FOREWORD

The revised and updated “Best Practice Code - Manual of Instructions on Agricultural Finance
(procedural and updated till 31.12.2013) is ready for release.

In view of importance attached to Agriculture, the norms governing agricultural credit have
become more dynamic. Numerous changes are being incorporated from time to time in order
to meet the demands of farm community. New products such as Revised KCCS Debit (RuPay)
Cards, Kisan All Purpose Term Loan have been introduced. Produce Loan to farmers has been
thoroughly revised to meet the expectations of both the farm community and also Collateral
Managers who have created storage capacity through a chain of warehouses/cold storages.
Guidelines on financing Micro Credit Groups (MCG’s) and Micro Credit Institutions (mFI’s)
have been advised since publication of previous edition of the manual. Also, many policy
changes have been effected in the intervening period. Revised Manual has been updated by
including all these changes.

One of the significant developments since publication of previous edition of AF Manual is

introduction of CBS in our Branches. Therefore, salient features of Agricultural Credit in
relation to CBS have been included in the revised manual.

Credit Dispensation is an art and technique. There is a need to exercise abundant diligence
by staff involved in entertaining the proposals. The staff at all levels, be it front office,
processing, sanctioning and monitoring have to scrupulously adhere to the guidelines relating
to credit dispensation, pre-sanction & post sanction verification of securities and related
systems and procedures. It is also necessary that staff involved in credit dispensation have to
tactfully elicit maximum information beyond what is furnished in the application from the
applicants/borrowers in order to facilitate a studied, well informed decision. It is also equally
important that the Branches/Offices have to be proactive in monitoring of loan accounts so
as to detect early warning signals in time and initiate necessary corrective measures / steps.

It is hoped that this revised manual helps the staff both at Branch as well as at Controlling
Office in discharging their responsibilities diligently. Branches /Offices should make best use
of this manual and ensure maintaining of a strong and healthy asset base.

We welcome suggestions/ideas for further improvement of the manual.

S.S. BHAT
GENERAL MANAGER
PC & FI WING
31.12.2013 H.O.: BANGALORE

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2
 INDEX OF CHAPTERS

Chapter Particulars Page No.

1 Classification of Agricultural Advances 5
2 Agricultural Finance – Lending Norms 11
3 General guidelines on procedural matters 42
4 Guidelines on lending process – Other procedural matters 66
5 Kisan Credit Card Scheme (KCCS)- Revised Scheme 82
(enabled with Rupay Debit Cards)
6 Crop loans 100
7 Kisan Suvidha Scheme 105
8 Krishi Mitra Credit Card Scheme 111
9 Kisan Tatkal 116
10 Canara Kisan OD 119
11 Produce loans 125
12 Kisan All Purpose Term Loan 151
13 Farm Development loan 156
14 Development loans for plantation/horticulture 160
15 Farm Forestry loans 164
16 Development loans for farm level storage structures 167
17 Pumpset loans 172
18 Drip/Sprinkler irrigation loans 179
19 Farm Machinery loans 182
20 Scheme for financing agriculturists for purchase of vehicles 194
(ALLHV)
21 Bullock/Camel/Cart loans 199
22 Dairy loans 202
23 Sheep and Goat rearing loan 208
24 Poultry and Duck Rearing 212
25 Piggery loan 221
26 Bee keeping (Apiculture) 225
27 Fisheries Loan 228
28 Sericulture Loan 242
29 Bio-Gas Plant Loan 245
30 Scheme for financing farmers for purchase of land for 249
agricultural purpose
31 Scheme for providing credit to tenant farmers & oral 256
lessees for raising crops through Joint Liability Groups
(JLGs)
32 Agricultural DRI Loan 260

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Chapter Particulars Page No.
33 Scheme for redemption of debts of farmers from 262
Non-Institutional Sources.
34 Hi-Tech Agriculture 265
35 Agricultural Loans to employees of our 277
Bank and NNND Agents.
36 Scheme for financing through Self-Help Groups(SHG’s) 279
37 Scheme for financing through Micro Credit Groups 291
(MCG’s)
38 Scheme for financing Micro Finance Institutions (mFI’s). 296
39 General Credit Card Scheme(GCCS) 319
40 Indirect Finance to Agriculture 322
41 Scheme for financing setting up of Agri Clinics and 325
Agribusiness Centres
42 Estate Purchase Loan 331
43 Asset classification, review, confirmation of status, follow 336
up and recovery of agricultural loans
44 Guidelines for relief measures by Banks in areas 358
affected by natural calamities
List of Annexure 374

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 CHAPTER - 1

CLASSIFICATION OF AGRICULTURAL ADVANCES

Agriculture advances are classified into following categories:

a) Priority - Direct Agriculture

- Indirect Agriculture.
b) Non-Priority Agriculture.

Priority – Agriculture(Direct and Indirect finance)

Direct Finance to agriculture shall include short, medium and long term loans given for
agriculture and allied activities (dairy, fishery, piggery, poultry, bee-keeping etc.,) directly
to individual farmers, Self Help Groups(SHG’s) or Joint Liability Groups(JLG’s) of individual
farmers without any ceiling on quantum of finance and to others (such as Corporates including
Producers Companies, partnership firms and Co-operatives of farmers directly engaged in
agriculture and allied activities) upto aggregate limit of Rs.2. crores per borrower.

Indirect Finance to agriculture shall include loans to Corporates, partnership firms and
institutions engaged in agriculture and allied activities if the aggregate loan limit per borrower
is more than Rs.2 crores(entire loan to be treated as indirect) besides other indirect agricultural
activities listed un Para 1.2.2.

Following are the mandatory norms for domestic commercial banks/Foreign banks with 20
and above branches stipulated by RBI in respect of agricultural advances vis-a vis Priority
Sector Advances:

Total Priority Sector 40% of ANBC* or CE-OBS Exposure** whichever is higher.

Total agriculture 18% of ANBC or CE- OBS Exposure, whichever is higher.

Of this, indirect lending in excess of 4.5% of ANBC or CE-OBS Exposure,

whichever is higher, will not be reckoned for computing achievement
under 18% target.
However, all agricultural loans under the categories ‘direct’ and
‘indirect’ will be reckoned in computing achievement under the overall
priority sector target of 40 % of ANBC or CE-OBS Exposure, whichever
is higher.

* Adjusted Net Bank Credit (ANBC)

**Credit equivalent of Off-Balance Sheet Exposures (CE-OBS exposure).

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1.1. Direct Agriculture

a) Loans to individual farmers [including Self Help Groups (SHGs) or Joint Liability Groups
(JLGs), i.e. groups of individual farmers, provided banks maintain disaggregated data
on such loans] engaged in Agriculture and Allied Activities, viz., dairy, fishery, animal
husbandry, poultry, bee-keeping and sericulture (up to cocoon stage).

i) Short-term loans to farmers for raising crops, i.e. for crop loans. This will include
traditional/non-traditional plantations, horticulture and allied activities.

ii) Medium & long-term loans to farmers for agriculture and allied activities
(e.g. purchase of agricultural implements and machinery, loans for irrigation and
other developmental activities undertaken in the farm, and development loans
for allied activities).

iii) Loans to farmers for pre-harvest and post-harvest activities, viz., spraying,
weeding, harvesting, sorting, grading and transporting of their own farm produce.

iv) Loans to farmers up to Rs.50 lakhs 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.

v) Loans to small and marginal farmers for purchase of land for agricultural purposes.

vi) Loans to distressed farmers indebted to non-institutional lenders.

vii) Bank loans to Primary Agricultural Credit Societies (PACS), Farmers’ Service
Societies (FSS) and Large-sized Adivasi Multi Purpose Societies (LAMPS) ceded to
or managed/ controlled by such banks for on lending to farmers for agricultural
and allied activities.

viii) Loans to farmers under Kisan Credit Card Scheme.

ix) Export credit to farmers for exporting their own farm produce.

b) Loans to Corporates including Farmers’ Producers Companies of individual farmers,

partnership firms and Cooperatives of farmers directly engaged in Agriculture and
Allied Activities) upto an aggregate limit of Rs.2 crore per borrower for the following
purposes:

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 i) Short-term loans for raising crops, i.e. for crop loans. This will include traditional/
non-traditional plantations, horticulture and allied activities.

ii) Medium & long-term loans for agriculture and allied activities (e.g. purchase of
agricultural implements and machinery, loans for irrigation and other
developmental activities undertaken in the farm, and development loans for
allied activities).

iii) Loans for pre-harvest and post-harvest activities such as spraying, weeding,
harvesting, grading and sorting.

iv) Export credit for exporting their own farm produce.

1.2. Indirect agriculture

1.2.1. Loans to Corporates, partnership firms and institutions engaged in Agriculture and
Allied Activities [dairy, fishery, animal husbandry, poultry, bee-keeping and sericulture
(up to cocoon stage)] , if the aggregate loan limit per borrower is more than
Rs.2 crore in respect of 1.1(b)(i) to (iv) as above, the entire loan to be treated as
Indirect

i) Short-term loans for raising crops, i.e. for crop loans. This will include
traditional/non-traditional plantations, horticulture and allied activities.

ii) Medium & long-term loans for agriculture and allied activities (e.g. purchase of
agricultural implements and machinery, loans for irrigation and other
developmental activities undertaken in the farm, and development loans for
allied activities).

iii) Loans for pre-harvest and post-harvest activities such as spraying, weeding,
harvesting, grading and sorting.

iv) Loans up to Rs. 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.

v) Export credit to Corporates, partnership firms and institutions for exporting

their own farm produce.

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 vi) Loans upto Rs.5 crore to Producer Companies set up exclusively by only small
and marginal farmers under Part IXA of Companies Act, 1956 for agricultural
and allied activities.

vii) Bank loans to Primary Agricultural Credit Societies (PACS), Farmers’ Service
Societies (FSS) and Large-sized Adivasi Multi Purpose Societies (LAMPS) other
than those covered under paragraph 1.1(a)(vii) above.

1.2.2. Other indirect agriculture loans

i) Loans up to Rs.5 crore per borrower to dealers /sellers of fertilizers,

pesticides, seeds, cattle feed, poultry feed, agricultural implements and other
inputs.

ii) Loans for setting up of Agriclinics and Agribusiness Centres.

iii) Loans up to Rs.5 crore to cooperative societies of farmers for disposing of the
produce of members.

iv) Loans to Custom Service Units managed by individuals, institutions or organizations

who maintain a fleet of tractors, bulldozers, well-boring equipment, threshers,
combines, etc., and undertake farm work for farmers on contract basis.

v) Loans for construction and running of storage facilities (warehouse, market yards,
godowns and silos), including cold storage units designed to store agriculture
produce/products, irrespective of their location.

If the storage unit is a micro or small enterprise, such loans will be classified
under loans to Micro and Small Enterprises sector.

vi) Loans to MFIs for on-lending to farmers for agricultural and allied activities as
per the conditions specified. Conditions specified are detailed after Para (viii),
below.

vii) Loans sanctioned to NGOs, which are SHG Promoting Institutions, for on-lending
to members of SHGs under SHG-Bank Linkage Programme for agricultural and
allied activities. The all inclusive interest charged by the NGO/SHG promoting
entity should not exceed the Base Rate of the lending bank plus eight percent
per annum.

viii) Loans sanctioned to RRBs for on-lending to agriculture and allied activities.

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Conditions specified for extending Bank loans to MFIs for on-lending:

1. Bank credit to MFIs extended on, or after, April 1, 2011 for on-lending to individuals
and also to members of SHGs / JLGs will be eligible for categorization as priority
sector advance under respective categories viz., agriculture, micro and small
enterprise, and ‘others’, as indirect finance, provided not less than 85% of total
assets of MFI (other than cash, balances with banks and financial institutions,
government securities and money market instruments) are in the nature of “qualifying
assets”. In addition, aggregate amount of loan, extended for income generating
activity, is not less than 75% of the total loans given by MFIs.

2. A “qualifying asset” shall mean a loan disbursed by MFI, which satisfies the following
criteria:

i) The loan is to be extended to a borrower whose household annual income in

rural areas does not exceed 60,000/- while for non-rural areas it should not
exceed 1,20,000/-.
ii) Loan does not exceed 35,000/- in the first cycle and 50,000/- in the subsequent
cycles
iii) Total indebtedness of the borrower does not exceed 50,000/-.
iv) Tenure of loan is not less than 24 months when loan amount exceeds
Rs.15,000/- with right to borrower of prepayment without penalty.
v) The loan is without collateral.
vi) Loan is repayable by weekly, fortnightly or monthly installments at the choice of
the borrower.

3. Further, the banks have to ensure that MFIs comply with the following caps on margin
and interest rate as also other ‘pricing guidelines’, to be eligible to classify these
loans as priority sector loans.

i) Margin cap at 12% for all MFIs. The interest cost is to be calculated on average
fortnightly balances of outstanding borrowings and interest income is to be
calculated on average fortnightly balances of outstanding loan portfolio of
qualifying assets.
ii) Interest cap on individual loans at 26% per annum for all MFIs to be calculated
on a reducing balance basis.
iii) Only three components are to be included in pricing of loans viz.,
(a) a processing fee not exceeding 1% of the gross loan amount,
(b) the interest charge and
(c) the insurance premium.
iv) The processing fee is not to be included in the margin cap or the interest cap of
26%.

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 v) Only the actual cost of insurance i.e. actual cost of group insurance for life,
health and livestock for borrower and spouse can be recovered; administrative
charges may be recovered as per IRDA guidelines.
vi) There should not be any penalty for delayed payment.
vii) No Security Deposit/ Margin are to be taken.

4. The banks should obtain from MFI, at the end of each quarter, a Chartered Accountant’s
Certificate stating, inter-alia, that (i) 85% of total assets of the MFI are in the nature
of “qualifying assets’’, (ii) the aggregate amount of loan, extended for income
generation activity, is not less than 75% of the total loans given by the MFIs, and (iii)
pricing guidelines are followed.

1.3 Non Priority Agriculture

Estate purchase loans.

1.4 Instructions on the system provision

The BAM83 & CIM09 fields are made mandatory before disbursement of loans. Hence,
branches are advised to select applicable fields to ensure proper classification.

Branches have to classify an account as Direct or Indirect advances to agriculture or

as Non-priority in BAM83 option, before disbursing the loan.

Since constitution of the borrower also is material to classification, updating of MIS

details in CIM09 option before disbursement is to be ensured.

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 CHAPTER - 2

AGRICULTURAL FINANCE - LENDING NORMS

1. Eligibility
2. Delegation of powers for sanction
3. Margin
4. Security
5. Rate of Interest
6. Classification of farmers
7. Repayment
8. Processing and other charges

2.1 ELIGIBILITY:

2.1.1 Individuals, Association of persons, Firms, Companies, Self Help Groups Joint Liability
Groups etc. having necessary resources, skills, capacity and willingness to undertake
any productive activity in agriculture are eligible for loans. Further, the applicants
should be
i) Receptive to modern technology
ii) Either owner cultivators, tenant farmers or landless laborers

2.1.2 While granting agricultural loans the following guidelines are to be noted:

i) The branches can finance upto 16 kms in their command area for all Priority
Sector Advances.

ii) For financing beyond 16 km the branches have to obtain the permission of Circle
Office for branch sanctions. The Chief Managers of VLB / Divisional Managers /
Assistant General Manager at Circle Office can permit for financing beyond 16 km
considering the size of the advance, cluster of loan proposals, capacity of the
branch to service the account, etc. However, follow up of such advances should
not be an issue, while permitting loan beyond 16 KM and same to be ensured by
the respective Sanctioning Authority.

iii) The accounts coming under the powers of Chief Manager (VLB) and Divisional
Manger of Circle and above, the sanctioning authorities themselves can permit
for financing beyond the stipulated distance of 16 km. However, follow
up of such advances should not be an issue, while permitting loan beyond
16 KM and same to be ensured by the respective Sanctioning Authority.

iv) In case of plantation advances the nearest branch to the estate should service
the loan.
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 v) The applicant however should not be a defaulter to any other bank or financial
institution.

2.1.3 In respect of Govt. sponsored Schemes Branches have to be guided by service area
guidelines wherein specific villages, generally in geographical contiguous areas, are
allotted to rural and semi Urban branches. In other cases the branches will be free to
lend in any area, in terms of para 2.1.2 , in as much as the borrowers who will also
have a choice of approaching any branch for their credit requirements.

2.2 DELEGATION OF POWERS FOR LOANS AND ADVANCES:

i) Loans for agricultural purposes should be sanctioned upto the delegated powers
by the concerned sanctioning authority. The detailed guidelines for delegation
of powers for loans and advances are as advised by HO from time to time and the
same are to be scrupulously followed.

ii) To determine sanctioning authority, security norms and rate of interest, the actual
loan component should be taken into account. However, specific scheme guidelines
on security norms advised by GOI/State Government to be adhered to.

2.3 MARGIN :
Generally the applicant has to bring in margin as under with exceptions in following
Para 2.3.3:

2.3.1.For loans other than revised KCCS:

i) For loans upto . 1,00,000/- No margin

ii) For loans more than . 1,00,000/- 15% to 25% of the project cost depending
upon purpose and quantum of loan.

2.3.2. For revised KCCS:

I) For loans upto . 1,00,000/- No margin

ii) For loans above . 1,00,000/-

Component
i) Crop cultivation/maintenance
ii) Sub-limit in respect of WC requirement
for allied activities, farm machinery
maintenance, consumption need,
non farm sector.
Norm
As per scale of finance
Margin of 15% to 25% of
projected expenditure.

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2.3.3 Exceptions on Margin Norms

Particulars Minimum margin

subsidy and borrower’s contribution (as specified in the Wherever subsidy is
respective schemes) together will constitute the margin. available
Small/marginal farmers, agricultural laborers for loans 10% - 15%
above ‘ 1 lakh & upto ‘ 2 lacs, the margin requirement
Land-based activities where the value of the mortgaged 10%-15%
land and building is twice the exposure, for loans above
Rs.1 lakh & upto Rs. 2 lacs
ALLHV loans other than Medium & Heavy Commercial 10%
vehicles (MCV/HCV)
MCVs/HCVs 25%
Second hand vehicles 25%
Second hand Tractors 40%
Deep Sea fishing vessels 25%-33%
KCCS/Crop loans for crop cultivation/Maintenance Inbuilt margin in SoF*
Kisan Tatkal Scheme Nil
Krishi Mitra Credit Card Scheme(Other than crop Nil
cultivation sub-purpose)
GCC Nil
Estate Purchase Loans 50%
Scheme for financing farmers for purchase of lands for
agricultural purposes 20%
Scheme for redemption of debts of farmers from non- Nil
institutional sources
Agri Clinics and agri-Business Centers (ACABC)
For loans upto Rs.5 lacs - No margin
For loans beyond Rs. 5 lacs - 15 % to 25 %

*The technical committee arrives at the scale of finance after retaining a usual margin of
25%.

2.3.3. Branch to provide the Project cost and Margin in LN 057 option at the time of
opening the loan accounts.

2.4 SECURITY:

i) Credit proposals will have to be considered primarily having regard to their

economic viability and technical feasibility. However, security is stipulated in
order to create a binding on the borrower in the project and to prevent him/her

13
 from the possibility of availing financial assistance by charging the assets
to other sources.

ii) Specific Scheme guideline on security norms advised by the Govt. of India/
State Government to be adhered. In other cases or if the same is not specified
in the Scheme guidelines, actual loan component should be taken into account
including subsidy amount receivable.

iii) Security to be created in BAM 74 option and linked to loan account in LNM34
option.

2.4.1. Loans are broadly categorized as under for the purpose of applying security norms-

i) Working Capital(WC) loans like crop production loans which shall include KCCS,
Crop loans etc.,
ii) Investment loans-where moveable are created
iii) Development loans-where assets are created on immoveable properties or result
in improvement of the immoveable assets on which development is
taken up

2.4.2 Security shall be obtained as under:

i) In respect of loans other than where specific relaxations/guidelines are advised

as detailed under Para 2.4.2(ii) to (vii) below:

Loan Quantum Security to be stipulated

For loan upto Rs.1,00,000/-
For loans above Rs.1,00,000/-
Hypothecation of crops/assets created out of
our finance.
i) Hypothecation of crops/assets created out
of our finance.
ii) Mortgage of landed properties.

Note:

In case party is already having a KCCS loan, and total exposure including the proposed
development/investment loan exceeds Rs.1,00,000/-, then mortgage of land has to be
stipulated in addition to hypothecation of crops/assets created out of our
finance.

ii) Collateral free agricultural loans for a higher amount of loan for certain category
of loans/borrowers:

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 Waiver of collateral/
mortgage for loans upto
Sub-ceiling Over all
ceiling
Borrowers with 2 years satisfactory track record 1,00,000/- 1,25,000/-
and where charge is created under the
State Act as per Talwar Committee
recommendations

iii) For loans under revised KCCS(5th year limit):

Loan Quantum Security to be stipulated

For loan upto Rs.1,50,000/-
For loans above Rs.1,50,000/-
Hypothecation of crops/assets created out of
our finance.
i) Hypothecation of crops/assets created out
of our finance.
ii) Mortgage of landed properties.

Note :

a) In states where charge creation is made online, irrespective of the limit, charge
shall be created.
b) In states where charge creation is done manually, charge shall be created in
respect of loans above Rs.1 lakh but upto Rs.1.50 lakh.
c) In case party is already having a development/investment loan, and total exposure
including the proposed KCCS exceeds Rs.1,50,000/-, than mortgage of land has
to be stipulated in addition to hypothecation of crop.

iv) In cases where tie-up arrangement is available:

In cases where tie-up arrangements (like in case of sugar factory, Tobacco Board
etc.,) are available for recovery, loans upto Rs.3.00 lakhs can be extended without
insisting on mortgage under KCCS/Investment /Development loans either
individually or put together.

In case of Sugarcane loans under Tie-up arrangements with such sugar mills
which are rated in terms of scoring matrix devised for evaluating the strength of
the Sugar mill, certain relaxations are permitted as detailed in
Annexure 2.

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v) Scheme specific Stipulations on mortgage of landed properties:

a) Canara Kisan OD irrespective of the limit, mortgage of landed properties are

to be obtained and the value should be at least 200% of the limit is to be
obtained as prime security. If same properties have already been mortgaged
to other limits, the balance value/residual value of securities available i.e.
excluding the existing limits is to be taken.

b) In respect of Tractor loans/power tiller/Combine harvester/other farm

machineries, when mortgage of landed property is required to be taken, the
value should be atleast equal to the loan amount or security of tangible assets
with requisite margin valued equivalent to the loan amount(relaxations subject
to Circle DGM as enumerated in the relative Chapter 19)

c) Loan for Deep sea fishing vessels, the value of collateral security of
immoveable properties should be atleast 200% of the loan amount

d) Estate Purchase Loan: Mortgage of property to be purchased. Also, collateral

security of mortgage of existing landed properties /including preferably
residential property is to be obtained. In any case, the value of the security
should not be less than 200% of the loan amount.

vi) Exceptions: for following Investment loans:

Either mortgage of landed property or co-obligation of 3rd party acceptable to

bank to be obtained in addition to hypothecation of assets created in following
cases:

- Fishing boats (excluding deep sea fishing vessels)-However, discretion is given

to SA to stipulate additional Collateral securities)
- Purchase of vehicles under ALLHV scheme (excluding Medium and heavy
commercial vehicles such as lorries/trucks)
- Sprinkler set loans of upto Rs.2 lakhs for coffee estates.

vii) For loans granted under certain specific Schemes, Scheme specific guidelines
on security shall be as under:

a) Krishi Mitra Card -Hypothecation of crops cultivated

b) Kisan Tatkal- Existing security/ies obtained for KCC limit to be continued. No

additional securities to be insisted

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 c) GCC-Clean loan, no co-obligation / third party guarantee shall be obtained.

d) Scheme for redemption of debts of farmers from non-institutional sources:

i) Clean Advance ; Co obligation of spouse/adult children of the borrower to

be obtained so as to ensure family pressure in not reverting to
non-institutional borrowings again;
ii) Mortgage of landed properties if the existing limits/liability & the proposed
loan exceeds Rs. 100,000/-

e) Credit to Tenant Farmers and Oral Lessees for raising crops through
JLGs- Clean advance

f) Purchasing Agricultural lands- Hypothecation of crops & Mortgage of lands

irrespective of the limit(subject to the ceiling of Rs.10 lakhs under the
Scheme)- lands presently owned, if any, and to be purchased

g) Agri-clinics / Agri-business:

i) Loans upto Rs. 100000/- : Hypothecation of assets created out of loan

ii) Loans above Rs.100000/- upto Rs.500000/- : Hypothecation of assets
created out of loan + Third party Co-obligation / Guarantee
iii) Loans above Rs. 5 lacs: Hypothecation of assets created out of loan +
mortgage of landed property equivalent to loan amount + Co-obligation
/ Guarantor (In deserving cases co-obligation / guarantor may be waived
by the sanctioning authority)

Note: Wherever immoveable assets are created out of the loan, mortgage of that
property should be obtained

2.4.2.1 Stipulations regarding mortgage

i. The borrower should mortgage landed properties where developments are being
envisaged or where crops are being raised for which crop loan has been
sanctioned.

ii. For genuine reasons such as non-availability of original title deeds, Jamma
lands, leasehold lands etc. if the borrower cannot mortgage
lands as above(2.4.2.1.i), alternative securities as under may be
obtained

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 NATURE OF SECURITY MARGIN
1 Surrender value of LIC policies 10%
2 Market value of approved shares/debentures/bonds 50%
3 Market value of approved demat shares 30%
4 Approved units of mutual funds 50% of net asset value
NAV) or market value
whichever
5 Govt. Promissiory Note 10%
6 NSC’s/Kisan Vikas Patra’s (KVP) 25%
7 Third party term deposits 25%
8 Gold 40% of the appraised value
9 Alternate landed properties:
• Farm development loans/crop loans 50%
• Investment loans The value of alternate
land should be at least equal
to the value of property
where developments are
proposed
• Development loan in case of allied The value of alternate
activities land should be
at least equal to the
post-developmental value
of property where
developments are
proposed

Conditions :
a) It should be ensured that there is no encumbrance on the land where developments
are being proposed and LSR to be obtained to ascertain valid title. Further, all
the available title deeds of the portion of the lands not taken as security, should
also be obtained from the party, and also the same should be kept along with
loan papers.
b) Though the security other than the land is being obtained, all other terms and
conditions like margin, repayment period, rate of interest, disbursement
procedures, pre-sanction, post- sanction visits, etc. as applicable to the different
schemes should be adhered to.
c) Third party deposit refers to deposit belonging to persons other than the borrower.
d) The other securities mentioned above other than deposits may be either in the
name of the borrower or in the name of third party.
e) As regards safe keeping of gold jewellery, the procedure as applicable in respect
of gold loans granted under the gold loan scheme should be followed.
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 f) In respect of development loans considered against the security of alternate
landed property, are to be referred to CO even though limit falls under the branch’s
delegated powers. However this norm is not applicable to crop and investment
loan proposals.

2.4.2.2 Crop loans: If for any genuine reason, the borrowers cannot mortgage the entire land
on which they are going to raise crops, branches/offices are permitted to grant crop
loans against the security of part of the land valued twice the loan amount. Then the
mortgage of other lands need not be insisted. In such cases the following precautions
should be taken

a) It should be ensured that there is no encumbrance on the land where crops are
being grown and LSR to be obtained to ascertain valid title. Further, all the
available title deeds of the portion of the lands not taken as security should also
be obtained from the party.
b) Up-to-date encumbrance certificate should be obtained at the time of renewal in
respect of all the lands for which finance is made while considering the renewal
of crop loan proposals.

2.4.2.3 Tractors & farm machineries :

Security of tangible assets like NSCs, KVP, the Bank’s FDs, surrender value of LIC
Policy, Gold (appraised value) etc., with requisite margin valued equivalent to the
loan amount when the mortgage of landed property is partly/fully waived by the
competent Authority(as per Chapter 19).

2.4.3 Security Norms - General Aspects

1. For loans granted for land development such as land levelling, sinking of well,
contour bunding, and other on farm developments, the value of security should
be twice the loan amount (post development value).

2. For loans granted for allied agricultural activities like poultry, dairy development
etc. which may also involve development work such as construction of cattle/
poultry sheds and other infrastructures which are required for carrying out
the allied activities, it is sufficient that the landed property on which the
developments are proposed to be carried out are mortgaged apart from
hypothecation of moveable assets created out of our loan irrespective of value
of the land. However, if the sanctioning authority feels that there is need for
additional collaterals depending on risk factors, the same may be insisted.

19
3. For development loans under government-sponsored schemes, the norm that the
value of security should be twice the loan amount, need not be insisted.

4. Aggregation of loans/liability for security norms: The liability of the borrower

under Gold loans, Bio-gas loans, Marine Fishery loans, ALLHV loans need not be
taken into consideration and vice-versa though movable assets are created and
are grouped under investment loans while deciding security norms for other
investment loans.

5. Development loans above `. 15000/- and upto `. 1,00,000/-: where the land is
not obtained as collateral in terms of the guidelines, branches are to obtain
Photostat copies of available title deeds duly verifying the same with the original.
Also encumbrance certificate for the past 13 years should be obtained and it
should be ensured that there are no prior encumbrances on the lands owned by
the farmer.

6. In respect of Indirect agricultural loans the above guidelines on Margin and security
norms are applicable only for cold storages, warehouses and such projects where
the immoveable assets are created in the nature of Farm development /land
development activities. In respect of the other indirect agricultural activities
norms as applicable to Non-agricultural/General loans shall apply.

7. Granting loan on lease hold landed property :

a) When the lease period is less than 50 years but cover the period of our
repayment, loans upto Rs.10,000/- can be permitted including for development
purposes subject to the following :
i) The lands where the developments are proposed should be only Government
leased lands.
ii) The lease agreement should provide for mortgage of lease hold rights in
favour of the bank and the same should be mortgaged to the bank.
iii) The period of lease should be atleast one year more than the time required
for repayment of the loan.
iv) For loans above Rs.5000/- suitable co-obligation to be obtained.

b) Where the lease period is longer i.e. more than 50 years need based finance
can be permitted on merits against mortgage of lease hold rights without
the ceiling of Rs.10,000/-on Government leased lands.

c) The above stipulations of 7 (a) and( b) do not apply to cases permitted under
specific schemes for tenant farmer groups , Krishi Mitra Card Scheme and

20
 also KCCS loans for cultivation and other eligible expenses on any authorized
lease lands i.e. lease arrangements where documentary proof is available
upto the extent where mortgage is not required in terms of Para 2.4.2 (i) of
this Chapter.

