onion, Maize, Soya beans, Black gram, Pineapple, Tomato etc.

Benefits

• Farmer can obtain loans subject to the Forward Sales Contract.
• Can obtain facilities upto 60% of the FSC agreement and be within the repayment capacity.
• Possession of an account when applying for a facility is not necessary.
• Benefits for Buyers/Millers/Producers

Maximum loan limit 75% value of the Forward Sales Contract agreement.
Should possess the repayment capacity and storage capacity.
Possession of an account when applying for a facility is not necessary.
Benefits for farmers

Farmer can sell his agro products to a fare price.
Can obtain a better harvest with the help of modern methods.
Can improve the quality and the bulk of the harvest.
Obtain an Insurance cover for the damage of the cultivation.
To have a good income through out the year.
Benefits for millers

Can purchase quality agro products.
Can obtain loan facilities at the interest rate 12% or less.
Since the purchase price is known well in advance, the best selling price can be decided.