2.5. RATE OF INTEREST :

2.5.1 For the purpose of computing applicable rate of interest at the time of sanction /
renewal of the limits, the aggregation of limit/liability should be with reference to
the following(except for the few exemptions furnished in para 2.5.6)
- Sanctioned limit in respect of all fund based working capital limits.
- Liability in respect of all term loans/short term loans, which are fully availed.
- Unavailed limit plus liability outstanding in case of partly availed Term Loan/
Short Term Loans.
- Limit permitted if not availed in case of Term Loan/Short Term Loans.
- Proposed limit/loan to be sanctioned.

To determine rate of interest, the actual loan component should be taken into
account excluding subsidy amount receivable.

2.5.2 For determining the rate of interest on credit facilities (non schematic loans) both
priority and non priority, term loans and short term loans, the limit or liability, as the
case may be in the name of the borrower in a particular capacity under any specific
schemes like Can cash, Can mobile, Housing Finance etc. (Schematic loans) shall be
excluded.

2.5.3 Loans/Advances against the term deposits of the bank, in the name of the borrower
(either singly or jointly) are to be excluded while aggregating limits/liabilities.

2.5.4 Interest at applicable rate as applicable to slab is to be charged. Under agriculture,

following is basis on which interest is to be charged:

Loan Quantum Basis of application of rate of interest.

1 i) Loans upto Rs.3 lakhs
ii) Loans above Rs.3 lakhs and
upto Rs.25 lakhs As applicable to particular slab.
iii) Loans above Rs.25 lakhs and
upto Rs.100 lakhs
2 Loans above Rs.100 lakhs and upto On the basis of scoring norms as advised
Rs.200 lakhs under:
a) For Working Capital Loans – Annexure – 3.
b) For Term loans – Annexure 4.

21
 Loan Quantum
3 For loans above Rs.200 lakhs and
upto Rs.1000 lakhs
4 For loans above Rs.1000 lakhs
Basis of application of rate of interest.
Based on Internal rise rating assigned (RAM
Model)
Based on whether borrower is subjected to
external rating or not.

2.5.5 The aggregation of the limit/liability needs to be done at the time of sanction / renewal
/review of credit facilities and need not be done wherever there is any change in the
rate of interest. Whenever there is any change in the rate of interest, the appropriate
interest in the corresponding slab is to be charged to the specific borrower.

Branches may generate the Native Report – LN 721 to know the details of the loans
already sanctioned to a borrower.

The review/revision of ROI is applicable only in respect of working capital limits.

Hence in respect of term loans, the ROI stipulated and prevailing at the time of sanction
subject to subsequent revision/s in ROI, if any, across the board may be continued

The fresh slab at the time of review/renewal will hence be applicable to only for
working capital /running limits.

2.5.6 Exemptions for aggregations for the purpose of determining Interest:

For the purpose of determining the rate of interest in respect of finance under the
following Schemes, the limits under similar type of advance alone shall be considered
for the purpose of aggregating the limits:

i) Scheme of gold loans for agricultural purposes.

ii) SHG loans.

In respect of other loans, exposures under the above are to be however aggregated
and slab should be arrived at.

To determine rate of interest, the actual loan component should be taken into account
excluding subsidy amount receivable, both in case of front ended and back ended
subsidy.

2.5.7.In the instances where farmers approach for a second loan when they have direct
liability under another loan availed jointly with another borrower, the direct liability
of parties under the earlier loan granted jointly should be taken into consideration
to decide the eligible slab of interest for the second loan.

22
2.5.8.CHARGING OF INTEREST TO SMALL AND MARGINAL FARMERS:

CROP PRODUCTION LOANS:

(i) The total interest debited in respect of crop production loans granted to small
and marginal farmers should not exceed the principal amount. However, from
the date of filing suit branches should claim future interest at the contracted
rate.

Branches should note to mark the ROI as zero in LNM 83 option, once the total
interest debited to the account exceeds the loan amount disbursed in the
account.

(ii) For the purpose of determining category of farmers, the land holding shall be the
criteria. The farmers having land holding of 5 acres and less of land, tenant
cultivators, share croppers are only to be classified as small farmers for extending
the above benefits.

(iii) To be classified as ‘Small Farmers’/”marginal Farmers’ in CIM 09

(iv) In case of suit filed/decreed accounts, if the decreed amount is less than the
suit claim then the branches may prefer appeal to the courts (in consultation
with their respective R & L section) for awarding higher amount including the
contracted rate from the date of filing suit.

2.5.9.PENAL INTEREST :

Penal interest is applicable to the following categories of advances :

i. All Priority agricultural advances :
a) Upto aggregate credit limit of Rs.25,000 Nil
b) Aggregate credit limit exceeding Rs.25,000
And upto Rs. 2 lakhs 1%
c) Aggregate limits above Rs. 2 lakhs 2%

ii. Estate purchase loans

a) upto Rs. 5000 Nil
b) Above Rs.5000 2%

Note: All advances under Govt. sponsored Schemes are exempted from the purview
of penal interest

23
iii. For loans granted through cooperative societies, penal interest at the rate of
1% p.a. should be charged on overdue loan accounts, on delayed payments and
for overdue period.
iv. In respect of delay in creation of EMT/II Charge, 1% penal interest is to be levied.
v. Delayed/Non submission of Stock/MSOD/Book debt statements- 2% on the entire
liability for the delayed period.
vi. Delayed/Non submission of QOS/HOS-1% on the Fund based liability and 0.25%
on the NFB liability subject to a cap of Rs. 1.00 lac per month for parties who
enjoy exclusive NFB limits/in case enjoying both FB & NFB limits.
vii. Non-submission of Annual Financial Statement:
Penal interest of 2% on the outstanding liability (fund based) shall be collected if
the audited financial statements are not submitted before 31st October every
year in case accounting year ends at 31st March or within 7 months from the date
closing of annual accounts in case accounting year ending is other than 31st
March or within a fortnight of adoption of accounts of the borrower whichever is
earlier. However, this stipulation will not be applicable to PSUs/Govt. bodies and
those statutorily exempted from audit.
viii. In respect of Agricultural Term loans penal interest is not to be charged upto
3 months from the due date of repayment of loans/installments.
ix. Penal interest is to be charged only on delayed payments (installment and interest)
for the overdue period and not on the entire liability.
x. The penal interest should be debited to the loan account along with regular
interest.
xi. It shall be ensured that under no circumstances, the penal interest levied to any
borrower exceeds 2% over and above the stipulated rate of interest in the
concerned individual cases.
xii. A letter as per the draft in Annexure - 5 is to be addressed to the borrower
whenever penal interest is to be charged to existing accounts in view of the
sanction of additional limits.
xiii. Waiver of Penal Interest
§ If the default is due to genuine circumstances like natural calamities, depending
upon the intensity of the adverse situation, the penal interest can be waived
by the concerned sanctioning authority (except in case of the borrowal account
falling within the powers of authorities at the branch level)
§ If the borrowal account falls within the powers of authorities at the branch
level, then the authorities at COshall permit the proposals.
§ Waiver to be permitted by the delegated authorities /Committees as advised
by the bank from time to time as a general policy matter on Delegation on
credit matters
xiv. The system debits the penal interest along with regular interest. Wherever
required, as mentioned above, Penal interest reversals in the accounts can be
done in BAM 57 Screen

24
2.5.10 MODE AND PERIODICITY OF CHARGING INTEREST:

The following Table explains the underlying system of periodicity of interest application:

Nature of loan Periodicity Remark

Crop production loans
for Short duration crops
Crop production loans
for Long duration crops
Crop/Land based agricultural
Term loans(Repayable in 36
months & above)like
plantation development/
investment loans where
income is linked to crop
production
Half yearly Compounding after it has
(March/September) become due(If drawal remain
Simple interest outstanding for more than
twelve months)
Yearly(March) Compounding after it has
Simple interest become due(In eighteen
months in case of long
duration crops such as
sugarcane, banana and other
annual yielding crops}
Compound annually after
the loan becomes due
Half yearly(March/ Repayment of installment/
September) interest to be fixed on the
Simple interest basis of income generation
and harvesting /marketing
season Compound the
interest if the interest /
installment becomes
overdue.

Allied activities like Poultry/ Monthly Or Half yearly Repayment of installment/

sheep-Goat rearing/fisheries (March/September) interest to be fixed on the
etc Simple interest basis of income generation
and harvesting / marketing
season Accordingly the
branch may stipulate
periodicity of debit/
compound the interest if the
interest / installment
becomes overdue.
Inventory advances given for Monthly Compounding is done when
agri activities where there is Simple interest installment/interest is
regular income generation overdue
such as- Floriculture, Poultry,
mush room etc

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 Nature of loan
VSL for Agriculture
Indirect Agriculture
Periodicity Remark
Monthly As applicable to General
Compound Interest advances -VSL
Monthly In respect of advances like
OCC, OD, KCC etc granted to
Dealers of Fertilizers,
pesticides, insecticides etc,
for trading activities

Half yearly In respect of other indirect

(March/September) advances where the income
generation is not regular/
continuous and linked to
crop seasons and General
Credit Card Scheme

Loans to SHGs/NGOsMFIs Monthly Or Half yearly Depending on the generation

for on lending (Agriculture)
Estate purchase loan
(Non Priority)
(March/September) of both as WC and Term loans
income of the majority of
the members of the groups
Monthly and However, in these cases
compounded recovery of interest may not
be insisted till harvesting
and marketing of crop by
fixing a suitable holiday
period at the time of
sanction.

In Core Banking Environment, there are two groups of agriculture product:

• Products from 783 to 811 come under the category of monthly installment-cum-
interest type
• Products starting from 812 come under the category of Quarterly/Half-yearly/
Yearly/18 months’ installment periodicity with Half-yearly interest type.

However the branch has to ensure the following:

Generate following reports in Business Object at monthly intervals and ensure

RoI stipulated in the accounts is as per sanction and subject to changes as
applicable

280002- agricultural loan interest dump

280015 - interest rate for loan accounts including zero interest variance

26
Note on the Table under Para 2.5.10:

a) Compounding of Interest

i) Kisan Credit Card / Sub-Limit I under Kisan Suvidha Scheme/Other Crop

production limits

If drawal remain outstanding for more than twelve months in case of short
duration crops or eighteen months in case of long duration crops such as
sugarcane, banana and other annual yielding crops, then alone compounding
of interest is to be made.

ii) Direct agriculture- other Short Term Loans :

If payment of principal and / or interest is not paid on or before due date

stipulated, then compounding of interest is to be done.

iii) Direct agriculture- Term Loans :

Where installment has not fallen due: Compounding of interest should not
be done.

Where installment / interest has fallen due and account is partly overdue:
Compounding of interest is to be done.

Where account is fully overdue: Compounding of interest is to be done.

Except under the above cases, ALL DIRECT AGRICULTURAL LOANS SHOULD
CARRY SIMPLE INTEREST ONLY.

b) Interest debited is not interest demanded. Interest may be demanded

along with installments or after a grace period or as and when debited
depending upon generation of income from the investment or income
from other sources. Therefore to decide whether interest has become
overdue or not, branches should carefully study the sanction terms and
conditions. Branches should specifically mention about the repayment of
interest in sanctions.

c) In respect of ALDRI loans the branches should compound the interest only
when the entire loan becomes overdue.

27
d) If the borrower has committed default at any time during the period of
application of interest though subsequently the account has been regularized
and is in order at the time of debiting of interest, in such cases interest
should be charged on the total liability (i.e. compounded for the relative
period)

e) In case there is no default of any type during the period for which interest
is being applied then interest should be calculated only on the balance
under principal on product basis.

f) Where the default is due to genuine reasons, branches should extend the
period of loan or reschedule the installments under the term loan. Once
such a relief has been extended, the overdues become current dues and
branch should not compound interest/charge penal interest.

g) Payment of interest and installments should be stipulated/insisted to coincide

with the expected receipt of income by the farmer. For eg., for crop loans,
payment of interest should be insisted along with principal after expected
marketing of produce.

i) For term loans where the farmer has other income and repaying capacity
to pay interest before generation of income from the investment financed
by the bank, interest should be recovered at half yearly/yearly intervals
to coincide with the expected receipt of income. Having so stipulated for
payment of interest, if not recovered interest should be compounded.

ii) In all other cases, other than g(i) referred to above, interest should be
recovered along with installments due for repayment.

h) In cases where repayment holiday is given for payment of interest and

installment and interest is accumulated, such accumulated interest
should be recovered first before start of recovery of principal. In such
cases, suitable repayment schedule should be fixed by the sanctioning
authority for recovery of interest and installments separately keeping in
view the income generation and the same is to be clearly stipulated in
the sanction letter itself. Fixing of repayment schedule should have a bearing
on the anticipated income generation out of the investment made/asset
created from our finance, so as to enable the farmers to effect repayment
from the incremental income so generated. Unlike industry and trading
activities where there will be normally certain uniform generation of

28
 income in the case of agriculture and allied activities, the income generation
will be mostly seasonal or graded. Hence, stipulation of repayment in equal
installments uniformly will not suit certain types of advances. Therefore,
wherever income is not uniform, graded installments may be prescribed
instead of equal installments by the sanctioning authority depending upon
incremental income generated. Branches have to follow standard repayment
schedule prescribed for various categories of advances as detailed in this
chapter elsewhere.

i) Additional interest on adhoc limits shall be priced at least 2% higher than

that stipulated for the regular credit facility. However, this is not applicable
to Adhoc facility permitted for export limits.

j) Branches to create adhoc limit under CHM07 and check the box – ADHOC limit.

2.5.11 Interest to PACS/FSS/LAMPS:

(i) The rate to be charged by the Banks to PACS/FSS/LAMPS should be as per

guidelines issued by Head Office from time to time.
(ii) The interest is calculated half yearly.
(iii) No compounding of interest for default of the account in respect of financing
of Co-operative Societies.

2.6. CLASSIFICATION OF FARMERS:

i) Farmers having agricultural holdings of upto 2.50 acres are considered as “marginal
farmers” and such farmers whose holdings is above 2.50 acres but upto 5.00
acres are considered as “small farmers”. For the purpose of priority sector loans
‘small and marginal farmers’ include landless agricultural labourers, tenant
farmers, oral lessees and share-croppers, whose share of landholding is within
above limits prescribed for “Small and Marginal Farmer”.

ii) When the loans are covered under SGSY/NRLM etc., the beneficiary should be
treated as small farmer.

iii) In respect of loans covered under NABARD refinance, the NABARD definition of
classification of farmers should be followed, to determine the category of the
farmer.

iv) Financing new farmers: In the light of focus on coverage of “new farmer” through
agriculture credit ,he/she is defined as one availing of bank credit for the first

29
 time and for this purpose, his/her declaration to that effect could be taken as
the basis. For this purpose a declaration on the following lines may be incorporated,
in the application above the place provided for signature of the applicant.
”I declare that I have not availed any credit assistance from the bank till now and
the assistance I am seeking is the first occasion of availing credit, if proposal is
considered, from the bank”. However VSL availed by a farmer need not be
considered as previous credit assistance for the purpose of treating the farmer as
a ‘New Farmer’ or otherwise.

Details of category of farmers ,extent of lands to be incorporated through ALM35

option

2.7 REPAYMENT :

The repayment of loan advanced should come from the incremental income generated
by the investment for which the loan has been given. Further a part of incremental
income will have to be left to the loan beneficiary to meet subsistence and improve
his standard of living if possible. The balance amount shall be used for servicing the
loan towards interest and installment.

Payment of interest and installment should be stipulated/ insisted to coincide with the
expected receipt of income by farmer.

i) In respect of crop loans, payment of interest should be insisted along with

principal.
ii) In respect of term loans, interest should be recovered along with installment due
for repayment.
iii) However, for term loans where the farmer has other income and repaying
capacity to pay interest before generation of income from the investment financed
by the bank, interest should be recovered at half yearly/yearly intervals.
iv) In respect of term loans, installments should be fixed taking into account economic
life of the asset and income generation of the investment proposed. Wherever
income is not uniform, graded installments may be prescribed instead of equal
installments by the sanctioning authority depending upon incremental income
generated.
v) In some of the cases the farmers will derive income only after a gestation
period. In such cases branches should provide grace period
(repayment holiday) until the investment/asset created from our loan generates
income.

30
NABARD has issued guidelines which are indicative in nature, stipulating the
repayment period/gestation/grace period for various types of investments. The same
are given below :

Sl Type of Investment Repayment Loans- Gestation/

no period periodicity Grace
(including of period
gestation installments
period)
(In years)
1 2 3 4 5
1 Dugwell with/without pumpset 11-15* **Yearly/ 23 months
half yearly
2 Deepening of well 5 -do - 11 months
3 Pumpset 9 -do - 11 months
4 Filter Point+Pumpset 11-15 -do - 11 months
5 Borewell 11-15 -do - 11 months
6 Shallow Tubewell 11-15 -do - 18 months
7 Pumphouse with AC roof 9 -do - 11 months
8 Persian Wheels / Rahat 5 -do- Nil
9 Pipeline distribution system
for well command 9 -do - 11 months
10 Sprinkler / Drip irrigation 10-15 -do- 11 months
11 Land development 9-15 -do- 23 months
12 Soil Conserveration 9-15 -do- 23 months
13 Ravine Reclamation 9-15 Yearly/half 23 months
yearly
14 Lift irrigation 11-15 -do- 23 months
15 Small lift irrigation(Command 9 -do- 11 months
area 10-40 ha)
16 Lining of water Courses 9-15 -do- 11 months
17 OFD under CAD projects 11-15 -do- 23 months
18 On farm development works 9 -do-
19 Farm ponds 9 2 years
20 Composting 7 1 year
21 Rain Water harvesting tank/pond 5 11 months
22 Tractors with accessories 9
23 Power tillers 7
24 Combine harvester 5
25 Power threshers & sprayers 5
26 Grain godowns 11 2 years

31
Sl Type of Investment Repayment Loans- Gestation/
no period periodicity Grace
(including of period
gestation installments
period)
(In years)
1 2 3 4 5
27 Cold storage 11 2 years
28 Onion storage 5 2 years
29 Cross-bred cow 5 Monthly / Repayment
quarterly to be linked
with
lactation
period
30 Buffaloes 4-5 -do- -do-
31 2 graded murrah buffaloes 4-5 -do- -do-
32 Cross-bred calf rearing 4-5 -do- 30 months
33 Sheep breeding 5 Half yearly 12 months
34 Piggery 4-5 Yearly 12 months
35 Goat rearing 4-5 Quarterly / 12 months
half yearly
36 Poultry 6-7 Monthly / 12 months
quarterly
37 Duckery 4-5 Quarterly / 12 months
half yearly
38 Camel 5 Half yearly /
yearly
39 Camel and Cart 5-7 Quarterly /
half yearly
40 Bullocks 4 Half yearly /
yearly
41 Bullocks and Cart 5-7 Quarterly /
half yearly
42 Animal drawn carts 5-7 -do-
43 Jhota Buggi 4 -do-
44 Marine Fisheries
a) Non-mechanised boat 4-7 Monthly (Excluding 4
months
during
monsoon
period each
year)

32
Sl Type of Investment Repayment Loans- Gestation/
no period periodicity Grace
(including of period
gestation installments
period)
(In years)
1 2 3 4 5
b) Mechanised boat 8-12 -do- -do-
45 Inland Fisheries
a) Pond fish culture 5-8 Half yearly 11 months
b) Brakish water fish / prawn culture 5-10 -do- -do-
46 Sericulture
a) Tray system 7 -do- 11 months
b) Shoot rearing system 6
47 Farm Forestry
a) Jatropha 12 3 years
b) Neem 10 5 years
c) BambooDendrocalamus strictus
(278 plts/ha)
Oxytenanthera stock sii(500 plts/ha) 109 6 years 4 years
48 Plantation / horticulture
49 Cashew plantation 10-12 Yearly 4-7 years
50 Mango plantation 13 -do- 6-7 years
51 Lime /citrus plantation 10-15 -do- 5 years
52 Guava plantation 10-15 -do- 4-5 years
53 Sapota plantation 10-15 -do- 5-6 years
54 Ber plantation 10-15 -do- 4-5 years
55 Acid lime plantation 10-15 -do- 4-5 years
56 Casurina plantation 7-12 -do- 6 years
57 Coconut plantation 14-15 -do- 8-9 years
58 Grape cultivation 10 -do- 3 years
59 Orange plantation 10-15 -do- 5-7 years
60 Betelvine plantation 5-10 -do- 1 year
61 Arecanut plantation 13-15 -do- 7-8 years
62 Pineapple cultivation 4-5 -do- 1-2 years
63 Apple 12-15 -do- 7 years
64 Litchi 12-15 -do- 6-7 years
65 Pomegranate 7 -do- 3 years
66 Tea 12-15 -do- 2-4 years
67 Coffee 10 -do- 3-4 years
68 Rubber 12-14 -do- 7 years

33
Sl Type of Investment Repayment Loans- Gestation/
no period periodicity Grace
(including of period
gestation installments
period)
(In years)
1 2 3 4 5
69 Pepper 10-13 -do- 7 years
70 Carnation 5 *** 1 year
71 Rose 5 *** 1 year
72 Anthurium 5-6 *** 2-3 years
73 Orchid 7 *** 4 years
74 Gobar Gas (upto 5M) 7 -do- **
75 Farm Forestry 7-10 -do- 6 years
76 Storage bins 3-5 Half yearly **

* Repayment installments fixed should be adequate to repay the portion of

pumpset loan with interest fully within a period of nine years i.e. the maximum
period allowed for a loan for pumpset.
** yearly/half yearly installment should be fixed depending upon the types of
crops grown/duration of crops, marketing period etc.
*** Depending on the production and income generation cycle

The sanctioning authorities should ensure that the repayment/gestation

period in respect of term loans sanctioned to small farmers (as per NABARD
definition) is as per above guidelines. The sanctioning authorities have
discretion for varying loan repayment periods within the range indicated above
on the basis of case by case appraisal but not in any case less than the minimum
indicated here above. However, it will be open to a beneficiary farmer to repay
the loan amount earlier than the prescribed period depending on his incremental
income/ability.

In respect of other farmers the sanctioning authorities will prescribe repayment

periods, gestation period bearing in mind the principle and rationale stated
above based on appraisal of individual projects. However, the gestation period
as indicated above is allowed to them also.

In case of composite loans for a well and electric pumpset only one loan
account and one repayment schedule may be fixed for the entire loan. It
should however be ensured that the loan installments are so fixed that the

34
 repayment made in the initial 9 years of the loan period are not less than the
loan amount advanced for the engine/pumpset.

Branches have to conduct case by case analysis of overdue accounts at regular

intervals and in respect of borrowers whose repaying capacity has been affected
because of reduction in income due to any genuine reason beyond his control,
branches have to effect conversion of short term loans/rephasement of term
loans as per the guidelines given in chapter 44 on Relief Measures in areas
affected by natural calamities and in such other cases.

2.8 PROCESSING AND OTHER CHARGES ON LOANS AND ADVANCES :

2.8.1 Processing charges should be collected for all agricultural advances at the following
rates:

Upto Short term & Term loans Nil

Rs.25000 /-
Above Rs. Short term loans above Rs.25000 Rs.200
25000/- (including gold to Rs.2 lakhs
loans)
Above Rs. 2 lakhs Rs.200 per lakh or part
there of (Maximum -
Rs. 2.00 lakh
term loans with/ Above Rs 25000/- 0.50% of the loan
without NABARD (No maximum ceiling)
refinance

NOTE:
i) Processing charges are to be collected on loan limit and not on the project cost.
ii) In case of KCCS, processing fee to be collected at the time of sanction for the 5th
year limit which will be the sanctioned limit.

2.8.2. Other provisions on processing charges:

1 Collection of processingcharges Branches to collect processing charges upfront

as far as possible. When Bank approaches any
party for securing borrowal accounts: and if
the party is not agreeable to pay the
processing charges upfront, the same may be
collected at the time of acceptance of
sanction by the borrower. However the party

35

2 Refund of processing charges
collected –Agricultural Term loans
3 Processing charges are not to be
collected in the respect of loans
granted to/under-
4 Mode of calculation
5 Processing charges for
enhancement / modification
before the date of renewal
6 Working Capital/OCC/KCC limits
- renewal of limits with considerable
delay after the expiry of the
tenability & Tenability of renewed
limits is being fixed as one year from
the date of renewal.
7 Processing Charges for ADHOC
facility
should be informed in writing regarding the
applicable charges. Such charges should be
collected by the branches on sanction of loan,
if the sanction is as per terms negotiated with
the borrower applicant irrespective of
whether the loan is availed or not.
The amount-collected as processing charges can
be refunded if the proposal is turned down by
the Bank. The amount so collected may also be
refunded if the borrower fails to avail the loan/
limit sanctioned for any reasons beyond the
control of the applicant after deducting
processing fee of Rs.200/- per lakh as applicable
to short term loans and commitment charges, if
any, payable to NABARD
- Loans/advances exclusively against our own
deposits
- REC-SPA Scheme
- Government sponsored Schemes
- Self -Help groups
- Limits granted to RRBs sponsored by our Bank
- Agriculture loans to employees
Processing charges should be collected for the
entire limit wherever the limit exceeds
Rs.25,000/-
For enhancement/modification before the date
of renewal, processing charges shall be collected
for the enhanced portion only, even if the
enhanced portion is less than Rs.25,000/- (i.e.,
the limits are to be taken in totality).
In case of extension of credit limits, pro-rata
processing charges should be collected for the
extended period. In case renewal of limits does
not take place within the extended period, pro
-rata processing charges are to be collected on
the existing limits till the date of ultimate
renewal of the limits.
Pro-rata processing charges are to be collected.
36
8 Processing Charges at the time
of annual Review (in case of
Schemes under KCCS/ Canara
Kisan OD where tenability of
original sanction is more than
1 year/limit continuation is
subject to annual review
9 Processing Charges-
Constitutionof the borrower
10 Clubbing of Agriculture and
Non Agriculture facility
Processing fee to be collected at the time of
sanction and at the time of each renewal (after
5 years’ tenability) with/ without enhancement.
i) Processing fee to be taken for enhancement
of limit for the enhanced portion in case
of enhancements before renewal.
ii)Annual review: Collection of 25% of normal
processing fee in case of limits above
Rs.5 lakhs (with/without enhancement in
limit).
iii) No processing fee for Annual review in other
cases which will continue to serve otherwise
as internal check for ascertaining the farm
status/ensuring end use.
To be separately collected for Loans/Advances
granted to Proprietorship/Partnership Concerns
notwithstanding the fact that the proprietor/
partners of the concerns are the same
In the case of parties availing agricultural and
non-agricultural limits/loans both the limits are
to be clubbed and the charges mentioned above
are to be collected

2.8. 3 Documentation charges:

Upto Rs. 2 lakhs Nil

Above Rs.2 lakhs Rs.50/- per Lakh or part thereof upto a maximum
of Rs.25000/-

Note:

1. Documentation charges will not be applicable to:

i) Government sponsored Schemes(including SHG’s)
ii) Priority Sector loans upto Rs.2 lakhs.
iii) Agriculture Gold loans
iv) AL VSLs

2. In case of operative accounts like KCCS/ Canara Kisan OD, documentation charges to
be collected at the time of-
i) Renewal (With/without enhancement)
ii) For Enhanced limit in case of Mid-Term enhancement.
37
2.8.4 Inspection Charges:

a) For Agriculture loans :

Per inspection Max.Per Year

in Rs. in Rs.
Up to and inclusive of Rs.25000/- Nil Nil
> Rs.25000-Rs.2 lakhs 500
Above Rs.2 lakhs 150 Actuals

b) Weaker section/Govt. Sponsored Schemes:

Per inspection Max.Per Year

in Rs. in Rs.
Up to and inclusive of Rs.25000/- Nil Nil
>Rs.25000-Rs.2 lakhs 200
Above Rs.2 lakhs 300

NOTE :
Inspection charges include Pre-sanction inspection, Post-sanction inspection and
go-down inspection also. However for loans above Rs.2 lakhs the charges prescribed
are only minimum and branch may charge higher depending upon the workload
involved
In case of SHG’s, inspection charges are waived.

Inspection charges may be collected at the time of debit of interest or as and when
incurred.

The inspection charges in all cases of advances to weaker sections/Govt. sponsored

schemes Loans, whether standard or substandard should be debited to loan accounts
and recovered.

2.8.5 Folio charges:

Folio charges are applicable in respect of running limits like KCCS, Canara Kisan OD.
Debiting folio charges at half yearly intervals (March and September) at Rs.100/- for 40
entries/part thereof. Recovery of folio charges shall be along with interest dues

No folio charges is applicable for SHG loans extended as cash credit limit to matured
SHG’s.

38
 Branches to note to debit the charges to the account through BAM50 option as and
when incurred and credit the proceeds to the respective income GL.

2.8.6 Commitment charges:

For Corporate borrowers with FB+NFB+TL exposure of Rs.10 crores and above, 0.25%
shall be collected as commitment charges.

2.8.6 Other charges:

Other charges for Revalidation of sanctions, Modification of sanction Terms, out of

pocket expenses, legal charges, charges for cancellation of lien on bank’s securities/LI
policies, charges for copy of documents shall be as applicable under Non-Priority
Sector to the extent not specified under Priority Sector.

2.8.7 Fee/service Charges relating to appraisal of projects by Agricultural Consultancy

Services (ACS),HO:

a) Formulation /appraisal /Viability studies (Bank clients)

i) Formulation /appraisal of Projects/ 1% of the Loan amount &

vetting of the project. Out of pocket expenses (OPE) as
decided by ACS
ii) Viability studies for the purpose of Out of pocket expenses (OPE) as
restructuring /rescheduling decided by ACS

Note on(a):

In case where formulation/appraisal of projects are referred to Agricultural Consultancy

Services,(ACS),HO ,branches are to collect 1% of approximate loan amount as upfront
fee(Processing fee) and kept in SL while referring the proposals to ACS. No further
processing fee shall be collected. Later based on the limit sanctioned, upfront fee
(processing fee) shall be appropriated with the ceiling of 1% of the sanctioned limit. In
such proposals, no further processing fee shall be collected.

ACS, will charge only out of pocket expenses (OPE) which shall be collected by the
branch and remitted to ACS, HO, Bangalore.

Only OPE will be charged by ACS, no other fee is levied in respect of proposal referred
to ACS for viability study by the Bank.

39
a) Charges for other services rendered

i) Service Charges for appraisal of public issue appraisals/consortium advances:

Category Schedule of Fees

a) Project cost aboveRs.1 Crore
and upto Rs.10 Crores
b) Project cost above Rs.10 Crores
0.25% of the project cost with a
minimum of Rs.50,000/-
0.25% on the first Rs.10 Crores and
0.125% on the incremental cost above
Rs.10 Crores.

(ii) Service charges for clients of other Banks/Institutions:

SERVICE CHARGES FOR OUTSIDE CLIENTS

PROJECT FORMULATION

OUTLAY SERVICE CHARGES

Upto Rs.500 Lakhs 0.40% of the outlay

Minimum of Rs.5,000/-
Above Rs.500 Lakhs Rs.2,00,000/- + 0.25% of th balance
outlay over and above Rs.500 Lakhs

PROJECT APPRAISAL

OUTLAY SERVICE CHARGES

Upto Rs.500 Lakhs 0.30% of outlay with a minimum of
Rs.5,000/-
Above Rs.500 Lakhs Rs.1,50,000/- + 0.15% of the balance
outlay over & above Rs.500 lakhs
*Exclusive of OPE Charges

d) General guidelines:

1. Branches/Offices to refer proposals for formulation/appraisal/ vetting/viability

study only after getting consent/concurrence from the sanctioning authority.

2. Out of pocket expenses (OPE) include travelling/lodging/boarding expenses

of officials on visit, charges payable to experts, purchase of books/CDs
connected with the work and other incidental charges.

40
 3. All reports prepared by ACS shall be handed over only to branches/
sanctioning authorities in case of proposals financed/to be financed by our
Bank. This will not apply to outside clients.

2.8.8 When applications for two or more agricultural loans with varying repayment schedules
are received together and if the total loans applied for are less than Rs.25000/- no
processing charges shall be collected. If the total loans applied for exceeds
Rs.25000/-, the applicable rates of processing charges shall be applied for each of
the individual loans for arriving at total processing charges to be collected.

2.8.9 All out of pocket expenses actually incurred for servicing the borrowal accounts such
as recovery visits, insurance charges, valuation charges payable to approved valuers,
sending notices, legal charges, sending of remittances of loan proceeds by post are
to be collected from the borrower.

2.8.10 Commission on Demand Drafts (DDs) issued out of loan proceeds

Normal DD commission/charges should be recovered from the borrowers for issue of

DD/electronic money transfers towards payment of loan proceeds to suppliers/
manufactures (to ensure end use of funds) and also towards remittance of insurance
premium for all types of loans/advances except for loans granted under SGSY/NRLM,
DRI, and State/Central Government sponsored/ subsidy oriented schemes. However
in respect of loans sanctioned on the applications sponsored by under autonomous
corporations such as Backward Class Development Corpn., SC/ST Development
Corpn., Minorities Devpt., Corpn., etc. DD commission/ charges to be collected.

41
 CHAPTER - 3

GENERAL GUIDELINES ON PROCEDURAL MATTERS

1. Adhering to “Know Your Customer” guidelines

2. Display of Bank Boards
3. Obtaining photographs of borrowers
4. Maintaining borrower's profile Card
5. Disposal of Loan applications
6. Disbursement , Obtention of bills, Reimbursement and Accounting procedure
7. Loan Pass Books
8. Inspection-Pre-sanction, Post sanction and follow up visits
9. Project Implementation Progress Report
10. Valuation of Landed property offered/taken as Security
11. Insurance
12. Appraisal of Loan proposals
13. Appraisal by Agricultural Consultancy Services(ACS)
14. Legal aspects of documentation, Mortgage & Renewal/Revival of
loan documentation
15. Balancing
16. Maintenance of DCB particulars
17. Granting of Loans to borrowers of Land Development banks
18. Substitution of Securities
19. Obtention of No due certificates
20. Drawing of CIBIL Reports
21. Conducting Extension activities

3.1 ADHERING TO “KNOW YOUR CUSTOMER” GUIDELINES:

The objective of KYC / AML / CFT(combating of financing of terrorism) guidelines is to

prevent Bank from being used, intentionally or unintentionally, by criminal elements
for money laundering or terrorist financing activities. KYC procedures also enable Bank
to know /understand the customers and their financial dealings better which in turn
help to manage the risks prudently.

The KYC Policy of the Bank includes the following four key elements:

a) Customer Acceptance Policy;

b) Customer Identification Procedures;
c) Monitoring of Transactions; and
d) Risk Management.
42
 Branches to exercise strict Customer Due Diligence, periodical review and updation of
Customer Identification Data, monitoring of transactions that are deviating from the
threshold limit/ outside the normal transaction region and periodic updation and
review of Risk Category of the customer. Branches are not to resort to any unethical
practices to garner business and strictly adhere to the extant guidelines.

Branches to monitor the transactions in the accounts, especially in the new accounts
and High Risk accounts. Periodical updation of customer identification data (including
photograph/s) is to be done in all accounts once in five years in case of low risk
category customers and once in two years in case of high and medium risk categories.

While opening new accounts, creation of multiple customer IDs should be strictly avoided
and process of de-duplication of existing customer IDs to be completed, wherever the
customers are having multiple customer IDs.

Branches shall adhere to guidelines advised from time to time on KYC norms.

3.2 DISPLAY OF BOARDS:

Boards are to be displayed in the farm in a prominent place. This will help to avoid
double financing and also serve as an advertising media. Therefore parties should
display the board with the following words boldly painted.

"AGRICULTURAL FINANCE-ASSISTED BY CANARA BANK"

However, display of boards need not be insisted in respect of following category of

loans:

i) All agricultural loans upto a limit of Rs.25,000/-.

ii) All crop production loans ,KCC, Kisan Suvidha and Canara Kisan OD loans
irrespective of loan amount.

The cost of the board will be borne by the bank.

3.3. OBTAINING OF PHOTOGRAPHS:

Stamp size/Passport size photographs of the borrowers in duplicate should be

obtained except in the following cases before disbursements:

i) Crop loans granted under tie-up arrangements with sugar mills/other mills.
In respect of Sugar mills satisfying stipulations as per Rating matrix devised under

43
 the Scheme, for all types of loans granted under tie-up arrangements with such
sugar mills, photographs may be waived if it was obtained at the time of opening
SB account/s.
ii) Partnership firm/companies, other traders or reputed persons who can be easily
identified.
iii) Existing borrowers who have long standing connections and well known to the
bank.
iv) Staff members.

In respect of borrowers falling in the category of' Weaker Sections' the cost of
photograph can be met by the bank debiting the expenses to general charges. In all
other cases the cost is to be borne by the borrower. The cost incurred by the bank
for photographs should be reasonable and should not exceed Rs.25/- (if the cost is
more, branches have to seek permission from the concerned CO by furnishing
competitive quotations from 2 or 3 local photographers). Staff members can also be
permitted to take photographs in case where there is no established photographer in
the area as long as there is no violation of their service rules. There is no need to
obtain photograph while granting subsequent loan for the same borrower. One of the
photographs should be affixed on the left hand corner cover of the file/loan
application after obtaining signature across the photo or thumb impression on the
reverse. Another copy should be affixed on the Borrowers Profile Card (BPC).

3.4. MAINTAINING BORROWER'S PROFILE CARD

Branches have to maintain Borrowers Profile Card (BPC) for all agricultural loans.
However, for such of borrowers who have gold loans or ALVSLs alone, BPC need not be
maintained.

3.4.1. One Card is to be prepared for each borrower and details of all loans availed by the
party are to be recorded therein.

3.4.2. The cards are to be kept village-wise and indexed for easy accessibility.

3.4.3. The basic details are to be recorded at the first instance and details are to be updated
periodically.

3.4.4. Photograph of the borrower has to be affixed on BPC.

3.4.5. The BPC's can be carried to the villages during field visits and details of inspection
observations are to be recorded in BPC/loan account as provided in the software
package.

44
3.4.6 Wherever BPC's are maintained specimen signature cards, credit limit sheet for
agricultural loans (LL 046) and village-wise / area-wise follow up registers need
not be maintained.

3.4.7. Wherever branch officials visit a particular village, BPC's in respect of all borrowers
pertaining to that village are to be carried with them, which would facilitate
obtention of AOD, conducting of inspection/follow up of loan accounts, etc.

3.4.8. Since there is provision for affixing photograph and signature/left hand thumb
mark of the party, the same would facilitate easy identification of the borrowers at
the time of obtention of AOD, etc.

3.5. DISPOSAL OF LOAN APPLICATION:

3.5.1 Inwarding and recording sanction/rejection/forwarding:

Loan application Inward Register module is implemented in ALPS package for all the
loan schemes of the Bank with a facility to generate acknowledgement letter to the
applicant for applications lodged by the branch user. After introducing this facility in
ALPS no loan application can be processed without inward register number. MIS facility
in the form of reports containing details of loan application received, pending,
sanctioned and rejected is also enabled.

Branch should generate Acknowledgement letter by using ‘Print‘ button and handover
same to the borrower.

If branch decides to process the inward application further, this inward number should
be attached to the loan application.

Rejection of application is also possible at inward stage itself. By selecting status as

“Cancelled”.

3.5.2. Branches should acknowledge the receipt of applications from borrowers by issuing
token of service. The running serial number should be affixed on the main application
form as well as on the token of service.

3.5.3 Time Norms for Disposal of Applications

The proposals received are to be quickly processed to enable disbursement in time.

Normally no credit proposals should be kept pending unduly for a long period. The
information required for processing the proposals should be called for at a stretch and
not in piecemeal.
45
 Following are the time norms that should be adhered to in disposing a credit proposal

Nature of credit facilities at Branch at Circle at HO

Kisan Credit Card-Branch powers 15 days
Other agriculture loans upto Rs.25000/- 15 days
Loans above Rs.25000/- 30 days 45 days 8-9 weeks

Note:
All the proposals which are to be sanctioned at the Circle Office should be reviewed at
the Circle level on a fixed day in a week so that there is no pendency for over 45 days.

The loan applications which are pending for want of response/ information from
different State Governments - whether to be sanctioned at HO level or Circle Office
level, should be followed up by the concerned Circle Offices with the respective
departments of the State Governments for expeditious clearance.

Circles to take up with the respective State Level Bankers Committee requesting the
Chief Secretaries of the respective states for expeditious clearance of the projects
coming up in the State where banks/financial institutions have sanctioned the projects
but disbursement is pending for want of clearances, wherever necessitates.

In respect of issues concerning loan applications under Government sponsored schemes

pending with sponsoring agencies, Branch Managers may take up in District
Coordination Committees on a monthly basis.

3.5.4. Rejection of credit proposals

i. Applications for credit facilities from SC / ST customers shall not be rejected at

branch level and such rejections shall be by the next higher authority. However,
proposals of CAC/MC Powers may be rejected by C&MD or ED in the absence of
C&MD.

ii. Whenever applications for loans under govt. sponsored schemes are rejected by
the Branch Manager for valid reasons, the same has to be recorded in a register
maintained to this effect which shall be examined by the controlling authorities
during their branch visits.

iii. Rejection of credit proposals by the branch level authorities shall be recorded in
a register (web based inward package) maintained for this purpose, which shall
be reviewed by the controlling authorities visiting branches.

46
 iv. If the applications are sponsored by Government agencies, the concerned
agencies should be promptly reported of the action taken i.e. sanction/
rejection. In case of rejections, the applications are to be sent back to the
agencies furnishing reasons thereof

3.5.5 Review of Branch sanctions-Copies of Credit reports

Branches need not send a copy of credit report to reviewing authority upto a limit of
Rs. 1 lakh under their normal sanctioning powers. For loans exceeding Rs. 1 lakh
(branch sanction) they should send a copy of credit report / sanction memorandum
along with a copy of application for review.

3.6 DISBURSEMENT AND ACCOUNTING PROCEDURE:

The loan is to be disbursed in stages as discussed under various schemes. The

particulars such as qualification of the borrower, whether he belongs to SC/ST,
small farmer, marginal farmer, Agricultural labourer, minorities, women beneficiaries
etc. and particulars of security should be noted in the package through CIM 09 and LNM
34 options respectively.

3.6.1.Disbursements are to be made only when the borrower/s execute all the relevant
documents duly completed in all respects and all sanction terms and conditions are
fulfilled.

3.6.2.Whenever branches disburse the first installment of loan on a day subsequent to

execution of documents they should obtain a link letter from both borrower/s and
co-obligants as per Annexure 6. The signature on link letter is to be verified and
authenticated. The link letter should be kept along with the loan papers.

3.6.3 The loan proceeds are to be remitted directly to the dealer/ supplier/vendor along
with margin money collected from the borrower. In case it is not possible to make
payment direct to vendor/supplier for any valid reasons, the loan amount may be
disbursed to the borrower’s operative account and no cash disbursement should be
made. Later the assets should be inspected without fail.

3.6.4 Obtention of Bills/Vouchers/Stamped receipts

Branches should obtain necessary bills/vouchers/stamped receipt for the amount

disbursed including margin amount.

47
However, obtention of bills, vouchers, receipts, etc., can be waived for following
categories of loans ;

i) Development loans:

Development loans under agriculture refers to such loans where the immoveable
assets such as labor lines, pump house, portion of animal husbandry loan
involving construction of poultry/cattle sheds, farm level storage structures,
orchards etc. are created/developed.

a. For Development Loans upto Rs. 2 Lacs :

Obtention of bills / vouchers / receipts can be waived, subject to the

following

P Obtention of a declaration from the borrower for having incurred the

expenditure on the lines of Annexure- 7
P Conducting post sanction visit within 15 days from the date of
disbursement for ensuring and confirming end use.

b. For Development Loans beyond Rs. 2 Lacs (other than loans involving
construction of poultry sheds) Branches to obtain necessary bills / vouchers
/ stamped receipts for amount disbursed including margin amount.

c. In case of Poultry Loans of above Rs. 2 Lacs involving construction of poultry

sheds : Obtention of bills / vouchers in respect of disbursements made is
waived for construction of poultry sheds, subject to the following :

P The conditions as advised in item 3.5.4. (i) (a) above should be adhered to
P Photograph of the asset covering the stage of construction shall be
obtained at the time of every disbursement and to be kept along with loan
documents.
P Obtaining Architect's / Engineer's certificate at the time of each
disbursement.
P However, bills / vouchers are to be obtained for investment portion of the
poultry loans like cages, equipments, chicks, etc, as per extant
guidelines.

ii) In respect of crop loans, a portion may be paid directly to suppliers or

reimbursed against cash bills/declaration obtained from the borrower

48
 However in respect of KCCS /Canara Kisan OD /Kisan Tatkal /Krishi Mitra card
Scheme Loans /tenant FARMERS groups/General Credit Card obtention of bills/
vouchers is waived.

iii) Other agricultural loans and loans under allied activity such as dairy, poultry,
piggery, etc., upto Rs.25,000/- subject to -

a) Obtention of declaration from the borrowers for having purchased the

asset/incurred the expenditure as the case may be. Declarations as
per Annexure- 7 may be obtained.

b) Post sanction visit to be conducted within 15 days from the date of

disbursement of loan for ensuring and confirming the end use.

3.6.5 In respect of Kisan Credit Card Scheme opening of SB account by farmers should not be
a precondition. Instead, in order to conform with “KYC”(Know your Customer) norms,
branches shall obtain Current account opening forms(for opening CASA SISO 226
account) wherein introduction of the customer can be made.

3.6.6 While sanctioning/disbursing the loans selection of the equipment/asset and also the
selection of the dealer must be left to the sole discretion of the borrowers and under
no circumstance the bank officials should involve themselves directly in the
selection of equipment/asset dealers.

3.6.7 Subsidy received and credited to loan account should be adjusted against principal
amount only and not against interest outstanding.

3.6.8 Reimbursement of expenses as a mode of disbursement for development loans

Agriculturists many times approach the Bank after commencing the work related to
certain projects and seek reimbursement from the Bank. The following guidelines are
stipulated in the matter of reimbursement relating to developmental works under
agriculture loans.

i. Reimbursement is to be permitted only in respect of development loans under

Agriculture.
ii. The reimbursement is to be permitted for expenses incurred within 6 months.
iii. Maximum reimbursement of Rs. 100 lacs can be permitted.
iv. Sanctioning authorities can permit reimbursement upto and inclusive of Rs. 5 lacs
out of the total sanctioned limit in case of agriculture development loans where
immovable assets such as, labour lines, pump houses, portion of animal

49
 husbandry loans involving construction of poultry / cattle sheds, farm level
storage structures, establishment of orchards, etc., are created / developed.
v. In case of reimbursement of above Rs. 5 lacs, permission is to be obtained from
the next higher authority except in the case of HO sanctions.
vi. In case of HO power accounts (GM/ED/C&MD/MC powers), reimbursement can be
permitted by concerned sanctioning authorities themselves.
vii. A declaration from the borrower is to be obtained as per the Annexure-8 and the
work undertaken is to be certified by branch official after a field visit.
viii. The source of funds and strength of borrower to undertake the work on his / her
own funds are to be studied and proof is to be obtained to ensure that the work
has been completed as per the declaration as per Annexure- 8.

3.7. LOAN PASS BOOKS:

To appraise the borrowers of the repayment programme stipulated, branches should

issue the following pass books while disbursing the loan:

i) NB 134 -Agricultural pass book for all agricultural loans.

ii) NB 99 -SGSY pass books.

The pass books are available in regional languages. The borrowers may be asked to
produce the pass books while they come for making remittance and the same are to be
kept up-to-date. However, branches should not refuse acceptance of payment on
account of non- production of pass books.

Presently, in CBS pass sheet in English can be generated and given to the borrowers.

3.8. INSPECTION:

The branch officials should undertake the following type of visits to the applicants/
borrowers house/business premises/ farm etc.

3.8.1 PRE-SANCTION VISITS:

i) Pre-sanction visit is undertaken to assess technical feasibility and economic

viability of the proposal. No loan should be granted without carrying out
pre-sanction inspection of the farm unless otherwise waived under any
scheme by Head Office as a matter of policy.

ii) The following aspects need be observed/assessed during the pre sanction
visits -

50
 P Present cropping pattern, proposed crop pattern, suitability of the land, yield,
net income, existing infrastructure, utility of proposed assets, need for
purchase etc.,

P General aspects relating to the nature of the terrain, linkages in the area,
market viability of the proposed activity etc.,

P Local enquiry/market information on the applicant and the proposed

activity.

P Present living condition of the applicant/s which can be an indication of risk

bearing ability.

P The genuineness of property documents by verifying the boundaries and

possible encroachments, market enquiries for valuation of the property.

P Establishing the identity & bonafides of the intending borrower /mortgagor.

Any specific aspects to be seen during pre sanction visits for different Schemes are
given in respective Chapters.

iii) Verification of Land records/Creation of Mortgage:

Many instances of loans being availed/mortgage being created on the strength of

fake/forged land records are being reported. Thorough local enquiries regarding
the character and background of the agriculturists and their title over lands
during the pre sanction visits will enable to cover this ground. The following
aspects are to be considered while undertaking pre sanction appraisal
/visit.

P Personally visiting the farm/site, verification of locality by the branch official

and by the panel advocate as well.
P Independent market enquiry to verify the veracity of valuation.
P Taking up the matter with the Govt offices such as that of Registrar of Land
records in case of doubt about the genuineness of documents produced.

iv) Recording of Pre sanction Visit:

The date of pre-sanction visit is to be invariably recorded in the Credit Reports.

The Reviewing authority shall look into this aspect while reviewing based on the
copies of Credit Reports.

51
3.8.2. POST SANCTION VISIT:

Post sanction visit is undertaken within 15-30 days of disbursement to ascertain

end use.

3.8.3. FOLLOW UP VISIT:

Follow up visit is undertaken to find out whether the activity of the borrower is
continuing, assets purchased out of bank loans, other securities are in existence, to
give technical guidance to farmers and to remind the borrower of repayment in
case of default. The following is the periodicity of follow up visits to be undertaken in
respect of regular accounts.

Type Of Loan Periodicity Of Follow Up Visits

a) Crop loans
i) Short duration crops First visit must be made within one month after
completion of sowing / planting operations & the
other visit 15 days before harvest of the crop.

ii) Long duration crops In addition to above visits, a visit during the mid
season should be made.
b) All other loans Half yearly visits

In all the above cases, if installments are not paid, regular course of action is to be
immediately taken up.

If the borrower fails to remit the loan amount on stipulated due date, the borrower
should be contacted personally and assurance made during the visits are to be diarized
and followed up. In case of intentional default after exhausting all persuasive
efforts, specific steps for recovery are to be recommended.

3.8.4. REPORTING SYSTEM FOR POST SANCTION INSPECTION VISITS:

The following forms are used for reporting post sanction inspection visits:

a) NF 594 : This is for loans granted to allied activities such as poultry, dairy,
piggery, fisheries, duck rearing etc.
b) NF 595 : These are used in respect of loans connected to land based
activities where the repayment is linked to income out of the crops such as
crop loans, farm development loans, minor irrigation loans, bio-gas loans,
tractor/ALLHVs, etc.

52
3.8.5. a) Preparation of the post sanction inspection reports in respect of all branch
sanction loans is waived. However, branches have to maintain borrowers profile
card in which the observations made during the farm visits are to be recorded.
b) On the basis of observation during post sanction inspection, a brief note is to be
made in the loan account by the official whoever has undertaken the visit.
Adverse features noticed during the inspection in respect of branch sanction loans
are to be invariably reported to CO in the appropriate format for seeking their
guidance.
c) Provision is available in CBS to note the details of post sanction visits in the
Option CIM12 where brief observation of the visit also can be noted for future
reference.

3.8.6. In respect of loans sanctioned by CO/HO detailed inspection reports in the

appropriate form is to be submitted.

3.9 PROJECT IMPLEMENTATION PROGRESS REPORT(PIPR)

3.9.1 PIPR is to be submitted by the branches on quarterly basis during implementation

stage of the project, in respect of term loan limit of Rs.50 lacs and above.

3.9.2. The Circle Heads, considering the nature of project may waive obtention of certificate
from Chartered Accountant/approved engineer for limits upto Rs.2 crores.

3.9.3 PIPR is to be submitted as per format given in Annexure 9.

3.10. VALUATION OF LANDED PROPERTY AS SECURITY:

3.10.1 Valuation of agricultural lands with structures (like farm house/poultry sheds) to be
taken once in 3 years and in case of lands without any structures, in view of dynamic
status of productivity, once in 5 years.

3.10.2 Enhancement in the powers of valuation by branch officials as under :

a) AEOs and AEO Promotee Managers - Agricultural loans upto a limit of Rs.30.00
lakhs.
b) Other Managers-Agricultural loans upto a limit of Rs.20.00 lakhs.

The above stated ceilings may be for both pre-sanction valuation and also for periodic
valuation.

3.10.4 The valuation base shall be as per Guideline value for Registration.

53
3.10.5 Independent valuation reports from 2 empanelled valuers in respect of loan accounts
where the value of the property (Land & Building) is Rs 10 crores & above.

3.10.6. While valuing the landed properties the following aspects should be taken into
consideration:
i) Local enquiries with reliable farmers.
ii) Perusal of records with the sub-registrar.
iii) Value of Building/Structure/Timber on the land.
iv) Nearness to market city and accessibility to the farm.
v) Developments carried out on the land such as land levelling, fencing, contour
bunding, terracing, etc.
vi) Irrigation facility available.
vii) Fertility and soil condition of the farm.
viii) The valuation of land can also be done based on incremental income method as
detailed in Annexure 10.

3.10.7 In all other cases branches have to obtain the valuation reports of landed property
offered as security from revenue officials or approved consultants/valuers.

3.11. INSURANCE:

The assets charged to the bank should be adequately insured at the cost of the
borrower. Branches may note insurance details in BAM 67 AND BAM 77.

Different types of insurance cover available against the securities are detailed below:

3.11.1 CROP LOANS(including under Kisan Card Schemes):

The crop insurance has been an important enabler for the farmers in mitigating the risk
in their agriculture. Presently the following variants of the crop insurance scheme are
under implementation:

i) National Agricultural Insurance Scheme (NAIS/Rashtriya Krishi Bima Yojana

ii) Pilot Weather Based Crop Insurance Scheme (WBCIS)
iii) Modified National Agricultural Insurance Scheme (MNAIS) on Pilot basis

The participation under the Scheme will be decided by the State Governments/Union
Territories who will accordingly issue notification for implementation of these Schemes.

Branches have to compulsorily cover all crop loans which are in the notified areas
and granted for notified crops.

For details of the scheme, please refer Annexure 11.

54
3.11.2 INVESTMENT AND DEVELOPMENT LOANS:

The assets charged to the bank including buildings like cow shed, pump house,
poultry sheds, machinery, livestock etc. should be insured at party's cost with an
approved insurer and the policy should be lodged with the branch duly assigned in
favour of the bank. The assignment should also be got registered with the insurer.
Further, wherever insurance of vehicles or machinery or other equipment/ assets is
compulsory under the provisions of any law or where such a requirement is stipulated
in the refinance scheme of any refinancing agency or as a part of a government
sponsored programme such as SGSY/NRLM etc. insurance should be obtained
compulsorily irrespective of the loan amount.

a) Discretion is given to the sanctioning authority to waive insurance cover for

assets charged to the Bank for loans/advances upto Rs.25,000/- on the merit of
each case.

b) Beyond the limits specified in (a), if the branch feels that insurance cover could
be waived, the same should be referred to the CO with suitable
recommendations. However, CO authorities while according permission for
waiver of insurance cover justifying waiver of insurance, should satisfy that the
risk is minimal or insurance companies are not in a position to issue coverage
and waiver of insurance does not affect the loan portfolio adversely.

In case any of the above conditions is/are not satisfied, the proposal for waiver of
insurance should be referred to the next higher authority as per usual
guidelines.

Specific guidelines framed from time to time for specific activities like Poultry,
Fisheries and advised vide Circulars/other communication will also apply for any
relaxations extended.

c) However, where the branch managers so desire to have insurance cover even
where the loan quantum is less than the cut off limit specified above, in view of
the nature of activities, they may insist on coverage of insurance in such cases.

d) Wherever obtention of insurance is waived branches should note to obtain risk

letter i.e, NF 368 from the borrowers.

3.11.3 RENEWAL OF INSURANCE COVER:

Branches may waive renewal of insurance cover at their discretion on the securities
charged to the banks when the liability comes down below the exemption limit

55
 (Rs.25,000/-) provided the repayments are regular. In respect of loans granted
under government sponsored schemes for purchase of livestock, renewal of insurance
cover is compulsory as long as asset is available and loan is outstanding. However, if
borrower insists for waiver of insurance cover, the same can be waived for renewals
by obtaining NF 368 from the borrower.

Insurance cover has to be obtained for full value of the asset and not for loan amount.
The premium amount should be collected in cash from the borrower or debited to his
loan account. When it is debited to loan account, the same has to be recovered from
the borrower and till that time interest has be to charged for the same as being
charged to the loan account.

Insurance is to be kept in force till the loan is outstanding.

As soon as policy is received, branches should thoroughly scrutinize the policy before
they are kept in safe custody with regard to:

(i) The due date of the policy, amount of insurance cover, nature of risk, goods
covered, chasis no./registration no. in case of vehicles, etc.
(ii) Inclusion of Bank clause in the policy.
(iii) The quantum of insurance is adequate to cover the entire security.

3.11.4 SETTLEMENT OF INSURANCE CLAIM PROCEEDS IN CASE OF DEATH OF ANIMALS

UNDER SGSY/NRLM LOANS

The following guidelines for settlement of insurance claim(s) in respect of cattle and
livestock financed under SGSY/NRLM are to be followed by branches.

a) IN THE CASE OF BORROWERS WHO ARE REGULAR IN PAYMENT OF INTEREST/

INSTALMENTS

i) Where the borrower is willing to receive replacement of animal the claim

proceeds may be utilised to purchase a new animal. In case of higher price
for the new animal additional loan to be sanctioned and proportionate
subsidy to be claimed from DRDA.
ii) Where the borrower is unwilling to take the replacement of animal/s, he
may be allowed to take up some other activity and the claim proceeds may be
utilised for financing the same.
iii) If the borrower is unwilling to take up any other activity then insurance
claim proceeds should be appropriated to the loan account. The surplus
amount is to be remitted to DRDA in proportion to the balance loan

56
 outstanding and remaining amount if any is to be paid to the
beneficiary.

b) IN THE CASE OF DEFAULTERS WITH OVERDUES:

i) In the case of willful default insurance claim amount should be adjusted to

the loan liability and surplus if any is to be remitted to Zilla Panchayath/
DRDA. If the claim amount is not sufficient to clear the loan liability,
recovery measures should be initiated for the balance amount.
ii) In case the default is due to genuine reasons like sterility of the animal etc,
such cases should be sympathetically considered and replacement of animals
may be provided out of the claim proceeds and if necessary additional
loan/subsidy may be considered to meet the cost escalation or other
genuine reasons. Wherever additional loan is granted for purchasing a new
asset as above, the proportionate eligible subsidy should be claimed from
DRDA.
c) Second loan for replacement of animal can be provided while settling
insurance claim as per 3.10.4 (a)(i) and 3.10.4 (b) (ii) provided the beneficiary
has not fully utilised the subsidy admissible under SGSY/NRLMS and the
balance subsidy available is adequate for the fresh proposal.
d) The following points are to be complied by branches under SGSY/NRLM loan
to ensure that the benefit of insurance policy accrues to the beneficiaries.
i) Beneficiaries should be educated on DO's and DONT's of insurance while
providing assistance.
ii) Claim for insurance should be filed with the insurance company within 3
working days from the date of receipt of the claim application.
iii) The list of pending claims may be furnished to lead district representative to
review the same in DCC/BLCC.
iv) The milch animals financed under SGSY/NRLM may be covered under
master policy at the time of financing the animal. Renewal of insurance
cover has to be done as per 3.10.3.
v) Insurance premium can be included and financed as project cost and
refinance availed thereof.
vi) Interest on the loan should not be charged from the date of receipt of claim
from the insurance company to the extent of claim amount received.
vii) The replacement of asset/s or the adjustment of insurance claim to the
loan account should be completed within 30 days of receipt of the claim
amount.
viii) When the claim amount is utilised for replacing the livestock the existing
loan account is to be closed out of the claim proceeds and fresh loan is to
be granted. However, when one or two animals die out of "10+1"or "20+1"

57
 sheep units financed, new assets may be purchased by obtaining
documentation as per Annexure 12.

3.11.5 TRANSIT INSURANCE COVER FOR CARRYING CASH TO SHANDIES:

To cover the risk of loss of cash while carrying cash to shandies Bank has taken a policy
with M/s United India Insurance Company for carrying cash in transit. The said
policy interalia covers loss of cash due to theft, riot, strike, loot, robbery and
dacoity.

Under the Banker's blanket insurance policy subscribed by us with the above company,
insurance cover for carrying cash to shandies is also included in the risk covered
under cash in transit. The policy is taken by RR Section, Inspection Wing, HO.

Reporting of loss of cash while in transit, to be made by branches as per extant

guidelines.

3.12. APPRAISAL OF LOAN PROPOSALS:

3.12.1 Branches have to appraise the loan proposals from its technical and economic
viability angle. While studying the economic viability of the proposal for loans
under Minor Irrigation, Horticulture and Plantation Development Land
Development etc., branches should draw up assumption of future cropping pattern
in realistic terms taking into account the overall farm situation. It has to be ensured
later that the farmer beneficiaries follow implicitly the revised cropping patterns
except for adverse features beyond their control.

3.12.2 The total cost of the project has to be assessed in respect of individual beneficiaries
taking into account the actual cost estimates on the basis of technical plans,
invoices, quotations etc.

3.12.3 Branches are permitted to include the expenditure incurred by applicants in payment
of fees/stamp duty to Government for obtaining land records, Encumbrance
Certificate(EC), Evaluation fees, creating mortgage/registration etc., legal
scrutiny charges, reasonable charges for obtaining estimates/valuation certificate
and transportation charges for assets from place of purchase to the place of
borrower and insurance premium for the asset as a part of project cost provided total
of these incidental charges do not exceed 10-15% of the total cost of the
project.

58
 Note:

ALLHV loans: Cost of the vehicle may include invoice value of the vehicle, life tax,
registration charges, insurance premium and other accessories by maintaining
stipulated margin.

Pumpset loans: The amount to be deposited in State Electricity Boards(SEBs) and all
other costs charged by SEBs for supply of power is permitted to be included in the
project cost .

3.12.4 Branches have to appraise the applications on all other aspects on our usual lines. In
case of deviation either in the unit cost or farm model, detailed economic appraisal
will have to be submitted.

i. Circle Offices shall provide the updated Unit Costs of important investment/
development activities that they deem necessary as a reference and guidance
value to the branches.

ii. The unit costs may be periodically reviewed (at annual intervals) by the Circle
Offices based on their own study /feedback/ representations from branches.

iii. The unit costs for new activities may be introduced by the Circle Offices
depending on requirement and extent of demand / potential.

iv. The Branches may take up cases of any variation over the Unit Costs advised with
the next higher authority (overseeing AF & PS Section of CO)

v. In case of large number of referrals as per ‘iv’ above, the Circle Offices may
review the need to revise the unit cost itself for such activities without waiting
for a full year as mentioned in ii above.

vi. The Circle Offices may use the forum of DCC/SLBC to decide the unit costs, which
are comparable and common in the district. In some states, NABARD is informing
Unit Cost for various investments, which Circles/Branches may adopt. Circles
have to ensure reasonableness of unit cost based on technical parameters and
avoid excess/under finance.

3.12.5 Borrowers have to be appraised of prompt completion of project. In respect of

individual schemes sanctioned under NABARD refinance, if there is delay in
completion of project and any commitment charges are levied by NABARD the

59
 same are to be recovered from ultimate borrowers. Branches have to obtain a
letter of undertaking as per Annexure 13 while granting such loans.

3.13 APPRAISAL OF TERM LOAN PROPOSALS BY ACS,HO

3.13.1 All term loan proposals of Rs.50 lacs and above are to be appraised by Agricultural
Consultancy Services (ACS), HO, as to its technical feasibility and economic
viability.

3.13.2 However, sanctioning authorities are empowered to waive the stipulation of appraisal
by ACS, HO for agricultural term loan proposals of Rs. 50 lacs and above. However,
technical feasibility and economic viability of the proposal shall be ensured while
permitting waiver. The fact of permitting waiver of appraisal by ACS, HO shall be duly
recorded in the sanction memorandum by the sanctioning authority.

In case, the sanctioning authority decides to subject agricultural term loan proposals
of Rs. 50 lacs and above to appraisal by ACS,HO, the same may be referred to them.

3.14 LEGAL ASPECTS OF DOCUMENTATION, MORTGAGE & RENEWAL /REVIVAL OF LOAN

DOCUMENTATION

Branches may refer Manual of Instruction on Documentation(updated till 30.4.2012)

and Head Office circulars issued from time to time on Legal aspects of documentation,
mortgage and renewal/revival of loan documentation and be guided accordingly.

3.15 BALANCING

3.15.1 Consistency check report shall be generated and account balances are matched with
day book figures and trial balance. Any difference indicated are to be verified and
tallied.

3.15.2 Difference in balancing is to be reported in PRR 18 to CO along with Branch Manager’s

comments and steps taken to locate the difference.

3.15.3 Business Objects (BO) Reports: The various types of BO Reports are:

Daily Reports
Balancing Reports
Consistency Check Reports
MIS Reports / statements
FCR and FCC Module Reports
Balance Sheet Statements and Reports
60
 To facilitate ready access, certain Business Objects MIS reports are generated at DIT,
HO Level and directly provided by placing them in URL (Universal Resource Locator)
http://172.16.42.70/ for the use of CBS Branches / Offices. However, it may be noted
that Branches can also directly generate the same on their own. The list of Business
objects reports, native reports, User Manual for Business Objects are available in the
download link under http://172.16.42.70/.

3.16 MAINTENANCE OF DCB PARTICULARS

Following report is available(Native report) which is to be referred

AL605 - Demand collection and balances

3.17. GRANTING OF LOANS TO BORROWERS OF LAND DEVELOPMENT BANKS (LDBs):

Branches may consider agricultural loans to the loanees of the LDBs subject to the
following conditions/precautions.

3.17.1 CROP LOANS:

Crop loans upto a limit of Rs.25,000/- and coffee crop loans upto a limit of
Rs.50,000/- may be considered for loanees of LDB after obtaining No overdue/No
Objection Certificate as per Annexure 14 from the land development Bank to grant
crop loans to their loanees on hypothecation of crops. The No Due/No Objection
Certificate should not be dated more than 15 days prior to the date of approach.

Further, in deserving cases, branches may consider crop loans above the ceiling
prescribed provided the farmers offer alternate unencumbered securities as detailed
below:

NATURE OF SECURITY MARGIN

a) Surrender value of LIC policies 10%
b) Market value of approved shares/
debentures/bonds. 50%
c) Market value of approved demat shares 30%
d) Approved units of mutual funds 50% of (NAV) or
market value whichever is
less.
e) Govt. Promissiory Note 10%
f) NSC's/Kisan Vikas Patra's (KVP) 25%
g) Third party term deposits 25%

61
 h) Gold 40% of the appraised value
i) Alternate landed properties 50%

NOTE:

a) The securities mentioned above other than deposits may be either in the
name of the borrower or in the name of third party.
b) As regards safe keeping of gold jewellery, the procedure as applicable in
respect of gold loans granted under the gold loan scheme should be followed.

3.17.2 TERM LOANS:

Branches may consider term loans for the present needs of the loanees of LDBs also
subject to the following conditions.

i) No Development loans should be granted on the lands which are already

mortgaged to the LDB.
ii) In case the borrower approaches for investment loan where moveable asset
created will be installed/housed/kept on the property which are already
mortgaged to LDBs, the applicant should produce NOC as well as No Overdue
Certificate from LDB to grant such loans on hypothecation of the same by our
bank. Branches to obtain a letter of access from LDB.
iii) Development loans such as sinking of well and investment loans (where assets
are kept/installed on the property which is not mortgaged to LDB can be
considered without insisting for no objection certificate). However, in such
cases no overdue certificate should be insisted.
iv) While granting loans for such category of farmers, the branches should be
highly selective and should grant loans only after ascertaining their bonafides.

3.18 SUBSTITUTION/EXCHANGE OF SECURITIES:

3.18.1 Branches can consider request of the borrower for substitution/ exchange of
securities on the following condition.

3.18.2 Only next higher authority is empowered to consider request for substitution/
exchange of securities strictly on merits of each case and on a very selective basis.

3.18.3 Request letter has to be obtained from the borrower for the exchange of asset duly
indicating the need for exchange/substitution.

3.18.4 Branches should ensure that the exchange of the asset would help in generating
adequate income for repayment of the loan.
62
3.18.5 No additional loan should be granted for procuring the new asset in place of the
existing asset and the additional amount, if any, required to acquire the new asset is
to be borne by the party.

3.18.6 Branches should obtain the supplemental agreement (to be stamped as an

agreement) as per Annexure 12 while permitting exchange of asset.

3.18.7 All other formalities required to be observed on the earlier asset such as obtention
of health certificate from the veterinary doctor, tattooing/tagging, insurance etc will
have to be invariably adhered to in the case of exchanged/substituted asset also
wherever applicable.

3.18.8 New asset has to be inspected and the report is to be recorded/sent to the appropriate
authorities as the case may be as applicable to fresh sanctions.

3.19 NO DUE CERTIFICATES

No Due Certificate from Financial Institutions is one among documents to be produced

by the applicant/s. However following relaxations are permitted:

The allocation of villages among the rural and semi-urban branches of banks shall not
be applicable for lending, except under Government sponsored schemes. While the
commercial banks and RRBs will be free to lend in any rural and semi-urban area, the
borrowers will also have the choice of approaching any branch for their credit
requirements.

Consequent to relaxations in Service Area norms, the requirement of obtaining “No

Dues” Certificate from the Service Area Branch for lending by Non-Service area Branch
is dispensed with.

The Branches have to ensure that dual financing does not take place by adhering to the
following:

i) Agricultural loans up to Rs. 50000/- for small and marginal farmers, share
croppers and agricultural laborers: By obtaining a declaration from the
applicant that he does not have any borrowings from other financial institution

ii) In other cases:

- By making local enquiries in the village to ascertain as to whether applicant

has any borrowings from other financial institutions.

63
 - By obtaining a declaration from the applicant that he does not have any
borrowings from other financial institution

3.20 CREDIT INFORMATION BUREAU OF (INDIA) LIMITED (CIBIL) REPORTS

i. CIBIL has categorized the credit information under two groups (i)Consumer
Accounts-Borrowal accounts in the name of Individuals(ii)Commercial Accounts-
Borrowal accounts of other than Individuals

ii. The obtention of CIR shall be a pre-sanction/ pre approval exercise.

iii. In case of Commercial accounts defined above, obtention of Credit Information

Report (CIR) shall be mandatory. CIR shall be obtained in consortium accounts
where we are the leaders.

iv. Consumer accounts, obtention of Credit Information Report shall be mandatory

for Priority Sector borrowal accounts with credit limits of Rs.2 lacs and
above

v. The CIR shall be obtained at the time of processing credit proposals from existing
clients of the Bank as well as credit proposals received from applicants who are
new to our Bank. The CIRs in case of existing accounts shall be obtained at the
time of processing renewal/ enhancement of proposals.

vi. If the threshold limits as mentioned above is crossed on account of credit

proposal on hand, the CIR shall be obtained as per guidelines.

vii. Exemptions (For Priority sector loans):

a. All Individual accounts of below Rs. 2 lakh under Priority Sector Advances.
b. All Borrow al accounts where in salary of the borrower is credited to the
account with lending branch.
c. Educational Loans
d. Loans against our Own Deposits/ approved securities
e. Gold Loans
f. Staff Loans

Specific guidelines issued on CIBIL by the Bank shall be complied with regard to other
issues like Payment of fees and procedural guidelines.

64
3.21. EXTENSION ACTIVITIES

Agricultural extension activities play a critical role in taking the bank closer to the
farming community. The extension programmes also facilitate knowledge transfer to
the farmers from the experts in various field of agriculture. A budget of Rs.2,500/- in
respect of rural and semi urban branches has been provided for conducting a minimum
4 activities per year.

COs are to monitor and ensure that the branches carry out extension activities which
are useful and help in building the bank's image.

Further, branches should report the details of extension activities conducted,

expenditure incurred thereof, impact created, etc., to their respective COs on a monthly
basis and a consolidated report on a half yearly basis i.e., as on March and September
of every year along with relevant details to PC Section, PC & FI Wing: Head Office.

65
 CHAPTER - 4

GUIDELINES ON LENDING PROCESS-OTHER PROCEDURAL MATTERS

1. Application forms, Enclosures & Appraisal forms

2. Documents to be Executed by the applicants
3. Documents to be produced by the Borrowers
4. Important issues relating to CBS parameters

4.1. APPLICATION, ENCLOSURES & APPRAISAL FORMS:

4.1.1 Other than specified under Produce loans, GCC loans, DRI loans, Marine fisheries
loan & Loans to MCGs/SHGs, Loans to MFIs

(i) For loans upto Rs. 10 lakhs

Application for loans upto Rs.10 lakhs simplified, applications have been
developed and the same may be used as per the following Table. It may be noted
that the concept of aggregation shall not apply for use of the application forms
and can be used for loans upto specified limits irrespective of other existing
loans.

Upto 50000 50000-2 lacs 2-10 lacs

Individuals NF.987 NF.983 NF.986
Joint borrowers NF.983 NF.986
Firms/companies NF.986

Note:
1. For revised KCCS, following shall be obtained in addition to application:

i) For New borrowers: Annexure -15.

ii) For renewal of existing KCCS/ Kisan Suvidha borrowers: Annexure-16.
iii) CASA a/c opening form with suitable modifications of mentioning ‘Rupay Debit
Card (to both (i) and (ii) above).

2. For Kisan Suvidha, in addition to application , application cum link letter for term
loan facilities as in Annexure-17 is to be obtained.

(ii) For loans above Rs.10 lakhs

Purpose of Loan Forms

Crop loans NF 417

66
 NF 418 Renewal-cum-appraisal report
Pumpset , Drip /Sprinkler irrigation, Farm NF 878
development loan, Farm level storage
structure (with modifications as detailed
in the concerned Chapter),Financing
farmers for purchase of land for
agricultural purposes
Development loan for Plantation/Horticulture NF.499, NF.519,NF.520
Farm Forestry
Purchase of Tractors/Power tillers & NF.499,NF.515,NF.516
farm machinery
ALLHV NF.862
Dairy loans, Sheep & Goat rearing, Piggery NF.499,NF.509,NF.510
Poultry NF.499,NF.513,NF.514
Bee Keeping As per Annexure 18
Marine Fisheries & Deep Sea fishing NF.499,NF.422
vessel(irrespective of the amount)
Inland Fisheries NF.529
Sericulture NF.767
Bio gas/Gobar gas NF.499,NF.517,NF.518
Estate Purchase Loan NF.499,NF.519,NF.520
Kisan All Purpose Term Loan Application as applicable to purpose
for which loan is sought for is to be
obtained.
KCCS NF 910
Annexure-15
CASA account opening form with
suitable modifications for Kisan Rupay
cards
KCCS Renewal without enhancement/
reduction in the existing limit /with - NF 975 with annual review for KCCS
enhancement in the existing limit in NF 974.
Enhancement in the limit in between two - Annexure -16
renewals
Kisan Suvidha NF 910 for sub-limit –I
Annexure-17
CKOD NF 986
CKOD Renewal-Without/With Enhancement NF 984

Modifications/alterations in the above forms if any, and application forms in other

cases, specified in the respective Chapters
67
 iii) In case of Co-obligation:

In all cases where Co-obligation is obtained NF:589

Note: For loans above Rs.1 lakh, this format NF 589 need be obtained

i. Produce Loans to farmers

Application for produce loan NF.611

4.1.3 GCC loans:

Loan application* NF 965

Request for OD facilities NF 372

*Note : In NF 965, the word “Canbudget” shall be replaced by “General Credit Card” in
page 1 and also in page 4, Para V (B).

4.1.4. Kisan All purpose Term Loan - As in respective Chapter

4.1.5 Loans to SHGs - As in respective Chapter

4.1.6. Loan to MCGs - As in respective Chapter

4.1.7 Loan to MFIs -As in respective Chapter

4.2 DOCUMENTS TO BE EXECUTED BY THE APPLICANT:

4.2.1 Specific Schemes/activities:

1. KCCS loans

Aggregate limit upto Rs.2 lakhs:

(i) Simplified Hypothecation agreement for agricultural loans - NF 963
(ii) Request cum undertaking letter to Agreement - Annexure 19

Aggregate limit above Rs.2 lakhs:

a) For Working Capital sub-limit
i) Agreement cum Hypothecation Deed for KCCS - NF 909
ii) Request cum undertaking letter to Agreement - Annexure 19

b) For Term Loan component:

i) Memorandum of Agreement for agricultural loans - NF 459
ii) Addendum (only for investment loans) - NF 373

68
Renewals(Short term WC Limit such as revised KCCS, Canara Kisan OD etc.,)

Without enhancement/reduction in the limit:

- Letter of Renewal NF 493
Renewal with enhancement/Enhancement in the limit in between two
renewal:
- Letter of Renewal NF 493
- Supplemental agreement NF 718
- Request cum undertaking letter to Agreement as per Annexure 19.
(in case of KCCS RuPay debit card).

2. Produce loans
As per relative chapter on various models of lending.

3. Marine Fisheries/deep sea fishing vessel:

- Pronote and take Delivery Letter NF 481

- Letter of undertaking/declaration / acknowledgement for agric NF 494
- Boat loan agreement NF 443

4. Canara Kisan Overdraft:

i. For fresh sanctions:

- Agreement and Deed for Canara Kisan OD NF 985

- Letter evidencing execution of documents NF 803

ii. For renewal:-Without enhancement:

- Application for renewal NF 984

- Renewal letter NF 493

iii. Renewal with enhancement:

- Application for renewal NF 984

- Renewal letter NF 493
- Supplemental agreement NF 718

Branches / Offices have to effect the following changes in Supplemental agreement

- NF 718 duly authenticated by the Borrower / s:

69
i) On page I Para 2 – Name of the agreement should be mentioned as “Agreement
and Deed for Canara Kisan OD dated……….”
ii) On Page 2 Para 2a – Rate of interest should be suitably linked to BPLR.
iii) On Page 2 Para 3-the word “hypothecated” to be replaced by “mortgaged”.

5. Kisan Suvidha :

For aggregate limit upto Rs. 2 lacs:

NF 963 - Simplified Hypothecation Agreement for Agricultural Loans

NF 373 – Addendum (only for investment loans)

For aggregate limit above Rs. 2 lacs:

For sub limit I

- NF 909 - Agreement cum Hypothecation Deed for Kisan Credit Card.
ii. For sub limit II
- NF 459 - Memorandum of Agreement for Agricultural loans
- NF 373 – Addendum (only for investment loans)
- Application cum link letter for release of term loan facilities as per
Annexure -17

6. GCC loans:

Pronote NF 480
Current Account opening form for individuals

Renewal without enhancement:

Letter of Renewal NF 493

Renewal with enhancement:

- Supplemental agreement NF 718

- Pronote for enhanced portion NF 480
- Link letter NF 719

7. Scheme for redemption of debts of farmers from non-institutional sources

- Pronote and take Delivery Letter NF 481

8. DRI Loans:

- Application cum undertaking NF 469

70
 9. MCG/SHG loans/Loans to MFIs

- As in respective chapters

4.2.2. In cases of other agricultural loans (other than listed in Para 4.2.1):

i) Aggregate agricultural limits upto Rs.1 lac:

Wherein no moveable asset is created/Development of land is involved viz.

Development loan for Plantation/Horticulture, Farm Development loan/Farm level
storage structure, DPN portion of EPL & Land Purchase Scheme)

Pro-note cum Take Delivery Letter NF 481

Letter of undertaking/declaration NF 494

ii) In other cases:

a. Aggregate agricultural limits upto Rs.2 lacs

NF 963 - Simplified Hypothecation Agreement

(In case, Co-obligation is obtained like in Tractor loans, NF 459 - Memorandum of

Agreement for agricultural loans to be obtained)

b. Aggregate agricultural limits of above Rs.2 lacs

NF 459 - Memorandum of Agreement for agricultural loans

Covenants of the co-obligant is to be filled up only where co-obligation is taken.

In other cases this portion should be striked out and words "Covenants of
co-obligation cancelled" to be written and Manager should sign and affix the
seal.

4.2.3 Applicable for all loans:

i) NF 373: Addendum

To be obtained when the asset is purchased subsequent to date of loan papers. If

the asset is purchased on the date of execution of loan papers the description of
the asset is to be noted in the hypothecation agreement(including under tem loan
component of KCCS-Revised Scheme).

71
4.2.4 Mortgage documents:

Particulars of documents to be obtained /executed wherever landed property is taken

as security are as mentioned under the chapter III on Mortgage in Documentation Manual
updated till 30.4.2012.

Link letter is to be obtained wherever continued mortgage of existing landed

properties and buildings is taken(Eg.Kisan Tatkal)

4.2.5 NF 803 wherever required

4.3 DOCUMENTS TO BE PRODUCED BY THE APPLICANTS

4.3.1 Common requirements:

a. Copies of land records regarding lands owned/leased as certified by revenue

authorities(For loans above Rs.10000/- in case of allied activities Dairy, Poultry,
Piggery, Goat/sheep rearing, Beekeeping)
b. No due certificate from other financial institution. This can be waived by the
sanctioning authority. However, they should satisfy themselves that the applicant
does not have liability with any other financial institution as mentioned in Para
3.17 Chapter 3 of this manual.
c. Latest land tax paid receipts are to be produced for verification (Need not be
insisted from the borrowers who are prompt in repaying the crop loans at the
time of renewal).
d. Original/certified copies of the title deeds and other required documents to
satisfy that the applicant is the true and legal owner of the land should be
insisted upon whenever landed property is taken as security/where developments
are proposed and ensured that it is free from encumbrance

4.3.2. Other specific requirements:

i) Farm development loan:

a. Whenever construction is involved estimates, layout plan approvals wherever

necessary, are to be obtained.
b. Valuation certificate of the land from a competent authority/approved valuer
whenever required

ii) Crop /plantation loan for Coffee/Cardamom

a. Original Coffee/Cardamom Registration Certificate (CRC/CDRC.)

72
iii) Plantation/horticulture:

a. Latest Agricultural Income Tax and Wealth Tax Assessment Order/returns filed
in respect of plantation loan to ensure that there are no tax arrears.
b. Audited Balance sheets for three years and latest ITAO/WTAO if loan is above
Rs.10 lakhs

iv) Pump set

a. Feasibility certificate from the electricity board wherever applicable.

b. Water rights certificate from competent authority in case of public source of
water.
c. Proforma invoice / invoice showing the prices separately for each item.

v) Farm machinery-Tractors/Power tillers/Combine harvestors

a. Proforma invoice for the farm machinery proposed to be purchased in duplicate.

b. True copy of the RC book after noting the lien with RTO in case of tractors /
trailors.
c. For power tiller, wherever the procedure for registration is in vogue, a true copy
of the RC book noting the lien with RTO is to be obtained.

vi) ALLHV

a. Proforma invoice in duplicate

b. Valid permit to run the vehicle in respect of heavy vehicles

vii) Tractors/Trailers/Power tillers(when RTO registration is mandatory)/ALLHV

a) True copy of RC Book after noting of lien with RTO for the vehicle financed.
b) Medium & heavy vehicle-valid permit to run the vehicle in respect of heavy
vehicles

viii) Drip/Sprinkler irrigation:

a. Proforma invoice with Technical report containing layout plan from the dealer

ix) For sheep/goat farming:

A certificate from Dept of Animal Husbandry/Forest Department recommending goat

rearing in the area.

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x) Produce loans:

As detailed in the Chapter No.11 of this manual.

xi) Marine Fisheries:

a. Copy of license/inspection certificate issued by port authority of the area.

b. Copy of Registration certificate issued by Marine Products Export Development
Authority (MPEDA) and from Fisheries Department wherever necessary.
c. Proforma invoice/Estimate of the Boat purchased/constructed

xii) Deep sea fishing Vessel

a. Estimates/quotation of the vessel to be acquired.

b. Design of the vessel.
c. Project report giving full details of description of vessel, method of fishing,
assumptions made while working out the economics etc.
d. Necessary permission from appropriate authorities whenever vessels are to be
imported. In respect of fishing vessels of above 20 meters in length, letter of
permission from ministry of agriculture should be obtained. In other cases,
necessary permission to be obtained from appropriate authorities.

xiii) Inland fisheries:

a. Estimate/invoice of the works to be done

xiv) Agri Clinic and Agri Business Scheme:

a. Valuation certificate of the land from competent authority/approved valuer

wherever required.
b. Wherever construction is involved, estimates, layout plan approvals (wherever
necessary) are to be obtained.
c. Also proforma invoice for machinery / equipment / vehicles to be purchased is to
be obtained.
d. Copy of Degree Certificate / marks card as a proof of being graduated in
Agricultural Science
e. Copy of the project report.

xv) Krishi Mitra Card:

Crops cultivated /proposed to be cultivated by the tenant farmer and nature of

tenancy etc., to be obtained from the farmer as per Annexure 20.

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xvi) Land purchase Scheme

a. Documents of title and other relevant documents in respect of presently held

landed property as well as lands to be purchased has to be produced for
establishing right over already possessed property as well as to prove proper flow
of title to the vendor of land to be purchased.
b. Copy of sale agreement if entered into or offer letter by the vendor.

xvii) Poultry, Duck rearing:

a. Proforma invoice for purchase of Equipments, cages, birds

b. Plan and Estimate for construction of building

xviii) Bio gas plant:

a. Technical feasibility report from KVIC/KVIB/BDO/Dept. of Agriculture

b. Quotation for gas holder from approved fabricator/supplier

xix) Estate Purchase loan/ Purchase of land for Agricultural purpose

a. Documents of title and other relevant documents in respect of presently held

landed property as well as lands to be purchased has to be produced for
establishing right over already possessed property as well as to prove proper flow
of title to the vendor of land to be purchased.
b. No due certificate from Cooperative Credit Society / Commodity Boards
This can be waived provided sanctioning authority is satisfied that the applicant
does not have liability with society/financial institutions/ commodity boards.
c. Documents of title and other relevant documents to establish the right over
presently held landed property as well as estate to be purchased is to be
produced.
d. Copy of sale agreement if entered into.
e. The valuation reports from the panel valuer / technical consultant is to be
obtained for both estate to be purchased and collateral security of existing
immovable’s offered.
f. Crop history of the estate to be purchased as well as existing estates.
g. If the repayment of loan is to be made out of the other sources of income,
supporting documentary proof of the same is to be furnished.
h. Tax assessment orders and copies of the tax returns filed indicating financial
position.
i. Audited Balance Sheet for the last 3 years.
j. Original registration certificate in respect of coffee/tea/rubber /cardamom
Estates.

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 xx) GCC:

In case of salaried persons, Salary Certificate issued by the competent authority

xxi) Scheme for redemption of debts of farmers from non-institutional sources-

In cases where the land is not mortgaged, branches shall obtain photostat copy of
available title deeds duly verifying the same with the original.

xii) Loan to SHGs, MCGs and MFIs - as in respective Chapters

4.4. SALIENT FEATURES OF AGRICULTURE CREDIT IN CBS

Full-fledged Agriculture Advances Module in CBS – Flex cube Retail is available for all
the CBS branches.

4.4.1 Agricultural Products:

i. Products from 783 to 811 come under the category of monthly installment-cum-
Interest type. Accounts opened under these products works like any other
general loans.

ii. The FCR Advances Module has been customized to support Agriculture specific
features as follows and these features are available for the accounts opened
under Products starting from 812.

a) Periodicity of Installment-Quarterly/Half-yearly/Yearly/18months' installment

periodicity
b) Interest frequency - Half-yearly on last working day of March and September.
c) DND: Interest Debited but Not Due. That means, all the half yearly interest
debits become arrears only on the subsequent installment date.
d) In case of disbursements in KCCS, Kisan Suvidha Sub Limit 1 accounts, every
withdrawal will become due after 12 months in case of short duration crop
purpose and after 18 months in case of long duration crop purpose.
e) Automatic compounding of interest when the principal/interest installment
becomes overdue
f) Automatic debit of PAIS premium in case of all KCCS loan accounts at the end
the account opening month, every year.
g) Automatic crediting of Interest Subvention and Interest Incentive at the time
of closure of the account / at the end of half year for eligible accounts.

76
4.4.2. Schedules:

i. In CBS environment, Schedule predominantly refers to the repayment method of

INTEREST /INSTALMENT and INTEREST RATE attached to a Loan account.

ii. Installment function includes the type (like revolving, non-revolving) and
periodicity (like monthly, quarterly, half-yearly, yearly, lumpsum).

iii. Interest function includes the normal interest, Penal interest, interest after the
repayment period, the method of calculating interest, rate of interest and the
interval at which interest is to be calculated.

iv. In CBS, an agriculture loan account is opened under a SCHEDULE attached to the
agriculture LOAN PRODUCT. So, while opening an agriculture loan account under a
specific product, the branch user has to select the correct schedule that is
applicable to that particular account.

v. The type of repayment is generally mentioned in the Schedule as follows:

Monthly Installment
Quarterly Installment
Half Yearly Installment
Yearly Installment
Lump sum repayment

vi. New schedules have been introduced in Loan Products, wherever required, to
facilitate graded repayment. So, at the time of account opening, branch user
should be very careful in selecting the correct Schedule in LN057 option (Account
Opening Screen).

vii. However, the branch has the option to change the schedule in LN521/AL521
(Account Schedule) screen at the time of disbursement.

viii. REVOLVING type of Products i.e., these products works like operative accounts.

PRODUCT NAMEOFTHEPRODUCT
CODE
840 KISAN CREDIT CARD SCHEME-SHORT DURATION
841 KISAN SUVIDHA SUBLIMIT1-SHORT DURATION
895 KISAN CREDIT CARD SCHEME-LONG DURATION

77
 PRODUCT NAMEOFTHEPRODUCT
CODE
896 KISAN SUVIDHA SUBLIMIT 1-LONG DURATION
897 CANARA KISAN OD
898 GENERAL CREDIT CARD SCHEME
899 KRISHI MITRA CARD SCHEME REVOLVING
900 COLD STORAGE – REVOLVING

4.4.3. Module Options

As already explained, there are two types of products for many Agri-schemes, i.e.,
monthly interest type and half-yearly interest type. The following are the Options for
the purpose of opening and maintenance of Agricultural accounts depending upon the
periodicity of interest.

Up to Product Product 812

No.811 & above
Customer Addition 8053 8053
Loan Direct Account Opening LN057 LN057
Customer Account Relationship CI142 CI142
Maintenance
Account Documents Maintenance LN323 LN323
MIS X ref Maintenance BAM83 BAM83
Loan Security Link Maintenance LNM34 LNM34
Account Schedule LN521 AL521
Agri Loan Disbursement Inquiry 1413 1415
Insurance Policy Master Maintenance BAM77 BAM77
Security Insurance Cross Ref BAM67 BAM67
Maintenance
Agri Loan Account Master Attributes LNM35 ALM35
Maintenance
Account Transactions Inquiry LNM10 ALM10
Agri Account Schedule Inquiry LN522 AL522
Agri Revolving Account Restructuring - AL523
Enquiry
Loans Balance Inquiry 7026 7026
Account Rates LNM83 LNM83
Agri Loan Installment Payment Inquiry 1065/1068 1072
Loans Full Payoff Inquiry 1067 1078

78
 Up to Product Product 812
No.811 & above
Agri Loans Cheque Book Issue -- ALM37
Maintenance
Loan Approved Amount Maintenance LNM38 ALM38
Reversal of Disbursement- Step1 6006 6006
Reversal of Disbursement - Step2 LN045 AL045
MISC Loan Debit (Reversal of latest 9540 9540
credit transaction)
Partial Pay-off 1066 1027
Withdrawal from Credit Balance in 1412 (other 1422
KCCS loan accts)
Agri Loan account Application Details LNM39 ALM39
Maintenance
Agri Stop Cheque instructions -- ALM36

4.4.4 Important options and provisions are furnished in following Paras:

Agricultural loan account opening in FCR

Opening and disbursement of a loan account under Agriculture module in Flex Cube
Retail involves the following steps:

1. Creation of Customer ID: 8053

2. Loan Direct Account Opening: LN057
3. Customer Account Relationship Maintenance: CI142
4. Account Documents Maintenance : LN323
5. MIS Xref Maintenance : BAM83
6. Loan Security Link Maintenance: LNM34
7. Account Schedule: AL521
8. Agri Loan Disbursement: 1415

4.4.4.1 Agricultural loan - account schedule (Fast Path: AL521)

The Repayment schedule for an agriculture loan account can be set through this
option. The account schedule consists of 3 stages:

1. Moratorium stage

a. Repayment holiday - Holiday for both Principal and Interest

b. IOI - Interest only installment i.e., Holiday for principal and actual interest to
be recovered.

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 2. Repayment stage
a. IPI - Interest principal Installment - Principal to be recovered in equal
installments.

Half yearly Interest debited (DND) to be recovered along with the principal
installment.

3. PMI stage
a. Post Maturity Installment stage - Once the loan repayment period is expired,
the loan account is treated to be in Post Maturity stage.

Repayment Holiday/ IOI is optional and the second and third stages are
mandatory for a loan account.

4.4.4.2 Agri Account Transactions Inquiry -ALM10

Accounts Transactions Inquiry option enables the user to view the following details of
an agriculture loan account.
1. Audit Trail
2. Arrears
3. Account Ledger
4. Account details
5. Statement

This is only an inquiry screen and no transaction / modification is allowed.

4.4.4.3 Reschedule / Restructure / Deferment –AL 521

Option AL521 plays a vital role, which enables the user to determine,
1. Setting of Repayment Schedule at the time of account opening
2. Changing of repayment schedule by means of Reschedule, Restructure,
Deferment
3. Setting a repayment schedule
4. Restructuring Revolving Loan accounts

4.4.4.4 Agri Disbursement: Option 1415:

i. After AL521 (Account Schedule), the required amount can be disbursed through
Option 1415.

ii. In respect of credit balance in revolving accounts (like KCCS), the disbursement
has to be made through 1422 option.

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4.4.4.5 ALM38- Renewal of KCCS account -Modification of Sanctioned Amount

i. The Agriculture loan amount, which is sanctioned for a particular account can be
reduced using the Loan Approved Amount Maintenance option ALM38.

ii. This option has to be used when the branch/borrower decides not to use the full
amount sanctioned.

iii. It is possible to reduce the Sanctioned amount only before disbursement. And in
case of agri loan, where part of the disbursement is already made, it is possible to
reduce the sanctioned amount only to the extent of disbursed amount.

iv. Enhancement / Reduction in limit for KCCS account shall be made using this
option.

v. This option is to be used for changing the available limit in case of annual
increase as per revised KCCS also.

vi. Also this option can be used to fix the period of KCCS loan upon renewal.

4.4.4.6 Agri loan account Master Attributes maintenance-ALM35

i. The option allows modifying the details of an agriculture loan account.

ii. When an agriculture loan account is opened, it acquires various characters based
on the parameters attached at Product level.

iii. But there may be occasions to change certain characters like NPA appropriation
sequence for certain specific accounts.

iv. Using option ALM35-Agri Account Master Attributes Maintenance, the user can
modify the default values extended to an account from the Product Parameters.

v. The NPA appropriation sequence that has been set at the product level can be
modified for an account using this option.

vi. For agriculture loan accounts with monthly repayment schedules, the user can
opt LNM35-Loan Account Master Attributes Maintenance- for changing the attributes
at account level.

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 CHAPTER - 5

KISAN CREDIT CARD SCHEME (KCCS)-REVISED SCHEME

(ENABLED WITH RUPAY DEBIT CARDS)

5.1 PURPOSE:

A single window credit assistance to the farmers for their cultivation & other needs as
indicated below, subject to ensuring repayment capacity of farmers.

i. To meet the short term credit requirements for cultivation of crops

ii. Post harvest expenses
iii. Consumption requirements of farmer household
iv. Working capital for maintenance of farm assets and activities allied to
agriculture, like dairy animals, inland fishery etc.
v. Investment credit requirement for agriculture and allied activities like pump sets,
sprayers, dairy animals etc

5.2 SCHEME COMPONENTS

i. Revised KCC Scheme consisting of working capital and a term loan component

ii. Technology enabled product features wherein the KCC borrowers will be given
Debit cards (RuPay) as designed by NPCI with the Bank’s branding. Presently the
card is a magnetic stripe card operated with PIN.

iii. Rupay Kisan debit card will be issued only for the short term(working capital)
operative limit

5.3 ELIGIBILITY:

i. All Farmers – Individuals / Joint borrowers who are owner cultivators

ii. Tenant Farmers, Oral Lessees & Share Croppers
iii. SHGs or Joint Liability Groups of Farmers including tenant farmers, share
croppers etc.
iv. Individual farmers will be issued with RuPay debit cards. In case of accounts with
joint borrowers, Rupay debit card can be issued to one of the borrowers by
obtaining an undertaking from borrowers as per Annexure- 21.
v. The party should not be a defaulter to any of the Financial Institutions
vi. Not to be issued to minors and defaulters.

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5.3 OPENING OF SB ACCOUNTS OF KCCS BORROWERS:

Under the Scheme, opening of SB account by farmers should not be a pre condition for
issue of Kisan Rupay Debit Card.

Instead, in order to conform with “KYC” (Know Your Customer) norms, branches shall
obtain SB / Current opening forms wherein introduction of the customer can be made
for opening of CA(SISO-CBS Product 226) along with application for Debit cards(with
suitable modification)

5.4 CURRENT ACCOUNT (SISO-PRODUCT 226)-CASA APPROACH FOR KISAN RUPAY DEBIT
CARDS

Our existing KCCS/Kisan Suvidha Working capital revolving limit component under in
our CBS does not support operation through ATMs and a work around CASA approach is
implemented presently which involves-.

• Opening of a CASA-Current Account in the name of the borrower and Linking it to

the KCCS account(Sweep in-Sweep out facility-SISO-Product number 226)

• Sweep in-Sweep out facility of transfer of KCCS balance to Current account and
ensuring ‘Nil’ balance in the Current account at the end of the day

• The said Current account will be enabled for ATM/POS etc.

• The required documentation/instructions relating to system advised by DIT for

the above approach advised in the following paras of this chapter.

5.5. LIMITS UNDER REVISED KISAN CREDIT CARD SCHEME:

i) The limit will be sanctioned based on 5 year projected requirement; The same is
arrived at based on current year requirement assessed with 10 % annual increase
upto the 5th year short term limit as shown in Para 5.5.1(i).

ii) The limit of the card should be equal to the actual loan requirement/drawing
limit of the farmers as assessed.

iii) The limit may be arrived at, based on operational land holding (including
leased-in land and excluding leased-out land), cropping pattern and other
requirements as in sub para (vii) below.

83
 iv) The Technical Committee arrives at the scale of finance after retaining margin of
25%. The branches may consider a higher quantum of loan for crop maintenance
to the extent of 15-25% over and above the scale of finance. However, branches
should ensure that loan limit should not exceed 50% of value of the produce and
flexibility given should be used judiciously and in deserving cases only.

v) In order to provide the facility for all the crops proposed in a year, requirement
for the entire year can be worked out and the same can be fixed as the limit for
crop production.

vi) Where scale of finance is not recommended, CO as the case may be, can fix
appropriate scale of finance in consultation with local agricultural department
and convey the same to the branches.

vii) Branches may fix suitable sub-limits taking into consideration seasonality in credit
requirements, in case of crop production.

viii) The loan requirement (working capital sublimit) under KCCS would be arrived for
the following purposes:

A. Crop loans Crop loans – based on Scale Of Finance (SOF) cultivation

B. Allied activities Working capital requirements on feed and other operational costs
for one month/till the income is generated from the activity,
insurance premium, veterinary expenses, etc.
C. Farm Machinery Fuel / power costs, general maintenance, repairs, etc.
Maintenance
D. Consumption -
Needs
E. Non-Farm
sector Working Capital requirement for Non-Farm Sector Activities

5.5.1 Basis for arriving at KCCS limit is as under:

(i)Short term operative limit(sub limit I)

(a) Current year short term operative limit requirement:

Norm
i) Crop cultivation/maintenance (A) As per scale of finance
ii) WC requirement for allied activities (B) Maximum 25% of (A)
and for farm machinery maintenance (C)

84
 Norm
iii) Sub limit for consumption need (D) 10% of (A+B) subject to a
maximum of Rs.15000/-
iv) Sub limit for non farm sector(E) 20% of the projected
turnover not exceeding
25% of (A) + (B)
Sub limit I(for the current year) (A)+ (B) + (C) + (D) + (E)

(b) Assessment of WC –requirement in the succeeding years- An Illustration

Limit for the I year(Current year) As above(a) Rs.50000

Limit for the II year 10% increase for cost escalation, Rs.55000
Limit for the III year 10% increase Rs.60500
Limit for the IV year 10% increase Rs.66550
Limit for the V year 10% increase Rs.73200

The KCCS limit will be sanctioned for the 5th year short term limit so assessed but the
withdrawal limit will be limit for the relative season/year (NOT THE ENTIRE 5th YEAR
Short term working Capital Limit)

(ii) Term Loan component(sub limit II)

This sub-limit is to meet the present and anticipated investment / development

credit requirements of the farmer. Sub-limit – II shall be limited to 3 times the
annual net income of the farmer/a maximum of Rs. 5 lacs.

In case the farmer is an existing borrower and has term loans, then the sub-limit
is to be arrived after deducting existing liability under term loan inclusive of
undisbursed portion of the limit, if any. The Sub-limit is not a revolving facility. At
the time of Annual review the Sub-limit - II shall be reinstated to the extent of
repayment of Principal made during the year.

The purpose of the term loan component (Sub-limit II) need not be given at the
time of sanction. Only a Sub-limit is provided at the time of sanction. However
disbursement will be as per the guidelines given in Para 5.9 of this chapter.

The term loan component will be made available to fresh borrowers & existing
borrowers of Kisan Suvidha Scheme in Kisan Suvidha Term loan product.

In case of renewal of loans under Kisan Credit Card product, the term loan
component to such KCC borrowers can be made available as a separate term loan

85
 account under the existing Scheme/s, till a separate Term loan product under
KCCS is enabled.

5.5.2 Fixation of Sub-limits for Marginal Farmers and Tenant farmers may also be
considered based on simple assessment: A flexible limit of Rs.10,000/- to
Rs.50,000/- be provided (as Flexi KCC) based on the land holding and crops grown
including post harvest warehouse storage related credit needs and other farm expenses,
consumption needs, etc. as above plus small term loan investments as per assessment
of Branch Manager without relating it to the value of land

5.6 ISSUANCE OF KISAN RUPAY DEBIT CARDS:

The KCC borrowers will be allowed to operate their Working capital limit through ATMs
by use of Debit Cards.

These are debit cards with RuPay logo developed by National Payments Corporation of
India (NPCI), with our Bank’s branding.

RuPay is the Indian domestic card payment network being set up by National Payments
Corporation of India (NPCI) at the behest of Banks in India.

5.6.2 Issue Of Cheque Books:

Cheque books may be issued at the discretion of Sanctioning Authorities to literate

borrowers who are: i) Already dealing with us with standard asset status OR
ii)Undertaking number of activities which demand frequent operations OR
iii) Planters.

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5.7 VALIDITY/TENABILITY:

The operative short term WC limit will be valid for 5 years subject to annual review

The review process may result in continuation of the facility (at the earlier projected
level with 10% annual increase) or any modified limit (due to change in crop pattern/
revised Scale of Finance/change in extent of holdings etc) or cancellation of the
limit / withdrawal of the facility depending upon the performance of the
borrower.

Annual review shall be done as per the NF 974 format and the borrower’s signature is
to be obtained ‘confirming the cropping pattern of the current season/year(Para 10
of NF 974).

5.8 TERMS OF THE LOANS:

The following terms will be as per guidelines specified in Chapter 2 of this Manual
apart from the Note/s here below.

5.8.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

5.8.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

The security norms shall be applied taking in to account the total of projected credit
assessment/sanction (based on 5th year projected short term requirement) and term
loan component proposed.

5.8.3 Rate of Interest

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

Wherever Interest subvention Scheme announced by the GOI/State Govt. from time to
time and as specifically advised by HO, the rate of interest will be in terms of such
Scheme. Details Interest Subvention Scheme for loans extended to crop production
purposes are furnished in Annexure-25. Branches/offices are advised to note the same
for compliance.

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5.9 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

The following terms will be as per guidelines specified in Chapters 3 & 4 of the Manual
in addition to the following Note/s

5.9.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

5.9.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

The requirement for each activity should be clearly indicated in the application.
Annexure can be given for working capital assessment for non-farm sector and allied
activities.

In respect of sugarcane finance under tie up arrangement, branches should obtain an

undertaking letter as per Annexure 22.

5.9.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

5th year PROJECTED short term limit should be filled in case of loan documentation for
short-term sub limit.

5.9.4 Pre sanction visit is to be conducted(Pre sanction not compulsory if conduct of the
account is satisfactory):

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

5.9.5 Post sanction inspection &follow up :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

5.10 DISBURSEMENT:

5.10.1 The short term component of the KCC limit is in the nature of revolving cash credit
facility.

88
 i. The drawing limit for the current season/year be allowed to be drawn using
any of the following delivery channels.

a) Operations through branch

b) Operations using Cheque facility
c) Withdrawal through ATM / Debit cards.
d) POS Merchant locations in the country, where RuPay Logo is displayed. Per
day transaction limit at POS Merchant Establishment is Rs.20000/-.

ii. In case of renewals/fresh loans though credit assessment/sanction is made based

on 5 year projections, withdrawal limit will be limit as assessed for the relative
season/year(subject to annual review)

iii. The long term loan for investment purposes may be drawn as per Schedule of
investment/development plan envisaged. The term loan amount to be drawn
only at the branches where the limit is sanctioned.

iv. Before making disbursements, branches shall ensure that the tenability of the
limit/validity period of the card has not expired

v. Overdrawing should not be allowed under KCCS.

vi. For reporting, all debit entries to the account other than interest and other charges
to be taken as disbursements.

5.10.2 Term loan sub component:

Within the overall credit limit sanctioned, the farmer is free to choose his own purpose
like purchase of agricultural implements, land development, purchase of bullocks and
carts, purchase of farm machinery, minor irrigation etc .

The applicant has to submit application-cum-link letter for release of term loan as per
Annexure 23.

The applicant has to submit quotation / invoice / estimates, etc., based on the
purpose as per extant guidelines.

For each term loan under the sub limit, a separate loan account is to be opened.
However, part disbursement can be made for each of the investment/ development
loans. All the loan accounts are to be linked to the Kisan Credit Card Scheme account.

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 The loan proceeds are to be remitted directly to the dealer / supplier / vendor along
with the margin money collected from the borrower. In case it is not possible to make
payment direct to vendor/supplier for any valid reasons, the loan amount may be
disbursed to the borrower. Later the assets should be inspected without fail. Branches
should obtain necessary bills / vouchers / stamped receipt for the amount disbursed
including margin amount. However obtention of bills, vouchers, receipts, etc can be
waived for loans upto Rs. 25,000 subject to obtention of declaration from the
borrowers for having purchased the asset/incurred the expenditure.

Such of the investment / development credit requirements of the farmers which

require a repayment period of more than 5 years shall be considered under existing
term lending schemes.

The limitation period of individual accounts under Sub-limit II should be considered

separately and Acknowledgement of debt / security is to be obtained accordingly.

5.11 REPAYMENT

5.11.1 Short term WC sub component (revolving credit facility): Each withdrawal under the
short term sub-limit to be liquidated in 12 months (short term crops)/18 months (in
case of long term crops like Banana, Sugarcane etc)

There is no need to bring the debit balance to Zero at any time.

Though the drawal is allowed to remain outstanding as explained above, nevertheless

the branches are requested to educate the borrowers to remit sale proceeds of the
crops to the card account. Borrowers may also be advised to remit the amount
whenever in surplus and keep the account operative.

When the Bank has granted extension and / or reschedulement of the period of the
repayment on account of natural calamities affecting the farmer, the period for
reckoning the status of operations is satisfactory or otherwise would get extended
together with the extended amount of limit. When the proposed extension is beyond
one crop season, it would be desirable to transfer the aggregate of debits for which
extension is granted to a separate term loan account with stipulation for repayment in
instalments.

5.11.2 The term loan component will be normally repayable within a period of 5 years
depending on the type of activity / investment as per the existing guidelines applicable
for investment credit.

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 Sanctioning authority at their discretion may provide longer repayment period for term
loan depending on the type of investment.

5.12 ASSET CLASSIFICATION NORMS

The ‘crop season’ linked norms will apply viz.

Prudential norms applicable for other agricultural loans will be applicable.

An account is considered non-performing when a drawls and interest demanded,

remains unpaid for a period of 2 crop seasons in case of short duration crops. In case of
long duration crops, account becomes non- performing when a drawl and interest
demanded, remains unpaid for a period of one crop season.

For the purpose of the above, “long duration” crops would be crops with crop season
longer than one year and crops which are not “long duration” crops, would be treated
as “short duration” crops

Term loan under KCC has fixed repayment schedule and is to be governed by extant
prudential norms.

The crop season for each crop, which means the period of harvesting of the crops
raised, would be as determined by the State Level Bankers’ Committee (SLBC) in each
state.

5.13 PAYMENT OF SB INTEREST ON CREDIT BALANCES KEPT IN KCC A/c:

Interest as applicable in case of Savings Bank account to be paid to Kisan Credit Card
holder in respect of minimum credit balance maintained in a KCC account

Periodicity of crediting of interest shall be as per norms in vogue for payment of

interest under SB accounts.

Any change in SB interest would also be applicable for payment of interest on credit
balances kept in KCC accounts.

Interest payable as mentioned above is to be debited to sub-head “Interest Paid – KCCS

A/c” and credited to respective KCCS accounts.

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5.14 PROCESSING CHARGES:

i) As applicable to short term loans-to be collected for the working capital as per
the Card limit (though drawl is to be permitted as per season wise/yearly
sub –limit).
ii) In respect of KCCS limit of above Rs.5 lacs, 25% of normal processing fee is to be
collected at the time of each annual review of the account apart from collecting
normal processing fee at the time of sanctioning /renewal of the limit.
iii) Processing charges for the Term loan component as applicable to agriculture term
loans to be collected at the time of disbursement of each term loan.
iv) Processing charges to be collected upfront to the debit of operative account and
updated in LN057/BA020

5.15 OTHER CHARGES

I. Folio charges & Documentation charges as applicable to agricultural loans

II. Cheque book issuance charges / Debit Cards as applicable

5.16 MOBILE BANKING

The details of mobile phone of the borrower, if available, to be captured at the time of
obtaining CASA application and mobile banking facility may be extended at his/her
option.

5.17 CROP INSURANCE

Crop Insurance is mandatory. At present, following crop insurance scheme are in

vogue:

1. Rashtriya Krishi Bima Yojana (National Agricultural Insurance Scheme).

2. Modified National Agricultural Insurance scheme (MNAIS).
3. Weather based crop insurance Scheme (WBCIS).

The guidelines applicable to above crop insurance schemes are detailed in

Annexure-11.

5.18 Personal Accident Insurance Scheme(PAIS) and Asset Insurance.

Personal Accident Insurance(PAIS) is available upto Rs.50000/- per borrower. Likewise,

assets purchased out of term loan are to be insured. However, coverage under PAIS and
obtaining insurance for assets created out of term loan may be left to the option of
the borrower.

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 The waiver if sought by the borrower may be incorporated in the application form with
the authentication of the intending borrower.

Guidelines governing PAIS are detailed in Annexure -24.

5.19 BRANCHES AND OFFICES ARE ADVISED TO NOTE THE FOLLOWING POINTS WHILE
IMPLEMENTING THE REVISED KCC SCHEME.

i. The scheme does not provide for purchase of livestock / machineries /

equipments.

ii. Limits for Working capital for allied activity/ies, working capital for farm
machineries, consumption needs should not be included in KCC limit if the party
has already availed term loan for the purpose, wherein working capital portion is
capitalized, unless and otherwise absolutely necessary or such requirements have
already been financed under any other scheme of the Bank such as Canara Kisan
OD, Kisan Tatkal etc.,.

iii. Replacements of parts for farm machineries where the cost is very high like tyres
of tractors, etc. should not be considered under KCCS.

5.20 GUIDELINES OF DIT WING ON PRODUCT 226

A new Current Account Product Code – 226 – ‘KCCS-SISO ACCOUNT’ has been created for
linking KCCS /Kisan Suvidha(sublimit I) accounts for the purpose of issuing Debit Cards
and cheque books.

The following are the features of KCCS-SISO Product (code 226):

i) No TOD allowed in the accounts opened under this product

ii) OD limit not allowed to be created for the accounts opened under this product
iii) Issue of cheque books permitted
iv) Minimum balance to be maintained is Zero whether cheque book issued or not
v) Cheque book Charges as applicable to ODOCC accounts
vi) Balance in the account is shown under Current Account in Day Book (Liability side)
vii) Permitted facilities – ATM, POS, INTERNET
viii) DIT has linked this Product only for Individuals. Branches should take care of
opening the accounts under this product for the purpose of issuing ATM-cum debit
cards to eligible persons such as Individual Farmers, Tenant Farmers, Oral Lessees
and share croppers.

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The following are the operative guidelines:

1. Obtention of Current Account opening form and adhering to KYC norms as per
extant guidelines.
2. To be opened only for the accounts where ATM Debit Cards / Cheque Books are
issued.
3. As only one Debit card can be issued to one customer, existing cards issued to the
customer, if any, should be got surrendered before issuing Debit Card to the
Current Account under Product 226.
4. The new card issued to be linked to the Current Account under Product 226 in
Option CMS01. Existing Savings Bank of the customer to be linked to the new card
if the party wishes or in case old card issued to SB account is surrendered.
5. Similarly cheque books issued to KCCS/Kisan Suvidha account, if any, should also
to be got surrendered and destroyed and new cheque book to the Current Account
should be issued.
6. The Cheque book should bear the Account No. of KCCS/Kisan Suvidha account in
addition to the number of the Current Account to indicate that the cheque book is
issued to Current Account for withdrawing from KCCS/Kisan Suvidha account.
7. ATM / Cheque book charges to be collected as applicable to ODOCC accounts.
8. Branches should enable ‘ATM’ and ‘POS’ for the customer id in CH021 Option
under ‘Account Details 2’. This can be viewed in CH021 under the tab –Account
Details 2 and select the following:

Under ‘Account Flags’ Select Cheque Book Facility and

Under ‘External Banking Facility’ select ATM and POS

9. Branches should enter the ATM Card details in CMS01 Option (Card details) for
linking the CASA account with the newly issued ATM-cum-Debit Card as follows:

Branch to choose Customer ID from Search Criteria and enter the Customer ID.
The system will display Name of the Customer and Customer_IC. Branches should
note to enter other details as follows:

Card product : Starter_kitClick on ‘New’ Radio Button.

Card No : Enter the 16 digit ATM-CUM-DEBIT Card No.

Card Status : Active

Remarks : KCCS ATM Card

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 Under Account Linked, the System displays all the CASA accounts of the
customer.

Branch should select Current Account No for which KCCS Sweep-in/Sweep-out

is maintained and mark as Default (Y) and Link (Y).

For other SB accounts of the customer the Default should be ‘N’ and Link
should be ‘Y’.

10. BRANCHES SHOULD NOTE TO LINK THE CURRENT ACCOUNT WITH KCCS/KISAN SUVIDHA
ACCOUNTS THROUGH OPTION CHM39 (SWEEP-IN) AND CHM32

(SWEEP-OUT) BEFORE HANDING OVER THE ATM CARD OR THE CHEQUE BOOK TO THE
BORROWER.

IF SWEEP-IN (CHM39) IS NOT MAINTAINED THE SYSTEM WILL NOT TRANSFER THE FUNDS
FROM KCCS ACCOUNT WHEN THE BORROWER TRIES TO DRAW CASH FROM ATM OR WHEN
THE CHEQUE IS PRESENTED ACROSS THE COUNTER OR IN CLEARING. THIS MAY LEAD TO
CUSTOMER COMPLAINT.

IF SWEEP-OUT IS NOT MAINTAINED THE CREDIT BALANCE IN CASA ACCOUNT WILL NOT BE
TRANSFERRED TO KCCS/KISAN SUVIDHA ACCOUNT AT THE END OF THE DAY.

11. Linking of Current Account with KCCS/Kisan Suvidha account:

Branch SHOULD NOTE to maintain Sweep-in for the Current Account in option CHM39
with sweep-in provider as KCCS/Kisan Suvidha account as follows:

a. Account Number : Casa Account No

b. Customer Name : Defaulted by system
c. Product Code : Defaulted by system
d. Instruction Number : Defaulted by system
e. Under Sweep In Provider Details

i. Account Number : KCCS/Kisan Suvidha Account No

ii. Customer Name : Defaulted by system
iii. Product Code : Defaulted by system

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12. Branch to maintain sweep-out link between Current Account and KCCS/ Kisan Suvidha
account in CHM32 Option as follows:

a) Frequency Daily
b) Min. Balance to be retained: NIL
c) Start Date Current Date
d) End Date A future date say, 31/12/2050
e) Next Date Next working day of Start Date
f) Maximum Sweep-out amount 999999999.00
g) Minimum Sweep-out amount 1.00
h) Sweep out to Select Revolving Loan Account and
enter KCCS/Kisan Suvidha Account in
Loan account Field. In case loan
account of different cust-id is entered,
the system gives an alert message
as – ‘FROM AND TO accounts do not
belong to the same customer.
i) Narration Appropriate Narration may be entered

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13. Branches should note that it is imperative to maintain sweep-out function as
mentioned above to enable the system to transfer credit balance in CASA account, if
any, to KCCS/Kisan Suvidha account at the end of the day. In case sweep-out is not
maintained, the credit balance will remain in Current Account only, which may attract
complaints from the borrower.

14. As the sweep-in from KCCS accounts to ATM happens online, withdrawal through ATM
does not support off-line transactions, i.e., when CBS host is not available.

15. Withdrawal limit is as applicable to other ATM Debit cards as advised from time to time
irrespective of the available amount for disbursement in the KCCS/Kisan Suvidha
accounts.

16. Maintenance of Season-wise limits within the overall limit sanctioned to the borrower
is not supported in CBS which should be taken care by the branches through the Option
ALM38 option.

17. RUPAY card supports only withdrawal at ATM and does not support usage of Card at POS
as of now.

5.21 SCOPE OF COVERAGE OF EXISTING KCCS/KISAN SUVIDHA BORROWERS

5.21.1 Existing KCC/Kisan Suvidha borrowers:

All the existing KCC /Kisan Suvidha borrowers will be issued RuPay debit cards that
shall be linked to their KCC/Kisan Suvidha(Working capital revolving sub limit) through
CASA account(product 226)

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5.21.2 Sanction as per revised Scheme parameters at the time of renewal:

At the time of renewal of Working capital limit under the existing KCCS/ Kisan Suvidha
loans, the same shall be sanctioned as per revised Scheme parameters, under the same
account.

The reassessment shall be made for 5 years and the documentation will have to be
obtained for the enhanced limit.

The short term loans shall be sanctioned based on 5th year projected credit
requirement assessment(current year assessment as per existing guidelines plus 10%
annual increase over the next 4 years).The existing RuPay debit cards will continue to
be linked to the account(Working Capital revolving limit) through the CASA account.

The term loan component to such KCC borrowers can be made available as a separate
term loan account under the existing regular Scheme/s, till a separate Term loan
product under KCCS is enabled. In case of Kisan Suvidha borrowers, the term loan
products are already available (Products 798 & 759).

The term loan component will be made available to new borrowers & existing
borrowers of Kisan Suvidha Scheme in Kisan Suvidha Term loan product. In case of
renewal of loans under Kisan Credit Card product, the term loan component to such
KCC borrowers can be made available as a separate term loan account under the
existing Scheme/s, till a separate Term loan product under KCCS is enabled

5.22 MODIFIED PARAMETERS/NORMS IN THE REVISED KCC SCHEME:

The revised Kisan Credit Card Scheme by virtue of having both Working Capital and
Term loan components is modified version of our existing Kisan Suvidha Scheme. The
revised parameters of the Revised KCC Scheme as compared to earlier KCCS/Kisan
Suvidha Scheme are as under:

Earlier KCCS norms Revised KCCS norms

Delivery of Credit to be availed at the
Credit branch
Purpose KCCS- WC as a revolving credit
with 3 year tenability
Kisan Suvidha-WC limit with
5 year tenability & Term loan
Through various channels viz. Branch or
Debit Cards operable at ATMs/Point of
Sales(PoS) etc (Note 1)
WC limit as a revolving limit with 5 year
tenability and an investment loan
component, repayable in 5 years(Note 2)

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 Earlier KCCS norms Revised KCCS norms
Sub-limit Limit will be current year Limit will be 5th year requirement
for WC requirement: For crop assessed with 10% annual increase
cultivation, allied activity/farm projected over the current year
machinery etc requirement (subject to annual review).
However withdrawal will be limited to the
respective year’s assessment of credit limit
Total Kisan KCC-Working capital limit The Working capital limit is arrived for the
Card limit assessed as above 5th year (with 10% annual increase as
above) PLUS
Kisan Suvidha- Estimated long term loan requirement
WC as above plus term loan (Note 2 & 3)
Drawing KCC limit/ sub limit for WC The sub-limit under Working Capital for
limit under under Kisan Suvidha the relative season/year
WC (NOT THE 5th YEAR Short term Working
Capital Limit)
Security Up to Rs.1 lakh- Hypothecation Up to Rs.1.50 lakh-Hypothecation of crops
of crops Above Rs.1.50 lakh:
Above Rs.1 lakh: - Hypothecation of crops.
- Hypothecation of crops - Mortgage of landed properties(Note 4)
- Mortgage of lands Waiver of mortgage for loans up to Rs.
3 lakhs in case of Tie-up arrangements for
recovery in respect of tie-up with Sugar
mills, tobacco board etc.,
Charge Not mandatory Creation of charge on land records to be
creation ensured in States where the facility of
on-line charge creation is available.
(Note 5)

Notes:
1. Rupay cards to be issued under the Scheme are presently operable at ATMs only

2. Separate accounts will be maintained for short term working capital and Term
loan components as in existing Kisan Suvidha Scheme; presently the Debit Cards
will be linked to short term working capital sub limit account

3. Separate accounting of Working capital and Term Loan under Kisan Suvidha Scheme
will continue as above

4. Mortgage of lands on which crops are to be raised/raised with the loan;

5. In States where manual creation of charge is mandatory, the same should

continue to be complied with.
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 CHAPTER- 6

CROP LOANS

6.1 PURPOSE:

Crop loans are granted for meeting the cost of seasonal operations to raise crops viz.
Cost of seeds, fertilizers, pesticides, irrigation charges, labour charges, etc.

6.2 ELIGIBILITY:

i. The applicant should be either owner cultivator or tenant or share cropper.

ii. Crop loans can be granted to farmers duly ensuring viability.
iii. The applicant should not be a defaulter to any financing agency and generally
free from any outside liabilities.
iv. Tenant cultivators should produce the record of possession and cultivation
issued by the competent revenue authorities which should indicate that the
applicant is cultivating the land mentioned in the application.
v. Crop loans can be granted both under irrigated and rainfed conditions.
vi. The land holding should be within the ceiling limits prescribed by the
Government under land ceiling legislation.
vii. In respect of borrowers of Land Development Banks, crop loans not exceeding
Rs.50,000/- may be considered on production of no objection certificate and
no overdue certificate and the same should not be dated more than 15 days prior
to the date of approach.
viii. Party should be a registered grower wherever Commodity Boards are constituted
for the development/marketing of such crops. Registration Certificate issued
from such boards is to be insisted, along with application for loan/ before
release of loan amount(i.e Branches to ensure that the borrower is a registered
/ licensed grower of crops wherever so required as per statute)
ix. Crop loans should not be given to those parties covered under KCCS or Gold loans
for Agriculturists for production of crops or Kisan Suvidha or Tenant Farmers Group
Scheme or Krishi Mitra Card or any other scheme having crop cultivation
component.
x. Renewal of crop loan should invariably be considered under the revised KCCS
only.

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6.3. TERMS OF THE LOANS:

6.3.1 Limit-scale of finance/margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

i) Crop loans when permitted for standing crops during mid season, proportionate
amount of loan required for the remaining operations are only to be considered
basing on the average cost of cultivation.
ii) For coffee crop loans, the scale of finance should be decided taking into account
the last 4 years average yield of the estate and amount recommended by the
technical committee for such yielding estates whichever is less.

6.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

Relaxation permitted for sugarcane is applicable to loans under tie up arrangement

with sugar factories only.

6.3.3 Rate of Interest :

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

6.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES:

6.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

6.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

i) Details of the coffee crop picked for the last 4 years should note to furnish the
same by way of annexure to NF 417 without fail duly authenticated by the
applicant.
ii) NF 417 will have to be preserved for subsequent renewals also if there is no
change in basic information and NF 418 is to be obtained for renewal.
However, if there is change in basic information such as constitution of
borrower, extent of land holdings, security i.e. Survey No., extent,
co-obligation, etc., fresh NF 417 should be obtained. At the time of renewal for
any reason if the earlier NF 417 is not traceable, the branch should obtain
NF 417 afresh.

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 iii) The date of original application NF 417 will have to be invariably mentioned
in renewal form NF 418 page 1, after the words 'already submitted by me/us
in my/our application dated ........
iv) In respect of sugarcane finance under tie up arrangement, branches should
obtain an undertaking letter as per Annexure-22.

6.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

6.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

Before granting any crop loan, a pre-sanction visit is to be made to the farm to study
the Technical Feasibility and economic viability of the project in relation to the
i) Extent of the area to be cultivated
ii) Availability of water
iii) Fertility of the soil
iv) Suitability of the cropping pattern and
v) Availability of processing, marketing arrangements and extension support.

However, in case of renewal of crop loans, pre-sanction visits are not necessary. In
respect of coffee crop loans, pre-sanction visit to be undertaken in respect of new
parties and the report is to be submitted in F 1168. For renewals, submission of
F1168 is dispensed with.

6.5 DISBURSEMENT:

The loan amount should be disbursed in two categories viz.

Cash - Called as 'A' component and
Kind - Called as 'B' component.

The cash portion is to meet the labour charges towards preparatory cultivation,
intercultural operations, harvesting, etc. This is restricted to 40% of the loan amount
in the case of irrigated crop and 60% in the case of rainfed crops.The kind portion is
for purchase of fertilizers, seeds, pesticides and such other material inputs. This
portion is to be paid preferably directly to the suppliers or reimbursed against cash
bills/declaration from the borrowers for having purchased the inputs. Such
declaration shall be filed in the party's file duly certified by the Branch Manager that
the end use of the loan is satisfied and date of post-sanction visit shall also be noted.

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 If there is any need for altering these disbursal arrangements, branches can do so to
the extent of not more than 10% either way in case of irrigated crops. If the variation
is wider, they should take up the matter with the RO.

The disbursement must be made in stages as per the requirements of the borrower.
For coffee and cardamom crops the following disbursement pattern shall be followed:
i. 60% of the loan as first instalment at the beginning of the season.
ii. 25% of the loan as second instalment during middle of the season.
iii. 15% of the loan as third instalment during picking and curing. The above ratios
are only general guidelines. Branches are given discretion to accede to genuine
request of planters to release the limit without sticking to percentage norm nor
period of release. However, branches should ensure enduse of the limit so
released.

6.6 POST SANCTION VISITS/FOLLOW UP VISITS:

As per Para 7 of Chapter 3(Note: In case of coffee crop loans a follow up inspection in
F 1169 has to be Submitted, preferably during September/ October and not later
than November/December.)

6.7 REPAYMENT PERIOD:

The period of repayment should always coincide with harvesting and marketing of
produce. In any case, it should not be more than 9 months in respect of short
duration crops like paddy, ragi, etc. and 15 months in case of long duration crops like
sugarcane, pine apple, etc. In respect of coffee crop loans, the repayment should be
linked with marketing of produce. Normally coffee crop loans granted during the
year are to be cleared before 30th June of next year.

6.8 PROCEDURE FOR GRANTING SUBSEQUENT CROP LOAN:

i. Those farmers who have availed crop loan and are prompt in repayment,
subsequent crop loans can be considered by obtaining Required Application as the
case may be.
ii. In respect of parties whose transaction is satisfactory for past 3 years and
where land is already mortgaged, submission of fresh record of rights/jamabandis
is not to be insisted. However, branches to obtain upto date encumbrance
certificate showing nil encumberance and also the latest land tax paid receipt.
iii. In these cases pre-sanction inspection of the farm is waived. However, post
disbursement follow up inspection should be undertaken regularly till the
loan is cleared.

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 iv. All other terms and conditions stipulated for crop loans should be adhered to.

6.9 Crop Insurance coverage

Branches have to compulsorily cover all crop loans which are in the notified areas and
granted for notified crops(Para 3.10.1)

6.10 Other Conditions:

All other General conditions referred in Chapters 2 & 3 shall be complied with.

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 CHAPTER -7

KISAN SUVIDHA SCHEME

7.1. PURPOSE:

The scheme aims at providing adequate and timely credit adopting the whole farm
approach, including the short term and term credit needs.

Finance is extended under the scheme for the following purposes:

a) Crop cultivation expenses, working capital requirements for allied activities,

maintenance of farm machinery/ equipments, non-farm sector activities and
consumption needs.
b) Investment and development credit needs

7.2. ELIGIBILITY:

a) Individual farmers / joint borrowers, partnership firms, private limited

companies and public limited companies who are owner cultivators / engaged in
allied activities.
b) Farmers who are cultivating on authorized leased lands are also eligible.
c) Kisan Suvidha can also be sanctioned to GPA holders.
d) The party should not be a defaulter to any of the financial institutions.

7.3. FIXING OF THE LIMIT:

Limit under the scheme shall have two sub-limits.

A) Sub-Limit – I (for Working Capital Requirements) :

This is to be permitted to meet the working capital requirements of the farmers and to
be computed similar to Kisan Credit Card Scheme

Sub sectoral limit Norm

i) Crop maintenance (A) As per scale of finance
ii) WC requirement for allied Maximum 25% of (A)
activities (B)
and for farm machinery
maintenance (C)

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 Sub sectoral limit Norm
iii) Sub limit for consumption 10% of (A+B) subject to a
need (D) maximum of Rs. 15000/-
iv) Sub limit for non farm 20% of the projected
sector(E) turnover not exceeding
25% of (A) + (B)
Sub limit I (A)+ (B) + (C) + (D) + (E)

Sub-limit - I will be revolving cash credit in nature and there is no maximum cap on the
limit to be sanctioned.

B) Sub-limit – II (for Investment / Development Credit Requirements) :

This sub-limit is to meet the present and anticipated investment / development credit
requirements of the farmer. Sub-limit – II shall be 3 times the annual net income of the
farmer subject to a maximum of Rs. 5 lacs. The purpose of the term loan component
(Sub-limit II) need not be given at the time of sanction. Only a Sub-limit is provided at
the time of sanction. However disbursement will be as per the guidelines given in Para
7.11 of this chapter. In case the farmer is an existing borrower and has term loans,
then the sub-limit is to be arrived after deducting existing liability under term loan
inclusive of undisbursed portion of the limit, if any. The Sub-limit is not a revolving
facility. At the time of Annual review the Sub-limit - II shall be reinstated to the extent
of repayment of Principal made during the year.

7.4. ISSUANCE OF PLASTIC CARDS :

Borrowers will be issued plastic cards (as in the case of KCCS) to facilitate easy
identification. The details on the card will be filed up by the branch and photograph of
the farmer is to be affixed on the card.

7.5. VALIDITY/ RENEWAL OF CARD

The card will be valid for a period of 5 years subject to annual review.
The operations in the account will be through the issuing branch only.

7.6. MARGIN:

A) Sub-Limit – I (for Working Capital Requirements) :

Scale of the finance is the basis for arriving at sub limit for working capital.
Limit is to be arrived as per Para 7.3 (A) above.
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 B) Sub-limit – II (for Investment / Development Credit Requirements) :
For investment and development credit:
Upto Rs. 1,00,000/- - No Margin
Above Rs. 1,00,000/- - 15- 25% depending on purpose.

The relaxations in margin norms are as follows:

a) In case of small / marginal farmers, agricultural labourers for loans above

Rs. 100000/- but upto Rs.2 lacs, the margin requirement is 10% to 15%.
b) In case of land-based activities where value of mortgaged land and building is
twice the exposure, for loans above Rs.100000/- but upto Rs.2 lacs, the margin
requirement is 10 to 15%.
c) In case of ALLHV loans of above Rs.100000/- {other than for Medium & Heavy
Commercial Vehicles (MCV/HCVs)}, margin requirement is 10%.

7.7. SECURITY:

The security to be obtained is based on the total limit (Sub limit I + Sub limit II)
sanctioned:

For loans upto Rs.100000/- Hypothecation of crops and / or assets.

For loans above Rs. 100000/- Hypothecation of crops and / or assets and
mortgage of landed properties
For tractors& tillers Hypothecation of assets and mortgage of landed
property or co-obligation of third party.

7.8. APPLICATIONS & ENCLOSURES:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

7.9. PRE -SANCTION VISIT

Branch Manager / AEO / Officer should visit the farm to assess the technical feasibility
and economic viability of the proposal

7.10. DOCUMENTS TO BE EXECUTED BY THE PARTY:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

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7.11. DISBURSEMENT:

A) Sub-Limit – I (for Working Capital Requirements) :

Cash disbursements will be allowed to the full extent as in Kisan Credit Card Scheme.

B) Sub-limit – II (for Investment / Development Credit Requirements) :

Within the overall credit limit sanctioned, the farmer is free to choose his own purpose
like purchase of agricultural implements, land development, purchase of bullocks and
carts, purchase of farm machinery, minor irrigation etc .

The applicant has to submit application-cum-link letter for release of term loan as per
Annexure 17.

The applicant has to submit quotation / invoice / estimates, etc., based on the
purpose as per extant guidelines.

For each term loan under the sub limit, a separate loan account is to be opened and
separate accounting/ledger sheets are to be maintained. However, part disbursement
can be made for each of the investment/ development loans. All the loan accounts are
to be linked to the Kisan Suvidha Scheme.

The loan proceeds are to be remitted directly to the dealer / supplier / vendor along
with the margin money collected from the borrower. In case it is not possible to make
payment direct to vendor/supplier for any valid reasons, the loan amount may be
disbursed to the borrower. Later the assets should be inspected without fail. Branches
should obtain necessary bills / vouchers / stamped receipt for the amount disbursed
including margin amount. However obtention of bills, vouchers, receipts, etc can be
waived for loans upto Rs. 25,000 subject to obtention of declaration from the
borrowers for having purchased the asset/incurred the expenditure.

Loans under Sub limit II can be disbursed till the validity of the card.

7.12. RATE OF INTEREST:

A) Sub-Limit – I (for Working Capital Requirements) and Sub-limit – II (for Investment /

Development Credit Requirements):

As per guidelines on rates of interest for agricultural loans as advised by Head Office
from time to time.

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7.13. REPAYMENT:

A) Sub-Limit – I (for Working Capital Requirements) :

The working capital/ crop cultivation component is to be cleared within 12- 18 months
based on cropping pattern. No drawal in the account should remain outstanding for
more than 12 months except in cases where loans are given for sugarcane, banana and
other annual yielding crops. In such cases, debits to be wiped out at the time of
marketing of the produce or within 18 months whichever is earlier.

B) Sub-limit – II (for Investment / Development Credit Requirements) :

Each term loan is to be repaid in five years in half yearly or yearly instalments based on
income generation and the interest accrued are to be paid along with the next
installment falling due.

At the time of review the Sub limit II shall be reinstated to the extent of repayment of
principal made during the year.

7.14. OTHER CONDITIONS:

a) Annual Review of the limit sanctioned shall be done as per format given in
Annexure 26.
b) The card shall be renewed after a period of five years and the facility will be
continued if dealings are satisfactory, if not the facility shall be discontinued.
c) Such of the investment / development credit requirements of the farmers which
require a repayment period of more than 5 years shall be considered under
existing term lending schemes.
d) The limitation of individual accounts under Sub-limit II should be considered
separately and Acknowledgement of debt / security is to be obtained
accordingly.
e) Reporting : The disbursements under Sub-limit I are to be reported under short
term disbursements and Sub-limit II under term loan disbursements in Flash
Report (PSR 1) and purpose-wise in other returns.

7.15. INSURANCE:

Assets should be adequately insured in terms of the guidelines advised under

Chapter - 3 of this manual.

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7.16. INSPECTION:

Inspection shall be undertaken as per guidelines advised under Chapter - 3 of this

manual.

7.17. PROCESSING CHARGES :

Processing charges for both term loan and working capital component have to be worked
out separately and collected. The processing charges for working capital portion
(sub limit – I) is collected upfront at the time of applying for the loan. Processing
charges for Sub-limit II has to be collected only at the time of disbursement of each
term loan.

7.18. POST SANCTION & FOLLOW UP VISITS

Regular follow up visits are to be undertaken for monitoring the loan repayment as per
extant guidelines on Agriculture Advances.

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 CHAPTER -8

KRISHI MITRA CARD SCHEME

8.1. Purpose :

An exclusive Credit Card Scheme for individual tenant farmers and farmers without
proper land records to bring in a larger number of disadvantaged sections within the
ambit of Financial Inclusion. The Krishi Mitra Credit Card Scheme (KMCCS) is used for
financing the following:

i. Cultivation of crops – Cultivation expenses should be atleast 50% of the limit.

ii. Maintenance of animals, maintenance of farm machinery.
iii. Repairs and replacements of animals / farm machinery.
iv. Consumption expenses.

However, for farmers who have availed finance under General Credit Card, finance can
be granted only for cultivation expenses.

8.2. Eligibility :

All individual farmers of the following categories:

i. All tenant farmers including Share croppers / Oral lessees cultivating lands on all
type of tenancy and contractual methods.
ii. Farmers cultivating lands under contractual arrangements with land owners, not
by way of complete leasing.
iii. Farmers cultivating land without proper land records.
iv. Farmers with tiny land holdings.
v. Any other type of farmers who are cultivating lands and cannot be brought under
our regular Agricultural loan Schemes.
vi. Should not be a defaulter to other Institutions.
vii. Finance is to be extended to only one person from a family.

8.3. Nature of Limit :

The limit can be extended either as a revolving limit on the lines of overdraft or as a
single transaction limit.

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8.4. Identification of Beneficiaries:

Only based on an affidavit (self declaration) as per Annexure-20 by the applicant giving
details of land tilled / crops grown without any need for independent certification.

8.5. Quantum of Limit :

Maximum quantum: Rs.50000/- (Rupees Fifty thousand only)

8.6. Assessment of Limit :

The limit shall be assessed as below based on annual requirement:

Sl. No. Particulars Amount

i) Crop cultivation expenses per annum *
ii) Maintenance expenses of animals and farm machinery
iii) Repairs and replacements of machinery, equipments and animals
iv) Consumption expenses
Total

* Note:
a) The limit may be arrived at based on land cultivated, cropping pattern and scale
of finance as recommended by District Level Technical Committee (DLTC) / State
Level Technical Committee (SLTC). Branches may consider a higher quantum of
loan for crop maintenance based on the need and in deserving cases to the extent
of 15-25% over and above the scale of finance.
b) Crop cultivation expenses should be atleast 50% of the total limit.
c) The total limit should not exceed 50% of the value of the produce.

8.7 Margin:

As per Scale of finance for crop cultivation. Nil for other purposes.

8.8. Security:

- Hypothecation of crops cultivated.

- To be treated as secured limit

8.9. Documents to be produced by the Borrower:

- Declaration as per Annexure 20.

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 - Photograph of the applicant.
- Declaration for not having any dues with any agency / no due certificate.

8.10.Application / Appraisal Forms / Documentation :

NF 987 with the following modifications / alterations under authentication.

On page 1 in Particulars of assets owned add “/ leased in respect of lands”

Also at the end of the box particulars of lease like Type of lease/contractual
arrangements, land owner’s name and address as well as period of lease should be
mentioned.

On Page 2.Clause 9.1 My annual gross income is Rs………….The words (Projected for the
current year) may be inserted after the amount.

NF 963 - Simplified hypothecation agreement for agricultural loans (Applicable for

aggregate limits up to Rs. 2 lacs) with the following modifications / alterations under
authentication:

a) In page 1 para 2 line 3 after the words “…..schedule hereunder” the following
words may be inserted :
“ during the period from …………. to ……………” the period for which crops are
hypothecated in the schedule of property should be specified as per the
contractual terms.

b) In page 1 para 3 the following words may be deleted :

“ Besides, borrower/s hereby mortgages the immovable properties specified in
the schedule hereunder”.
c) In page 1 para 3 line 7 the words “mortgaged” may be deleted.
d) In page 2 para 10 line 3 the words “mortgage” may be deleted.

8.11. Pre - Sanction Visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

8.12. Nature of Limit / Disbursement:

The limit can be either as a running (revolving) limit on the lines of overdraft or as a
single transaction limit. The borrower will be entitled to withdraw by cash to the
extent of limit sanctioned both in case of running limit as well as single transaction
limits.

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8.13. Rate of Interest:

The rate of interest will be as applicable to Kisan Credit Card Scheme. Limit not to be
aggregated with any other limit for arriving at the cut-off limit for Rate of Interest.

8.14. Tenability / Repayment:

a) Running Limit:

Tenability-Three years subject to annual review

As the limit is of overdraft nature, no repayment is to be stipulated for principal
portion. However, interest debited becomes due 90 days from the date of debit

b) Single Transaction Limit:

The limit is to be repaid in 5 years in quarterly / half yearly / yearly instalments

depending upon the income generation. Interest debited is to be recovered along
with next principal instalment.

8.15. Sanctioning Authority:

Branch In charge is empowered to sanction the loan.

8.16. Pre-sanction / Post-sanction Inspection:

Pre sanction inspection is to be conducted to assess the requirement. Regular post

sanction inspection is to be conducted as applicable to KCCS loans.

8.17. Classification: Priority – Direct Agriculture.

8.18. Asset Classification Norms :

Asset classification norms applicable for crop based agricultural advances are to be
applied.

8.19. Other Conditions:

i. The period of lease as indicated in the document obtained as per Para 32.9 should
be atleast equivalent to the tenability / tenor of the loan.
ii. In case of farmers who had availed finance under General Credit Card, the
finance under the scheme can be made only for crop cultivation

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 iii. Loan Pass Card to be issued.
iv. No overdrawing to be allowed in the running limits under any circumstances
except for interest debits.
v. Farmers who own lands with proper records and titles, taking up additional area
under tenancy are not eligible under the scheme. Such farmers should be covered
under other regular advances under Agriculture.
vi. Limit / disbursements to be treated as crop loans for the purpose of interest
subvention / any other subsidy scheme.
vii. No estimate, bills and vouchers are to be insisted.
viii. The borrower to be encouraged to pass on all his transactions through this running
account for having better monitoring of the account.
ix. Reporting should be done in quarterly statement on special schemes, PSR 80.

8.20. Insurance:

Loans granted for crop production purposes are to be covered under Rashtriya Krishi
Bima Yojana/applicable crop Insurance Scheme wherever the scheme is operational for
notified crops.

8.21. Post Sanction & Follow up Visits:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

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 CHAPTER- 9

KISAN TATKAL

9.1. PURPOSE

The scheme is an instant credit facility for farming community with existing KCC
facility, whose cards are valid (limit is tenable) and accounts are regular to meet their
post harvest expenses and tide over temporary difficulties.

Finance under the scheme is to be extended for the any of /all the following purposes:

i. Expenses towards storing, processing of produce and expenditure incurred in

holding like godown charges, treatment of food grains to prevent pest/rodent
attack of the agricultural produce till marketing and to meet other unforeseen
post harvest expenses and tide over temporary difficulties / liquidity problems in
any agricultural and allied activities operations like labour charges, urgent
repairs of farm equipments / machinery.
ii. Kisan Tatkal should not be granted for purposes which are already covered/
financed under existing Kisan Credit Card / Kisan Suvidha /Kisan OD/Any other
Investment or development loan

9.2. ELIGIBILITY:

i) Individual farmers / joint borrowers (not exceeding 4 farmers) who are existing
KCC holders of the branch and account is regular/limit is valid(tenable)

ii) Should not be a defaulter to any of the financial institutions.

iii) Only for farmers having agriculture as predominant activity.

9.3 TERMS OF THE LOANS:

Branches to adhere to guidelines advised in Chapter 2 of this manual in respect of the

following:

9.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

9.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

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9.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

9.4. NATURE OF LIMIT:

The limit can be extended by way of a single transaction term loan

9.5. FIXING OF LIMIT:

Minimum limit: Rs.1000/- Maximum limit: Rs. 50000/-

The total amount of finance extended not to exceed 50 % of the KCCS limit and shall
not exceed 25% of the estimated annual income of the agriculturist within the above
ceilings.

The Branch Manager/AEO/Officer should satisfy about the quantum of loan required
and genuineness of the purpose and also satisfy about the income and the repayment
capacity of the borrower before sanctioning the limit.

9.6 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

9.6.1 Documents to be produced by the applicant:

Latest copies of Land records would be enough since he is an existing KCCS borrower

9.6.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

9.6.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

9.6.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

9.7. DISBURSEMENT:

i. The entire limit can be disbursed at one instance or in stages depending on

requirement.

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ii. Disbursements should be routed through SB accounts.
iii. Quotations, estimates, bills and vouchers need not be insisted.

9.8 REPAYMENT:

To be repaid within a period of 3-5 years in half yearly/annual installments based on

the income generation pattern or coinciding with the harvest/marketing of the crops.

Interest has to be debited half yearly, September / March. Interest debited is to be

recovered along with the subsequent installment/s.

9.9 Asset Classification:

Asset classification norms for crop based Direct Agriculture advances shall be
applicable.

9.10. POST SANCTION & FOLLOW UP VISITS:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

9.11. OTHER CONDITIONS:

i. Further loans under Kisan Tatkal can be given to the same borrower subject to the
compliance of norms for Kisan Tatkal ie. the total amount of finance extended not
to exceed 50 % of the KCCS limit and shall not exceed 25% of the estimated annual
income of the agriculturist with the above ceilings.
ii. Farmers enjoying Kisan Tatkal are also eligible for our normal production,
investment and development loans under Agriculture subject to the adherence of
norms and repaying capacity.
iii. However, it should be ensured that finance is not extended for the same purpose
under KCCS / Kisan Suvidha / Canara Kisan OD / Investment / Development loans.
The loans granted under “Kisan Tatkal” are to be classified under loans to Direct
Agriculture.
iv. All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this
manual are also applicable.

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 CHAPTER – 10

CANARA KISAN OD

10.1 PURPOSE:

Finance under the scheme is extended for the following purposes:

1. Working capital requirements - for allied activities, farm machinery / equipments

maintenance.
2. Repairs and replacements of machinery, Repairs / Improvements of
Developmental nature and replacement of draught animals, bullock carts etc.
3. Working capital requirements for Non-farm sector activities
4. Consumption needs
5. Repayment of genuine private debts:

The private debts should be for farm related investments and expenses towards family’s
urgent needs. The purpose is to be considered taking into account the repaying
capacity of the farmer for servicing the finance to be provided by us. Maximum amount
that can be financed for the purpose is Rs. 1,00,000/- per borrower subject to
compliance of other terms and conditions of the scheme.

However, the following conditions shall hold good for finance under this purpose of
repayment of genuine private debts:

a. A declaration indicating the source (name and address), amount of debt, date of
creation of debt and other relevant details to be obtained.
b. The declaration given by the farmer is to be certified by Gram Panchayat Member
or by existing reputed customer of the Branch or by the President / Secretary of
a reputed NGO operating in the Block or office bearers of the Farmers' Clubs
promoted by the branch.
c. The applicant should undertake not to resort to non-institutional borrowings in
future during pendency of the loan availed under this scheme.
d. Receipt / discharge should be obtained from the non institutional lender for the
amount repaid.
Note:Canara Kisan OD should not be granted for crop cultivation expenses as Kisan
Credit Card and Kisan Suvidha Schemes cover such requirements.

10.2.ELIGIBILITY:

i. Individual farmers / joint borrowers, partnership firms, private limited

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 companies and public limited companies who are owner cultivators and / or
engaged in allied activities.
ii. Agriculturists with one year satisfactory track record. This norm may be relaxed
by the next higher authority provided other norms of the scheme are complied
with.
iii. Canara Kisan OD can also be sanctioned to GPA holders.
iv. Should not be a defaulter to any of the financial institutions.

10.2.1. Issuance of ATM Cards :

Borrowers will be issued cheque books and / or ATM cards / debit cards to facilitate
easy withdrawals. Issue and operation through ATMs will be as per extant guidelines of
the Bank. ATM Cards / Debit Cards should be issued for individual accounts only. To be
eligible for ATM card - the individual borrowers should be literate i.e. educated enough
to operate ATMs.

10.3. FIXING OF LIMIT:

i. The limit is fixed based on the value of security and the annual income of the
farmer/ agriculturist.
ii. The maximum limit that can be fixed is 50% of the value of the landed property
offered as security or Limit to be sanctioned is subject to a maximum of three
times the gross annual income (as assessed by the Branch Manager / AEO) or the
assessment of limit based on the chart provided below, whichever is lower.
iii. The ceiling of finance per acre of land mortgaged with Maximum of Rs. 1 lac per
acre of land mortgaged subject to 50% of the value of the landed property
mortgaged / proposed to be mortgaged.
Minimum limit: Rs. 1 lakh
Maximum limit: Rs. 7.50 lakhs

Chart for assessing the limit with eligible purposes:

Sl. Particulars Estimated Margin Limit

No. cost
A. Working Capital requirement for
a. Animal Husbandry / Fisheries /Apiary /
Any other Allied activity
b. Farm machinery / maintenance of 15-25%
equipments

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Sl. Particulars Estimated Margin Limit
No. cost
B. Repairs and Replacements:
a. Replacement of machinery/animals
(Pumpset / pipelines / plough animals/
bullock cart ….etc.)
b. Repair/Improvement of developmental
nature (Repair of well, well walls, repair 15-25%
of farmhouses, repair of godowns, repair
of fences, gap filling, land filling and soil
improvement)
C. Working capital for non-farm sector (if the
farmer undertakes non farm sector activities):
The sub limit under the sector should not
exceed 30% of the total of (A+B) ( the limit is 15-25%
to be arrived at based on the turn over
method -- 20% of the projected and accepted
annual turnover)
D. Consumption needs: The sub limit under 15-25%
Consumption needs should not exceed 20% of
the total of (A+B+C)
E. Repayment of Genuine Private Debts related 15-25%
to investments and expenses towards family's
urgent needs (Max. of rupees one lakh per
borrower).
Grand Total (A+B+C+D+E)

It should be ensured that there is no double financing. Finance should not be extended
under the heads A, C D and E, if the same purposes have been financed under KCCS /
Kisan Suvidha Scheme or under any other scheme for the same farmer / agriculturist.

Care should be taken to ensure that KCCS / Kisan Suvidha limits / limits under any other
scheme to be sanctioned in future also does not include the purposes under the heads
A, C, D and E.

10.4 EXTENDING HIGHER LIMIT UNDER RELAXED NORMS:

Canara Kisan OD can be permitted under relaxed norms only at such of the branches
designated by the Circle where the recovery percentage under the scheme is above
90%, based on periodical review of latest PSR 29. However, within the ceiling, the
Circle Head has to fix a suitable limit per acre, keeping in view the land value and
margin of 50% required for various distinct regions/Districts
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 The relaxations that can be extended are as under:

a) Maximum of four times the gross annual income

b) Upper ceiling of Rs.12.50 lakhs.
c) Ceiling on Finance per acre of land mortgaged :Rs. 1.50 lakh per acre subject to
50% of the value of landed property mortgaged/proposed to be mortgaged

10.5. TERMS OF THE LOANS:

Branches to adhere to guidelines advised in Chapter 2 of this manual in respect of

margin, security and rate of interest apart from notes detailed hereunder:

10.5.1 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

Note: When further limits / loans are to be granted to the same borrowers who have
availed Kisan OD, it has to be ensured that there is no dilution in security (200% of the
Kisan OD limit). In such cases, fresh security by way of mortgage of properties is to be
brought in. Alternatively, Kisan OD limit has to be reduced to 50% of the extent of the
residual security available taking into account the fresh loan granted.

10.5.2 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

10.6 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

The following terms will be as per guidelines specified in Chapters 3 & 4 of the Manual
in addition to the following Note/s

10.6.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

10.6.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

10.6.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

Note: Valuation report of the landed properties mortgaged.

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10.6.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

10.7 TENABILITY OF THE ACCOUNT

i. The account will be tenable for three years subject to annual review as per the
format provided in Annexure 27.
ii. The operations in the account can be permitted through cheques, debit slips and
ATMs.

10.8. DISBURSEMENT:

i. The entire limit is made available to the farmer as a revolving limit. Withdrawals
can be made through cheque leaves/ debit slips / ATM / Debit cards. The
procedure for issuing of ATM / Debit Card will be in terms of extant guidelines.
ii. No overdrawing should be allowed in the account under any circumstances.

10.9 LIMIT FOR WITHDRAWAL FROM ATM PER DAY:

Any number of transactions with a per day per card limit as applicable to our ATM Debit
cards within the limit available under Kisan OD.

10.10 REPAYMENT:

The limit would be in the nature of revolving OD and provide for any number of drawals
and repayments within the limit.

Interest: Interest has to be debited half yearly, September/March. Interest debited is

to be recovered within a maximum period of 90 days. The interest debited in
September is to be paid before 29th December and the one debited in March is to be
paid before 29th June. However, if the interest debit results in the liability in the Kisan
OD exceeding the limit, further disbursements are not to be permitted till the liability
is brought down /interest outstanding beyond the limit is recovered.

Asset classification norms for Agriculture advances have to be complied with as per
extant guidelines.

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10.11. OTHER CHARGES:

All other charges like folio charges, processing charges and cheque book issue charges
shall be applicable as per extant guidelines for agricultural loans

Insurance: Wherever buildings are obtained as security they should be insured against
loss or damage by fire and other risks.

10.12 POST SANCTION & FOLLOW UP VISITS:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

10.13. REVIEW, RENEWAL AND REPORTING

a) Tenability of the Canara Kisan OD account will be three years.

b) The OD Account shall be renewed at the end of three year from the date of
sanction. The facility will be continued if dealings found satisfactory, if not the
facility shall be discontinued.
c) The extant guidelines for review of loan accounts shall hold good for the subject
scheme too.

10.14. DELEGATION OF POWERS & CLASSIFICATION OF ACCOUNT

The delegation of powers for sanction of other agricultural advances is applicable for
sanction of Canara Kisan OD accounts. The Canara Kisan OD accounts are to be
classified as Direct Agriculture advances.

10.15. OTHER CONDITIONS

a) The scheme shall be implemented only in designated Branches. The Circles will
be designating the Branches located in irrigated belts.
b) Agriculturists enjoying Canara Kisan OD limit are eligible for KCCS / Kisan Suvidha
or Crop loan. They are also eligible for investment and development loans under
Agriculture. However, it should be ensured that there is no double finance. It
should also be ensured that finance is not extended for the same purpose under
KCCS / Investment / Development loans. Further finance should be based on the
capacity and income levels of the farmer to service the existing Canara Kisan OD
and proposed KCCS / Kisan Suvidha / investment / development loans.
c) Bills and vouchers need not be insisted for debits / disbursements under the
scheme.
d) All other conditions and guidelines applicable for other agricultural loans are to
be made applicable.

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 CHAPTER – 11

PRODUCE LOANS

11.1 OBJECTIVE:

Post harvest finance enables farmers to achieve better price realization of their
produce-by avoiding distress sales. The Government's efforts at improving food
security by providing the post-production logistics / facilities have resulted in
substantial addition of warehouse / storage infrastructure in the last few years.

Price/Market risk mitigation through post harvest finance to farmers significantly

reduces our credit risk also since the exposure becomes collateralized through easily
realizable security.

RBI’s policy on Priority credit also has given positive signals by revising the ceilings &
treating produce loans to farmers upto Rs.50 lakhs under Priority- Direct Agriculture
and under Indirect Agriculture in respect of produce loans upto Rs.50 lakhs to Corporates
& such other entities engaged in Agriculture/Allied activity.

11.2 PURPOSE:

Produce loans are granted to farmers to keep their produce in an approved godown or
warehouse or in farmers residence so as to enable them to sell the produce for a
better price at a later date. Produce loan can be complimentary to the crop loan/
Kisan Credit Card (KCC)/ Kisan Suvida etc., so that farmers can avail finance for
cultivation of crop for subsequent crop without loss of time.

11.3 Common Guidelines:

1. Eligible borrowers

i) Farmers, Individually and Jointly(including Self Help Groups, Joint Liability

Groups, Proprietorship and Partnership firms, Companies, Societies
undertaking Agricultural activities who have either availed credit limits with
the Bank or otherwise)

ii) The Bank has to ensure compliance of KYC norms of our borrowers in all forms
of financing, including in cases of financing the farmers under Collateral
Management Companies.

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 iii) The intending borrower under Produce loans should not be having any
agricultural loan with other Banks/Financial institutions

iv) In case of financing through on-lending model it should be ensured by the

concerned unit that the borrower is a farmer and farmers will be required to
submit copies of land records to be given to the Bank along with the
statement of details of on-lending

2. CIBIL report:

Credit Information Report from CIBIL is to be obtained as a pre-sanction exercise

for screening the proposal.

3. Repayment period:

Within the balance shelf life of the produce stored with a maximum of 1 year. The
shelf life shall be noted in the warehouse receipt (WHR)/ the branch has to
ascertain in other cases the approximate shelf life

4. Exposure limit under each model

Within overall limit fixed by the Bank to the Circle. Circle to fix exposure limit to
branches.

5. Maximum Per borrower/family exposure:

The present per farmer limit is Rs.50 lakhs,subject to any lower cap in any of the
variants of the Scheme. Though no group/family exposure is proposed, the limit
extended to farmer should be in tune with the land holdings & approximate
production level.

6. Delegation of Power

As per sanctioning powers applicable to Agricultural loans in respect of Produce

loans to farmers/Corporates under direct agriculture.

However limits to Private sector Empanelled units for on-lending shall be

sanctioned by CO & above authorities(committees) only.

7. Disbursement

To be adjusted to the outstanding crop production loans (including KCC, Kisan

Suvidha, Krishi Mitra card loans, JLGs of tenant farmers, etc.), and other overdues
if any, in other Short Term loans / Term Loans of the borrower with the Bank.

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 Otherwise, the proceeds can be credited to the Savings Bank account / Running
account of the Borrower

8. Documentation:

As per manual on Documentation.

Branches to take note of the following:

i) NF.430-Wherever agriculture produce is security in respect of the loan and

agriculture produce is stored in the godown of the borrowers.
(Suitably modified as applicable to agriculture produce and loan to farmers with
corrections authenticated by the borrower/s)

ii) NF.970-Where agricultural produce is stored in the warehouse (CWC/SWC/

Collateral Management Company Warehouse/ Private sector empanelled unit)
and the farmer is availing loan on the basis of warehouse receipt(including
NWR).However, in the last para of the first page of NF 970, along with the
other securities, “Warehouse Receipt” to be incorporated as one of the item.

9. Penal Interest

Penal Interest as applicable to Agricultural loans to be charged in case of over

drawing-due to fall in value of stocks/if repayment is defaulted on the due date

10. Periodicity of Interest:

i) Interest shall be applied at Half Yearly intervals (September/March) in case of

Produce loans to farmers.

ii) In respect of WC limits to Warehouse units for on lending, Interest shall be

applied at monthly intervals

11. Processing & Inspection Charge:

i) Processing charges as applicable to short term agricultural loan

ii) Inspection Charges shall be recovered as applicable to the Direct Short Term
Agricultural Lending

12. Asset classification:

As per extant guidelines on prudential norms advised on agriculture loans from

time to time.

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13. Insurance:

Adequate insurance cover is to be taken for the stocks hypothecated/pledged to

the Bank and the mortgaged properties (wherever applicable) against the risks of
fire, strike & riot/Malicious damage, terrorism, Burglary and acts of God like
floods, earthquake etc.

“Bank's Lien” to be noted in the Insurance policy

14. Time norms:

The proposals received shall be disposed off as per time norms stipulated for
priority sector loans.

15. Rejection of proposals:

Proposals belonging to SC/ST applicant shall not be rejected at branch level and
should be referred to the next higher authority.

16. No Due Certificates

A declaration from the intending borrower that he does not have any borrowings
from other Banks/No due certificates should be obtained as per extant guidelines
in case of new borrowers

17. Reporting and Monitoring/Recovery steps:

i) Irregularities in the Produce loan accounts including erosion of margin below

sanctioned level should be reported as applicable to agriculture loans

ii) Diarizing due dates/ validity / shelf life etc of various commodities,
movement of commodity prices (present & forward), calculation of stock value
to ensure availability of margin, etc to be ensured.

iii) Close monitoring of prices/analysis of market reports is necessary to ensure

that adequate margin is available for our exposure. The Circle to facilitate
monitoring prices and advise steps for disposal of produce/recovery in case of
any adverse movement of prices.

18. Command area distance norms:

Command area norms(16 KMs ) shall apply. For financing beyond 16 km -

permission of Circle Head is required ,based on the monitoring/follow up

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 aspects, cluster of loan proposals, capacity of the branch to service the accounts
etc.

19. Lien Board:

i) Hypothecation Board shall be displayed inside the warehouse where the goods
pledged are stored.

ii) In case of EPSU, hypothecation is to be prominently painted on the walls.

iii) In case of accredited godowns, the Bank should intimate the details of finance
to WDRA.

20. Monitoring:

Offices to monitor the working of the scheme on a regular basis, like loan amount
disbursed, overdue, if any, problems faced under the scheme, etc.

21. Price tracking mechanism:

The Circle should review/advise on the agriculture produce against which

produce loans can be given, to be approved by the Circle Head as market risk
mitigation. It should be decided by the production pattern of the region and
market volatility.

Generally, the market price of a commodity can be ascertained from the local
news papers/Mandi/APMC market. Wherever the market value is furnished in the
warehouse receipt, the same has to be as per the price prevalent in the local
Mandi/APMC market. The Circle Office may also provide periodical reference
based on News paper reports on commodity prices. Information on National
commodity exchange may also be sourced by CO.

A&PS Section, CO to send weekly bulletin to branches.

22. Technical parameters-Empanelling Pvt sector WH:

The godown wherein the pledged goods are stored should be of pucca
construction with proper locking/security arrangements.

The suitability of the premises for storing the agricultural produce should be
certified by revenue department/a practicing architect.

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 The suitability may be with regard to the following specific aspects:

i) Location away from pollution sources

ii) Protection from water logging-Plinth of about 2.0-3.0 feet above the surrounding
ground area
iii) Provision for Cross ventilation
iv) Rat proofing
v) Adequate strength of walls-Brick/stone walls (walls of about 9"23 cm)
vi) Cement plastering of walls and absence of cracks in the wall
vii) Damp proof flooring
viii) Availability of fire fighting equipments
ix) Adequate anti termite measures at the construction stage
x) Bird proofing (iron mesh for the ventilators)
xi) Approach road to the godown.
xii) In case the same has been constructed and covered under any Central
sponsored Schemes wherein release of the subsidy is linked to the
construction as per specific standards and inspection by the concerned
central Govt. department/NABARD ,the inspection report/subsidy release
order can be accepted in lieu of a separate report.
xiii) Maintenance of storage standards also should be periodically checked.
xiv) Suitability and registration of the warehouse to stock the particular
commodity to be ensured.

23. Leased godown (in case of individual farmers & Collateral management
companies):

i) Period of lease must be more than the repayment period.

ii) It should be further ensured that the godown operator does not have right of
lien over the produce stored therein for non-payment of lease rent.

iii) In such cases the Bank to give notice to the landlord that the goods stored are
pledged to the Bank and that Bank alone has charge over such goods and get it
duly acknowledged by the land lord.

iv) The branch should verify the rent paid receipts periodically and satisfy that
the borrowers pay rent promptly so that no claim over the goods may arise for
recovery of the rental dues.

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 24. Other general guidelines:

As provided in Working Capital Manual with regard to loans against Warehouse

receipts/ Produce loan-Inventory Finance

11.4 Different models of lending to farmers-Agriculture produce loans/Warehouse

receipt financing:

11.4.1 Legislative provision to encourage Warehouse receipt Finance:

The Warehousing (Development and Regulation) Act, 2007 has introduced Negotiability
in case of Negotiable Warehouse receipt (NWR) and also scientific storage of
agriculture goods and Warehousing Development & Regulatory Authority (WRDA) set up
under the Act has created an enabling environment for warehouse receipt financing.
The NWRs will be issued by Warehouses accredited by WRDA. The Govt. of India is also
extending interest subvention for loans to farmers against NWRs and making available
loan at 7% p.a for a period of six months.

11.4.2 Context of operational guidelines:

With a view to strengthening the checks for ensuring the quality of the portfolio and
also ensure compliance of guidelines on eligibility of classification of advances under
Priority-Agriculture, comprehensive operational guidelines are now put in place.

The operational guidelines cover all variants of the Produce loans Scheme to farmers,
taking into account the entire gamut of scope of financing the farmers against
produce/warehouse receipts and various credit delivery options that will facilitate
quality expansion of the portfolio.

The following variants(models) of Produce loans to farmers against their produce/

relative warehouse receipts are advised:

1. Produce stored in their own houses/godowns/Leased godowns

2. Warehouse receipts of Central Warehousing Corporation(CWC)/State
Warehousing Corporation(SWC)
3. Warehouse receipts issued by Private sector Warehousing Units
4. Warehouse receipt financing under tie-up arrangements with Collateral
Management Companies
5. Financing against Negotiable Warehouse receipts of accredited Warehouses/Cold
storages
6. Financing the Private Cold Storage units / Private Warehouses by way of WC limit

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 against the Receivables (arising from amount advanced to farmers against stocks
of Agricultural produce stored by the farmers)- 2 models.

Comparative features of various models of Produce loan Scheme to farmers are

furnished in Annexure -28.

11.4.3 The details of different models of the Scheme and terms and conditions governing
each model are furnished as under:

MODEL 1

Loans against Produce kept in own premises/own warehouse/leased warehouse

facility

1.Purpose Produce loans to farmers who store their agriculture produce either in a
separate room in their own house or in their own or leased godown
under the lock & key of the Bank(to be extended only for existing
agriculture borrowers with satisfactory track record)
2.Ownership of i) Should be of such construction, able to secure the stocks pledged
godown/storage and stored therein
space ii) Own godown/ premises: Property records to be verified.
iii) Lease godown: Documents relating to the ownership of the lessor
and lease agreement to be obtained and ensured that there is no
encumbrance on the property
3.Limit/Nature Single transaction loan up to a maximum of Rs.10 lacs per borrower.
of loan
The extent of produce pledged and the limit sought by individual
farmers should be in accordance with the landholdings of the farmers
and approximate production level.
4. Margin With a minimum margin of 40% of the value of the goods stored at lower
of the market price (It can be ascertained by the branch from the local
Mandi/APMC market/ as given by the Circle Office)
5.Security Upto Rs 3 lakhs Pledge of stock under the lock & key of the Bank.
(Produce loan)
>Rs 3 lakh Pledge of stock as above &
(Produce loan) Mortgage of landed properties equivalent to the
limit for produce*
If the other existing loans of the party are already secured by mortgage,
collateral of the properties may be obtained to the Produce loan/s. The
residual value of the security after meeting existing exposure shall cover
the Produce loan proposed.

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 *Own premises/godowns: Mortgage of premises/godown may also be
obtained.
6.Interest As advised by Head Office from time to time. Branch shall also adhere
to guidelines on charging of interest as advised in Para 2.5 of Chapter 2
of this manual.
7.Documentation As per documentation Manual –Also, Para 11.3(8) of this chapter to be
referred to.
8.Inspection Pre-sanction inspection is necessary. Subsequent inspection at least
once in a quarter .Stocks should be advised to be stocked in suitable
stacks, that can facilitate verification/checking. Stocking should be done
in the presence of branch official/s.
9.Repayment Within a maximum period of 12 months, but not exceeding one month
less than the shelf life, as can be ascertained. Grader’s certificate for
loans above Rs.5 lakhs to be obtained
10.Goods release The pledged produce to be released after remittance to PL in full.
11.Classification Direct Agriculture – Priority (indirect-Incase of Corporates etc)
12.Others All general stipulations as per Para 11.3 of this Chapter shall be
adhered to.

MODEL 2

Produce loans against the Warehouse Receipts (WHR) issued by the Central Warehousing
Corporations (CWCs) / State Warehousing Corporations (SWCs)

1.Purpose Produce loans to farmers against the Warehouse Receipts issued by

the CWC/ SWC. The agency will be encouraged to register under
WRDA for becoming eligible to issue Negotiable Warehouse
Receipt(NWR)
2.Limit/Nature of loan Single transaction loan up to Rs.50 lacs per borrower.
The extent of produce pledged and the limit sought by individual
farmers should be in accordance with the landholdings of the
farmers and approximate production level.
3. Margin Minimum margin of 30% of the value of the goods stored as declared
in the WH Receipt issued by the CWC/SWC
4.Security Upto Rs. 50 lakh Pledge of stock covered under the Warehouse
(Produce loan) Receipts with the Bank’s lien
If the other existing loans of the party are already secured by
mortgage, collateral of the properties may be obtained to the
Produce loan/s.

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5.Interest As advised by Head Office from time to time. Branch shall also
adhere to guidelines on charging of interest as advised in Para 2.5 of
Chapter 2 of this manual.
6.Documentation As per documentation Manual; Also, Para 11.3(8) of this chapter to
be referred to.
7.Inspection Pre-sanction inspection is to be carried out. Subsequent inspection
at least once in a quarter.
8.Repayment The loan is repayable within a maximum period of 12 months, but
not exceeding one month less than the shelf life(if indicated in WHR),
along with interest in one lump sum.
9.Release of Goods The pledged produce to be released after remittance to produce
loan in full.
Part release of Goods: Part release may be permitted, and in case of
part release, along with proportionate principal, proportionate
interest is also to be recovered. A register of movement of
warehouse receipts should be maintained by the branch. Particulars
of Release/Part release should be noted therein.
10.Classification Direct Agriculture – Priority (indirect-Incase of Corporates etc)
11.Others All common stipulations as per Para 11.3 of this Chapter shall be
adhered to.

MODEL 3

Loans against the WHR issued by the Empanelled Private warehousing units (Rural Godowns
(RGs) and Cold Storages (CSs)

1.Purpose The produce loans shall be granted to the farmers against the
Warehouse Receipts issued by the private warehousing facilities
(including Cold Storages) which are empanelled by the Bank for the
specific purpose of the Scheme. The empanelled unit will be
encouraged to register under WRDA for becoming eligible to issue
Negotiable Warehouse Receipt(NWR)
2.Cap Limit/ Single transaction loan up to Rs. 50 lacs per borrower
Nature of loan The extent of produce pledged and the limit sought by individual
farmers should be in accordance with the landholdings of the
farmers/approximate production level to eliminate financing for
trading purposes.
3.Empanelment Shall include the Private Warehouses (WHs) / Cold Storage (CSs) /
Rural Godowns (RGs) and shall be referred as Empanelled Private
Storage Unit (EPSU) under the Scheme-

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3.1)Entities Those who have availed Term Loan and / or working capital limits
from our Bank and the dealings are satisfactory(Outstanding accounts&
regular)/ have been satisfactory (in case of closed accounts)
Or
Those who have not availed loan or for Working Capital from our
Bank, of good reputation; have an operative Savings or current
account with us.
Or
Availed limit from other financial institution but have closed the loan
account with them by paying all the dues; With a satisfactory OPL
and no encumbrances on their assets.
3.2)Authority i) Proposals for Empanelment would be recommended by the
permitting branches to respective Circle Offices.
empanelment ii) Committee at the Circle consisting of Section Manager,
overseeing executive and the Circle Head. Upon selection of the
empanelling unit, the Circle to send a report to PC&FI Wing, HO for
information.
3.3)Factors to be i) Empanelment would be at the discretion of the Bank
considered ii) Following factors to be considered:
Potential of the Area, Financial strength of the party, Net worth,
capacity and utilization of the WH / CS / RGs (EPSU), Promoters’
/ Business background and capacity to handle the business.
iii) Suitability of the private warehouses should be ensured as
detailed in Para 11.3 (22) of this Chapter.
iv) The EPSU to agree to be subjected to stock audit by the
Auditors.
3.4)Fixing of overall a) An Overall Total Notional Pledge Limit would be fixed for the
limit EPSU for financing by the bank, against the Warehouse Receipts
issued by them.
b) In case the produce loans to farmers are going to be extended by
more than one branch for a particular EPSU, branch wise ceiling
within the overall ceiling fixed for that EPSU should be fixed by
the Circle.
c) The Loan for each individual farmer would be extended by way
of a single transaction short-term agricultural loan.
d) The Overall Limit to be fixed by the Circle Office for the unit for
financing against the Warehouse Receipts issued by them would
be calculated keeping in mind the following factors: Capacity of
the Storage Units, Utilization of the Storing Unit, Type of
Commodities Stored, Duration for which the Commodity is stored

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 with Number of Entries for the Commodity, Net Worth of the
Owner, Promoter’s Background and Capacity to handle the
Business, Dealings with the Bank etc
e) The overall limit on exposure for each EPSU fixed as above
should not exceed 200% of the value of Security available by
way of Land& Buildings, Plant& machinery and Equipments
available as collateral from the EPSU. However the Circle Head
may permit a higher limit /Waiver on merits.
f) Exposure limit-cap of Rs.2 crores against WH Receipts issued
by warehouse/Empanelled unit if Collateral of the is not
obtained from them
g) The list of empanelled units (EPSU) under the Scheme should be
reviewed, as at June every year by the Circle Office and
recommendation to continue/discontinue the arrangements shall
be placed by the concerned section at Circle Office. In case of
discontinuation no fresh loans shall be granted for produce in
such units but the securities extended by EPSU should not be
released till all the loans granted against WHRs of such EPSUs
are fully recovered /closed.
4. Margin Minimum margin of 30% of the value of the goods stored as
declared in the WH Receipt issued by the Empanelled unit . A
close watch on the price movement has to be kept and action is
to be initiated when there is erosion in the margin.
5.Security a)Prime:
Upto Rs 10 lakh Pledge of stock as covered under the
(Produce loan) Warehouse Receipts issued by the EPSU in
favor of the bank(Lien of Bank must be noted
on Warehouse Receipts of EPSU )
Above Rs 10 lakh Pledge of stock as above and Mortgage of
(PL) upto landed properties equivalent to the limit for
Rs.25 lacs. produce loan (if collateral of the Empanelled
unit is not available)
Above Rs 10 lakh Pledge of stock as above (if collateral of the
(PL) upto Empanelled unit is available)
Rs.25 lacs.
Above Rs.25 lacs. Mortgage of landed properties atleast equal
to the loan amount
If the other existing loans of the party are already secured by
mortgage, collateral of the properties may be obtained to the
Produce loan/s. The residual value of the security after meeting

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 existing exposure shall cover the Produce loan proposed when
mortgage is required.
b)Collateral Security:
i) Hypothecation of Plant & Machinery, Mortgage of Land &
Building by the Empanelled Private Storage Unit (EPSU)
ii) Corporate Guarantee of the Company / Firm (EPSU) to cover
the limit sanctioned besides the Personal Guarantee of the
Owners / Partners / Director of the Company for the overall
limit fixed to the Empanelled Warehouse Units
iii) In case of EPSU being a Company, charges are to be created
with Registrar of Companies as per guidelines.
Note: In case the Private sector unit is not extending the
Collateral security(to be permitted by Circle Head) and the
reputation of the unit is assessed to be exceptional, the
exposure limit should be limited to 50% of the capacity /
maximum Rs. 2 crores) and individual Produce loans to farmers
above Rs.10 lakhs to be backed by Mortgage.
6.Interest As advised by Head Office from time to time. Branch shall also
adhere to guidelines on charging of interest as advised in Para
2.5 of Chapter 2 of this manual.
7.Documentation As per Documentation Manual (Also, Para 11.3(8) of this chapter
to be referred to) and also the following : (i)Agreement between
the warehouse/Cold storage owner(Empanelled unit) & the Bank
as per Annexure 29 and Annexure 30.
8.Inspection Pre-sanction is to be done. Later-at least once in a quarter.
9.Repayment Within a maximum period of 12 months, but not exceeding one
month less than the shelf life, along with interest in one
lump sum.
10.Release of Goods The pledged produce to be released after remittance to
produce loan in full .Part release of Goods: Part release may be
permitted, and in case of part release, along with proportionate
principal, proportionate interest is also to be recovered. A
register of movement of warehouse receipts should be
maintained.
11.Classification Direct Agriculture – Priority (indirect-Incase of Corporates etc)
12. Other operational modalities:12.1. Lodging of and verification of Signatures:
a. The empanelled unit (EPSU) shall confirm and lodge the signatures of the Owner
/ Management Representative (MREPSU)

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 b. At the time of receipt of the warehouse receipt or correspondence, the Branch
shall verify the signature with the signature lodged
c. The specimen signatures of the Officers / Managers of the Designated Branch who
will be signing the delivery orders or correspondence shall be lodged with the
empanelled unit (EPSU) –for which a confirmation may be obtained.
12.2. Issue of warehouse receipt (WR) :
i) The farmers should deposit the produce with the EPSU and approach the Branch
with the warehouse receipt issued by the EPSU.
ii) The EPSU should therein indicate its acceptance to hold the stocks and act as the
custodian of the stocks /note the lien in favor of the Bank so held
iii) The EPSU should expressly indicate its acceptance to stand as the Guarantor for
the relative produce loan in terms of Guarantee (Personal / Corporate
Guarantee) executed in favour of the Bank for the produce loans to be granted to
the farmers The warehouse receipts shall be issued by the warehouse in
duplicate and shall contain, among other details the farmer's signature / LTI, may
be along with photograph, duly attested (in case of individuals)
iv) The warehouse receipt issued should indicate the quality and shelf life of the
stocks pledged
12.3. Sanction process and noting of the lien :
i) The Branch will examine the proposal on merits and subject to KYC norms of the
borrower.
ii) The Empanelled unit should send the original Warehouse receipt duly noting the
lien in favour of the Bank and send it to the concerned Branch.
iii) The Branch shall disburse the loan on receipt of the confirmation of the noting of
lien in favour of the Bank on the original Warehouse Receipt.
12.4. Submission of Monthly Statements by the Empanelled Private Storage Unit(EPSU):
The EPSU will submit on a monthly basis, a statement indicating the value of goods
deposited by the borrowers, stocks taken out and balance stocks held in terms of
quantity and value. They have to maintain appropriate back up records to facilitate
inspection by the Bank.
12.5 Co-mingling of Goods :
The goods stored and pledged to the Bank though are of the same quality and kind,
shall not be co-mingled as one general lot and should be kept separately for easy
identification, Borrower wise / Loan wise.
12.6 Release/Part release of Goods :
The EPSU shall not allow the release of any Goods unless it has received Letter of
Release and Delivery Order NF – 496 from the Bank duly signed by the authorized
signatory of the Branch stating the name of the borrower to whom Goods shall be
released along with the original warehouse receipt.
12.7. Invocation of Pledge by the Bank :
Upon receipt of invocation, the Empanelled unit (EPSU) may sell the goods by giving

138
 7 day’s notice to the borrower informing Bank's intention to sell the pledged products
and seek loan clearance. A separate notice on these lines shall also be sent by the Bank
to the borrower, with a copy to the warehouse. The EPSU will sell the goods in
consultation with the Bank as per Bank’s directions. A suitable Authority letter to be
collected from the borrowers at the time of sanction.
13.Others All common stipulations as per Para 11.3 of this Chapter shall be
adhered to.

MODEL 4

Loans against the WHR issued by the Collateral Management Companies

1.Purpose i) The produce loans shall be granted to the farmers against the
Warehouse Receipts issued by Collateral Management
Companies of repute like M/s NCMSL, M/s NHBC etc
ii) The WH receipts will be issued against the agricultural produce
stored in the warehouses owned/leased by such Collateral
Management Companies or their franchisee warehouses/field
warehouses.
2.Limit/Nature of loan i) Single transaction loan up to Rs. 50 lacs per borrower
ii) The extent of produce pledged and the limit sought by
individual farmers should be in accordance with the
landholdings of the farmers and approximate production level
to eliminate financing for trading purposes.
3.General scope of a) Identification/providing warehouse facilities as per technical
Collateral specifications.
arrangements in brief b) Quantity verification, weight checking, godown rentals/quality
preservation, insurance coverage, Identification of goods stored
with reference to quality, grade, physical condition and
estimation of value.
c) Issue of Warehouse Receipt.
d) MIS to the Bank to facilitate granting/ disbursement of produce
loans/Market information.
e) Noting of Lien in stocks pledged, Maintenance of Records.
f) Release of goods/disposal of goods on invocation of pledge by
the Bank.
3.Evaluation and MoU The Selection of Collateral Management Company for WH Receipt
financing shall be generally based on the following:
i) The promoters & Management of the Company, experience and
market report.

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 ii) Feedback from other financial Institutions if they already have
tie-up arrangements
iii) Accrediting by WDRA in respect of its own/leased/franchisee
godowns to be encouraged for issuance of Negotiable Warehouse
receipt
The Bank may enter into MoU for Warehouse receipt financing either
at specific Circle level/Bank as a whole. HO will take the decision
based on the demand/scope.
4. Margin Minimum margin of 25% of the value of the goods stored as declared
in the WH Receipt issued by the Collateral Manager
Upto Pledge of stock as covered under the Warehouse
5.Security Rs 50 lakhs Receipts
(Produce loan)
The loan is granted to individual farmers. No collateral need be
extended by the Collateral Management Company.
If the other existing loans of the party are already secured by
mortgage, collateral of the properties may be obtained to the
Produce loan/s.
6.Interest As advised by Head Office from time to time. Branch shall also
adhere to guidelines on charging of interest as advised in Para 2.5 of
Chapter 2 of this manual.
7.Documentation As per Documentation Manual - Also, Para 11.3(8) of this chapter &
MoU with the Collateral Management Company to be referred to.
8.Inspection i) Pre-sanction inspection is waived. However post disbursal
inspection is to be carried out within 7 days.
ii) Subsequent inspection at least once in a quarter
9.Repayment The loan is repayable within a maximum period of 12 months, but
not exceeding one month less than the shelf life, along with interest
in one lump sum.
10.Release of Goods The pledged produce to be released after remittance to produce
loan in full.
Part release of Goods: Part release may be permitted, and in case of
part release, along with proportionate principal, proportionate
interest is also to be recovered.
A register of movement of warehouse receipts should be maintained
by the branch. Particulars of Release/Part release should be noted
therein.

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11.Classification Direct Agriculture – Priority (indirect-Incase of Corporates etc)
12.Charges paid to The charges pertaining to Preservation of quality, quantity and Weight;
Collateral Indication of value of good at regular intervals; Quality certification
Management and submission of periodical reports to the Bank on the stock held up
Company to a maximum of 1%-borne by the bank(but net return on Interest to
be a minimum of BR+0.5%)/as determined in MoU.
Charges above the said ceiling/Other charges-by the Borrower
13. Operational Other operational modalities will be covered in detail in the MoU.
modalities The KYC diligence will have to be undertaken by the Bank.
14.Others All common stipulations as per Para 11.3 of this Chapter shall be
adhered to.

MODEL 5

Loans to farmers against the Negotiable Warehouse Receipts

1.Purpose The produce loans shall be granted to the farmers against the
Negotiable Warehouse Receipts issued by the accredited
warehousing facilities (including Cold Storages) which are empanelled
by the Bank for the specific purpose of the Scheme.
2.Limit/Nature of Single transaction loan up to Rs. 50 lacs per borrower.
loan The extent of produce pledged and the limit sought by individual
farmers should be in accordance with the landholdings of the
farmers/approximate production level to eliminate financing for
trading purposes.
3.Background on The salient features of the Warehousing (Development and
NWR system Regulation) Act, 2007 which was notified from 25.10.2010 are:
i) As per the Section 3(1) of the aforesaid Act provides that No
person shall commence or carry on the warehousing business
unless he has obtained a registration certificate in respect of
the concerned warehouse or warehouses granted by the
Authority under this Act: Provided further that no such
registration shall be required for warehouses which do not
propose to issue negotiable warehouse receipt.
ii) The Warehouse Development and Regulatory Authority (WDRA)
is the apex body set up to regulate warehouses/ also usher in a
system of negotiable warehouse receipts (NWRs) in the country.
iii) Whenever any warehouse feels the need for issuing NWRs either
because of demand from its consumers or due to competition, it
approaches the WDRA and gets the accreditation subject to
satisfying standards prescribed for a scientific storage.

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 iv) Negotiability in case of NWR will allow the holder of the receipt
to trade them easily, increasing their value as collateral for loans.
It has features like name, quantity of the produce, warehouse
registration number, description of goods, shelf-life of the
produce, etc. It also has in-built security features to ensure it is
not misused and WDRA have a control over the accredited
warehouses.
v) The statutory backing to the regulator and authority to take
penal action against defaulters also helps lower risk perception
of lending against warehouse held commodities.
3.Empanelment i) Both private warehouses and those which are under the control
- Entities of the central or state government can apply for accreditation
to issue negotiable receipts.
ii) The accredited Warehouses in Private sector issuing NWR will
have to be empanelled before financing by the Committee at
the Circle.
iii) Procedure as stipulated for financing against WHR issued by
private sector warehouses as in Para 3.2 and 3.3 of Model 3 shall
also apply.
4. Fixing of overall a) An Overall Total Notional Pledge Limit would be fixed for the
limit EPSU for financing by the bank, against the Negotiable
Warehouse Receipts issued by them.
b) In case the produce loans to farmers are going to be extended by
more than one branch for a particular EPSU, branch wise ceiling
within the overall ceiling fixed for that EPSU should be fixed by
the Circle.
c) The Loan for each individual farmer would be extended by way
of a single transaction short-term agricultural loan.
d) The Overall Limit to be fixed by the Circle Office for the unit for
financing against the Negotiable Warehouse Receipts issued by
them as in the case of Pvt sector warehouses
e) The overall limit on exposure for each EPSU fixed as above should
not exceed 300% of the value of Security by way of Land &
Buildings, Plant& machinery and Equipments available as
collateral from the EPSU or Rs. 4 crore whichever is lower.
However the Circle Head may permit a higher limit on merits.
f) Exposure limit-cap of Rs.2 crores if Collateral of the warehouse
is not obtained.
g) No exposure cap in case of CWC/SWC and Collaterally
managed warehouses -issuing NWRs

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h) The list of empanelled units (EPSU) under the Scheme should be
reviewed, as at June every year by the Circle Office and
recommendation to continue/discontinue the arrangements shall
be placed by the concerned section at Circle Office. In case of
discontinuation no fresh loans shall be granted for produce in
such units but the securities extended by EPSU should not be
released till all the Produce loans granted against WH receipts
of such EPSUs are fully recovered /closed.
i) The WRDA should be informed of the arrangements/
shortcomings and termination of arrangements and also for
remedy in case of irregularities
j) Branch/Circle obtain the details of expiry/rejection/
suspension of licenses in respect of WDRA accredited warehouses
4. Margin Minimum margin of 25% of the value of the goods stored as declared
in the WH Receipt issued by the Empanelled unit .A close watch on
the price movement has to be kept and action is to be initiated when
there is erosion in the margin.
5.Security a)Prime:
Upto Pledge of stock as covered under the Warehouse
Rs 50 lakhs Receipts issued by the EPSU in favor of the bank(Lien
of Bank must be noted on Warehouse Receipts of
EPSU )
If the other existing loans of the party are already secured by
mortgage, collateral of the properties may be obtained to the
Produce loan/s.
b)Collateral Security:
i) Hypothecation of Plant & Machinery, Mortgage of Land &
Building by the Empanelled Private Storage Unit (EPSU)
ii) Corporate Guarantee of the Company / Firm (EPSU) to cover the
limit sanctioned besides the Personal Guarantee of the Owners /
Partners / Director of the Company for the overall limit fixed to
the Empanelled Warehouse Units
iii) In case of EPSU being a Company charges are to be created with
Registrar of Companies as per guidelines.
The above collateral of the EPSU may be waived by the Circle
head.
Collateral as above is not applicable in case of CWC/SWC and
Collaterally managed warehouses -issuing NWRs
6.Interest As advised by Head Office from time to time. Branch shall also
adhere to guidelines on charging of interest as advised in Para 2.5 of
Chapter 2 of this manual.

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7.Documentation As per Documentation Manual (Also, Para 11.3(8) of this chapter be
referred to) and also the following : (i)Agreement between the ware
house/Cold storage owner(Empanelled unit) & the Bank as per
Annexure 29 and Annexure 30.
8.Inspection i) Pre-sanction is waived. But post-sanction inspection within 7 days.
ii) Subsequent inspection at least once in a quarter
9.Repayment The loan is repayable within a maximum period of 12 months, but
not exceeding one month less than the shelf life, along with interest
in one lump sum.
10.Release of Goods The pledged produce to be released after remittance to produce
loan in full. Part release of Goods: Part release may be permitted, and in case of
part release, along with proportionate principal, proportionate
interest is also to be recovered. A register of movement of
warehouse receipts should be maintained by the branch. Particulars
of Release/Part release should be noted therein.
11.Classification Direct Agriculture – Priority (indirect-Incase of Corporates etc)
12.Other operational As applicable to non-negotiable WH receipt financing of CWC/SWC/
modalities: Pvt. sector warehouses (Model 2 & 3)
13.Others All common stipulations as per Para 11.3 of this Chapter shall be
adhered to.

MODEL 6

Working capital Limit to Empanelled Private warehousing units(Rural Godowns (RGs) and
Cold Storages (CSs)] against the Book Debts /Receivables (arising from amount advanced
to farmers )

1.Purpose Working capital limit to Empanelled Private warehousing units (Rural

Godowns (RGs) and Cold Storages (CSs)] against the Book Debts /
Receivables arising from on-lending to farmers against their stock of
Agricultural / Horticultural produce stocked therein.
2.1)Eligibility of the a. Private Warehouses (WHs)/ Rural Godowns (RGs) / Cold Storage
Borrowing Designated (CSs) which have availed finance from us for the construction of
unit the unit or for the Working Capital of the unit and with
satisfactory dealings either when the loan is closed /
outstanding loan/s is/are regular.
b. Credit Information Report from CIBIL should be obtained
wherever applicable as a pre-sanction exercise for screening the
proposals.
c. Such units proposed to be designated should not have availed
loan for construction of Warehouse or for Working Capital from

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 other Banks / Financial Institutions and if availed, should have
closed their loan account/s and the assets of such Private
Warehouses (WHs) / Rural Godowns (RGs) / Cold Storage (CSs)
should be totally unencumbered.
d. They should undertake not to issue any warehouse receipts
e. No individual Produce loans to farmers to be granted in these
cases against the same stocks pledged
2.2)Sanctioning i) Empanelment of Private Warehouses (WHs)/ Rural Godowns (RGs)
authority / Cold Storage (CSs) shall be done by the Circle(Procedure in as
in Model 3)
ii) Identification of suitable units shall be done by the Branches
who shall take up the credit proposal with the Circle Offices
iii) To be permitted by the Circle Head. Upon selection of the
empanelling unit, the Circle to send a report to PC &FI Wing, HO
for information.
Factors to be considered:
a) Capability of the promoters.
b) Capacity utilization of their unit should be above 50% at the
time of designating under the Scheme.
c) Production pattern of the area / region should be encouraging
demand for storage of Agricultural / Horticultural produce
d) The units, which rent out a minimum of 75% of storage space on
rental basis.
e) Satisfactory dealings with the Bank - the accounts should be
Standard / S1 or S2 in respect of accounts subjected to Mid Term
Review.
f) Financial soundness- Net worth of the unit should be
satisfactory / improving. The financials are to be satisfactory in
general.
g) Promoter’s Background and Capacity to handle the Business in a
transparent manner.
h) Suitability of the private warehouses should be ensured as
detailed in Para 11.3 (22) of this Chapter.
3.Nature of Limit/ The limit shall be granted as an operative limit to the designated
Limit units.
Fixing of the limit :
i) The limit would be fixed to such designated units as WC
requirement arising from onward lending to farmers against the
goods stored in their storage units.
ii) The limit will be fixed taking into account 80% of the storage
capacity, Nature of principal produce stocked and average

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 market rates and a margin of 30% on the produce value(The Circle
Head may permit reduction of margin on case to case basis on
merits)
iii) Overall exposure (Existing liability/Loans (if any) plus TL
exposure proposed if any /OCC Limit for on-lending under the
Scheme) should not exceed 200% of the value of Security
available by way of Land & Buildings, Plant& machinery and
Equipments). However the Circle Head may permit a higher limit.
iv) Per Borrower limit to farmers on lent: Not to exceed Rs.25 lakhs
per farmer and it should be commensurate with the level of
farming. Necessary proof in this regard may be obtained.
4.Margin/ A minimum of 25% of amount on lent (the WH unit is expected to
Drawing limit : retain a margin of 20-25% of market value while on-lending to
farmers and not expected to exceed 60% of value of produce)
The Drawing Limit shall be calculated as under:
i) Drawing Power shall be worked at 75% of the amount on-lent,
but shall be restricted to 60% of the value of produce stored
whichever is lower.(There shall be a minimum stake of 25% of
the empanelled unit in the amount on-lent)
ii) The Drawing Limit shall be arrived at the beginning of every
month based on the borrower wise on-lent details/stocks held
to be submitted to the Bank by the Designated Unit. The cold
storage unit shall submit a monthly statement of advances
outstanding as on last day of every month for arriving at the
Drawing Limit.
5.Security Prime :
a) Book debts arising out of on-lending to farmers against
their produce stored.
Collateral :
b) Mortgage of landed property including the building by the
Designated Unit.
c) Hypothecation of Plant/Machineries
d) Corporate/Personal Guarantee.
e) Registration of Charges with ROC(in case of a Company)
6.Interest i) As applicable to agricultural loan extended to Warehousing units/
Cold storage units or as advised from time to time. Branch shall
also adhere to guidelines on charging of interest as advised in
Para 2.5 of Chapter 2 of this manual.

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 ii) Penal Interest as applicable to Agricultural loans/Inventory
finance
iii) Interest shall be applied at monthly intervals/to be recovered
depending on the income stream as the case may be
7.Application & a. As per Documentation manual for Inventory /Working capital
Documentation finance against stocks/book debts
b. Undertaking from the Borrower unit as per Annexure 30.
c. Undertaking from the Designated Unit that they shall not charge
high Interest for the farmers much above our lending rate .The
same shall be certified by the Chartered accountant at Half yearly
intervals.
8.Inspection Pre-sanction inspection is necessary.
The Branch has to undertake random checking of the stocks once in a
month.
9.Repayment The limit shall be tenable for a period of one year.
In case it is decided not to renew the limit for any reason, the
empanelled Unit will have to arrange for immediate clearance of the
limit notwithstanding the fact the amount on lent to farmers may not
be due for repayment / not paid by the farmers. A suitable
undertaking in this regard to be obtained from the designated unit.
10. Delegation of Loans to be sanctioned only at Circle Offices/HO as per powers
Powers delegated to various authorities at CO/HO under Agriculture
11.Release of Goods The pledged produce to be released after remittance to produce
loan in full. Once the goods are released by the unit to the farmer,
the unit should remit the proportionate Bank credit to the limit.
12.Classification Indirect Agriculture – Priority Sector
13. Specific Maintenance of Records by the Empanelled Private Storage Units
Operational (EPSU):
Modalities i) The Borrowing Empanelled Private Storage Units (EPSU) will
maintain the records client wise (farmer wise) and make
available the same to the Bank for inspection.
ii) If the details are computerized, the details may be provided for
verification and also soft copy also be sent to the Bank at weekly
intervals. Co-mingling of Goods :The Goods stored and pledged
to the Bank though are of the same quality and kind shall, not be
co-mingled as one general lot and should be kept separately for
easy identification, Borrower wise / Loan wise.
14.Monitoring by the Though credit risk lies with the Designated Unit, considering the charge
borrower unit held by the Banks on the goods stored by way of Re-hypothecation
the following need be complied:

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 i) The Designated Units shall inform the Designated Branch on loans
on-lent by them and remain unpaid beyond 9 months, at monthly
intervals.
ii) The Designated Unit shall take steps for recovery of such
overdue loans and should keep Bank informed of steps taken for
recovery.
iii) The borrowing farmer will have to give a declaration that he
does not have an outstanding crop loan /any other agriculture
loan account with any Bank/FI. In case of any existing loan, the
loan proceeds (on lent loan) should be sent to the concerned
bank branch as per the particulars of the branch/loan number
furnished by the farmer in his/her declaration.
iv) The Circle Office may stipulate such other conditions depending
upon the local conditions to protect the interest of the Bank,
wherever so warranted.
15.Other conditions All common stipulations as per Para 11.3 of this Chapter shall be
adhered to.

MODEL 7

Limit to Empanelled Private warehousing units (Rural Godowns (RGs) and Cold Storages
(CS)] as an INTERMEDIARY for on-lending to farmers

1.Purpose Limit to Empanelled Private warehousing units (Rural Godowns (RGs)

and Cold Storages (CSs)] for onward lending to farmers
The role of empanelled unit will be principally as an intermediary of
credit to farmers
2.1)Eligibility of a. Private Warehouses (WHs)/ Rural Godowns (RGs) / Cold Storage (CSs)
the Borrowing which have availed finance from us for the construction of the unit
Designated unit or for the Working Capital of the unit and with satisfactory dealings
either when the loan is closed / outstanding loan/s is/are regular.
b. Credit Information Report from CIBIL should be obtained wherever
applicable as a pre-sanction exercise for screening the proposals.
c. Such units proposed to be designated should not have availed loan
for construction of Warehouse or for Working Capital from other Banks
/ Financial Institutions and if availed, should have closed their loan
account/s and the assets of such Private Warehouses (WHs) / Rural
Godowns (RGs) / Cold Storage (CSs) should be totally
unencumbered.
d. They should undertake not to issue any warehouse receipts
e. No individual Produce loans to farmers to be granted in these cases
against the same stocks pledged

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2.2)Sanctioning i) Designation’ of Private Warehouses (WHs)/ Rural Godowns (RGs) /
authority Cold Storage (CSs) shall be done by the Circle
ii) Identification of suitable units shall be done by the Branches who
shall take up the credit proposal with the Circle Offices
iii) To be permitted by the Circle Head. Upon selection of the
empanelling unit, the Circle to send a report to PC&FI Wing, HO for
information.
Factors to be considered:
As in the case of financing Book Debts /Receivables of Storage units
arising from amount advanced to farmers against their stock of
Agricultural / Horticultural produce stocked therein-Model 6)-with a
minimum of 2 years experience in such onward lending, since this model
envisages the unit as an intermediary, with margin only in case of their
lending to farmers exceed 50% of the value of stock.
3.Nature of 3.b Maximum exposure limit The limit shall be granted as an operative
Limit/Limit limit:
Fixing of the limit :
i) The limit would be fixed to such designated units as WC for onward
lending to farmers against the goods stored in their storage units.
The limit will be fixed taking into account 80% of the storage
capacity, Nature of principal produce stocked and average market
rates and a margin of 50%. (The Circle Head may permit reduction of
margin on case to case basis on merits)
ii) The overall exposure (Existing liability/Loans (if any) plus TL
exposure proposed if any /OCC Limit for on lending under the Scheme)
should not exceed 200 % of the value of Security available by way of
Land & Buildings, Plant& machinery and Equipments.
iii) Per Borrower limit to farmers on-lent: Not to exceed Rs.25 lakhs per
farmer and it should be commensurate with the level of farming.
Necessary proof in this regard, including land records need be
obtained.
3.b Maximum Rs.1 crore per Borrower unit (The Circle Head may permit a higher
exposure limit limit on a case to case basis on merits)
4.Drawing The Drawing Limit shall be calculated as under:
limit : i) 50% (or at such margin permitted by Circle)of the value of produce
stored & repledged to the Bank or the actual amount on lent,
whichever is lower.
(ie. There will be stake of the empanelled unit in the amount on-lent
to the extent of amount lent in excess of 50% of the value of stock)
ii) The Drawing Limit shall be arrived at the beginning of every month
based on the borrower wise details on-lent amount and value of stocks

149
 hypothecated to be submitted to the Bank by the Designated Unit.
The cold storage unit shall submit a monthly statement of advances
outstanding as on last day of every month for arriving at the Drawing
Limit.
5.Security As in the case of financing Book Debts /Receivables of Storage units &
re-hypothecation of stocks arising from amount advanced to farmers
against their stock of Agricultural / Horticultural produce stocked
therein-as in Model 6)
6.Interest As advised by Head Office from time to time. Branch shall also adhere
to guidelines on charging of interest as advised in Para 2.5 of Chapter 2
of this manual.
7.Application & As in Model 6.
Documentation Undertaking from the Designated Unit that they shall not charge more
than 2% Interest for the farmers above our lending rate .The same shall
be certified by the Chartered accountant at Half yearly intervals
8.Inspection Pre-sanction inspection is necessary. The Branch has to undertake
random checking (at least 10% in terms of number of farmers/value) of
the stocks once in a month.
9.Repayment i) The amount repaid by the farmer at the time of getting the stock
released should be remitted to the Bank the same day/on the next
day.
ii) The tenability of the limit shall be for a period of one year and shall
be renewed subject to satisfactory performance. In case it is
decided not to renew the limit for any reason, the empanelled Unit
will have to arrange for immediate clearance of the limit
notwithstanding the fact the amount on lent to farmers may not be
due for repayment / not paid by the farmers. A suitable undertaking
in this regard to be obtained from the designated unit.
10. Delegation of Loans to be sanctioned only by Credit Approval Committee at Circle
Powers Offices /HO as per powers delegated to various authorities at CO/HO
under Agriculture
11.Other terms As in the case of financing Book Debts /Receivables of Storage units
arising from amount advanced to farmers against their stock of
Agricultural / Horticultural produce stocked therein-as in Model 6) & All
common stipulations as per Para 11.3 of this Chapter shall be adhered
to.

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 CHAPTER -12

KISAN ALL-PURPOSE TERM LOAN

12.1 Objective:

i) To create a convenient single shot term loan limit to farmers for all term loan
requirements like Farm Mechanization, Land Development, Minor Irrigation,
Water Conservation, Horticulture, Allied activities and other agri related
activities etc.

ii) Development projects with a long gestation period shall not considered under the
scheme in view of the specific tenor of this credit product (eg. Mango
plantation-requiring gestation of 6-7 years).

iii) Purchase of Tractors, Combine Harvesters, and Cars are out of the purview of this
Scheme for the reason that farm machinery loan requires independent appraisal
with regard to minimum viable land holdings, and the need for controlled
expansion of the portfolio.

12.2 Eligibility:

Individuals, Joint/ Group of Farmers-owner cultivators and JLGs, SHGs etc. engaged in
Agriculture and related activities.

12.3 Type of Loan

i) It shall be single transaction Term loan limit Loan repayable within 9 years.

ii) The purposes for which the limit is granted shall not be a part of the Kisan Credit
card limit /Canara Kisan OD Scheme /term loan already availed for the same
purpose and it shall be a separate Single transaction account.

12.4 Quantum of loan/Ceiling:

Quantum of loan is based on the investment plan given by the farmer to be undertaken
in the next 2-3 years. The plan can be a combination of investment/development
activities relating to agriculture and allied activities.

It shall be subject to 5 times of Annual farm income (current-pre development stage as

assessed by the branch based on crop pattern & allied activities undertaken) of the

151
 farmer including allied activities OR 50% of the value of land mortgaged (for aggregate
loan above Rs.1 lakh), whichever is lower with a maximum Rs. 20 Lakhs.

Actual purpose wise assessment is to be made as per regular Scheme on the pre
development status, viability and post development income etc.

Illustration:

A farmer with the 5 acres of landed property cultivating cotton crop is proposing the
following investment plan for his farm/to supplement his house hold income:

Present farm activity:

5 acres of Cotton (single crop)

Cost of cultivation: Rs.1.25 lakh (Separate KCC is granted)
Income: Rs.2.00 lakhs
Net surplus:Rs.0.75 lakhs
Value of land: Rs.20 lakhs

Proposed Investment/Development:

Minor irrigation/Pipeline : Rs.2.50 lakhs

Land development/Bunding : Rs.1.50 lakhs
Farm machinery : Rs.2.50 lakhs
Dairy unit (2 animal unit) : Rs.1.50 lakhs (In the 3rd year)

Post development -Farm income pattern:

Cotton (I) 5 acres say Net surplus Rs. 1.20 lakhs

Vegetables/Pulses 5 acres “ Rs. 0.80 lakh

Dairy activity (from 3rd year) “ Rs.0.40 lakh-3rd year

Rs.0.60 lakh p.a from 4th year
Net surplus (post development):

I yr II III IV V VI VII VIII IX

Post-dev 2.00 2.00 2.40 2.60 2.60 2.60 2.60 2.60 2.60
Pre dev 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75
Incremental income(surplus) 1.25 1.25 1.65 1.85 1.85 1.85 1.85 1.85 1.85
Repayment of TL/year 0.50 0.70 0.80 1.00 1.00 1.00 1.50 1.50
Periodicty of repayment HY/Y

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Loan Estimation:

Purposes Cost Loan

(Rs lacs)
Minor irrigation/Pipeline 2.50 2.375 I year
Land development/Bunding 1.50 1.425
Farm machinery –Power 2.50 2.375
tiller/implements
Dairy unit 1.50 1.425 III year
Household (consumption) 0.40 0.40
8.40 8.00
Loan limit Subject to ceiling of-
Assessed amount Rs.8.00 50% of land value -Rs.10
lakhs lakhs
5 times annual income(pre
dev)=5x2= Rs.10 lakhs
Loan is well within upper
ceiling

12.5 Margin

Loans upto Rs.1 lakh - Nil

Loans above Rs.1lakh - 15-25%

The entire margin need not be brought in upfront for the entire limit. The prorata
margin to be brought at the time of creation of asset only

12.6 Security:

Upto Rs.1 lakh-Hypothecation of Assets created out of the loans

Above Rs.1 Lakh (aggregate loan)-Mortgage of Land (it shall be at least 200% of the
limit sanctioned) in addition to the hypothecation of assets created.

12.7 Rate of Interest & applicability of penal interest:

As applicable to agriculture term loans as advised from time to time.

12.8 Disbursement

Disbursement is made as and when the farmer requires loan for creating the Asset.

153
 The farmer is allowed to draw the amount as per the initially estimated period of 2-3
years (but one of the activities to be currently availed), with a simple letter of
undertaking linked to the loan application/loan document executed. The drawal to be
permitted on the indicated limit for each of the purposes specified at the time of
sanction.

The loan proceeds to be directly remitted to dealers wherever possible; Otherwise, the
loan may be credited to the account of the farmers who are to undertake to create the
asset within 15 days /complete the project within 30 days of availing the disbursement

12.9 Application:

Applications as applicable to agricultural loans are to be obtained.

12.10 Documentation:

Loan documentation has to be obtained one time for the sanctioned limit as applicable
to agricultural term loans. As and when the borrower requires disbursement for
creating the asset/ development, a simple letter/letter of undertaking to be obtained
that shall-

i) Indicate the purpose, cost, loan amount of the planned activity (Investment/
Development purpose as indicated in the application)
ii) Undertaking to create the asset within 15 days/execute the development within
30 days
iii) The relative bills need to be submitted to the Bank.
iv) The bank to insist on photograph of pre-post development stages to establish the
creation of the asset as per the proposal and as a proof of end use.

12.11 Processing and other charges

Processing and other charges to be collected as applicable to agricultural term loans.

12.12 Post- sanction monitoring & follow up

i) Pre sanction exercise is to be conducted at the time of appraisal of the Loan.

ii) Post-sanction inspection within 30 days of disbursement/drawl by the borrower

for creation of the asset/development activity.

iii) Half yearly farm visits when the loan is regular.

iv) Loan classification-Priority-Direct Agriculture

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12.13 Repayment:

In suitable installments coinciding with harvest season/income generation depending

on the overall income generation of the farmer, within a maximum period of 9 years.

This may be a ballooning repayment and interest shall be paid along with the
installments.

12.14 Insurance

Assets created have to be insured for full value. The borrower is to advise the Bank on
creation of the asset and provide the required particulars for taking Insurance cover.

12.15 Asset classification

Though the investment may be for a variety of purposes, land based activity being the
major activity of farm households, ‘Crop season’ delinquency norm will be applicable
for asset classification.

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 CHAPTER – 13

FARM DEVELOPMENT LOAN

13.1 PURPOSE:

Development loans are considered for digging/deepening of wells, construction of tanks/

ponds and repairs thereof, bunding, land reclamation, levelling of land, terracing,
conversion of dry lands into wet irrigable lands, development of farm drainage,
laying/lining irrigation channels, fencing, cattle and poultry sheds, construction of
farm buildings/structures like implement sheds, tractor and truck sheds, farm stores
etc., and such other developmental activities of the farm, where the investment
made will result in creation of immovable assets resulting in increase in the value of
land and income of the farmer.

Farm House Loans are for construction of structures apart from being dwelling houses
for farmers, shall necessarily include storage room/godowns/sheds for livestock and
farm machinery and other infrastructure that shall be located on or adjacent to the
Farm. However loans to farmers for construction of farm houses exclusively used for
residential purposes are not eligible for classification under agriculture.

13.2 ELIGIBILITY:

i. The farmer should be a owner of the land.

ii. He should own an economic land holding with a minimum of 2 acres. However,
loans can be considered even if the benefitting area is less than 2 acres
provided the farmer is able to sell the surplus water or the viability of the
project is ensured.
iii. In case of digging/deepening of wells, the Department of Mines and Geology of
the State Government (Ground Water Survey Directorate) should have
surveyed the area and confirmed the feasibility of digging new wells/
deepening of the existing wells in the area. The feasibility certificate from the
Ground Water Directorate is to be obtained, in individual cases as advised by
Circle Office. However, in the following cases, adherence to ground water
discipline or obtaining of feasibility certificate from ground water directorate
will not arise.
a. Financing for desilting of well due to caving in of soil because of torrential
rains.
b. Construction of stone revetment/parapet wall and repairs thereof for the
existing well.

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13.3. TERMS OF THE LOANS:

13.3.1 Limit-scale of finance/margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

The margin amount required to be invested need not be brought in one lump sum and
it may be brought in stages. The labour put in by the applicant and members of family
can also be treated as margin.

13.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

For loans granted for land development such as land levelling and other on farm
developments (including loans for allied agricultural activities like poultry, dairy
development etc. which may also involve development work such as construction of
cattle/poultry sheds and other infrastructures required) the landed property on
which the developments are proposed to be carried out are to be mortgaged (apart
from hypothecation of moveable assets created out of our loan irrespective of value
of the land)

However, if the sanctioning authority feels that there is need for additional collaterals
depending on risk factors, the same may be insisted for loans above Rs.100000/-

13.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

13.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

13.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

13.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

13.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

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13.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

During farm inspection, the following details should be observed:

i) Necessity of the development/s proposed.

ii) The crops now cultivated and suitability of the crops proposed after
development.
iii) Ensure that the land on which the developments are proposed is available as
security.
iv) While appraising the proposal, the technical feasibility and economic viability of
the project must be ensured.

13.5 DISBURSEMENT:

The loan is to be disbursed in stages depending upon the progress of work. Before
making each disbursements, Manager/AEO/Officer should visit the farm and satisfy
themselves regarding the progress of work made.

13.6 REPAYMENT :

The farm development loans are normally repayable in 9 to 15 years by annual/half

yearly instalments. The repayment period/gestation period should be fixed strictly as
per the guidelines given in Chapter 2 Item 2.7 of this manual for various activities.

13.7 POST-SANCTION & FOLLOW UP VISITS :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

13.8 OTHER CONDITIONS:

1. In respect of development works like sinking/drilling of wells, construction of

pump house/sheds/cattle sheds etc, the estimates made by the farmers
themselves can be accepted provided the cost do not exceed more than 10% of
the unit cost approved for that activity/purpose in that region. However, the
applicant should submit break up figures of cost of construction, the type of
construction like AC sheets roofing with iron trusses, brick pillar or RCC pillars
etc., to enable the branches to ensure the end use. In case of higher variations,
the estimate from qualified engineers / contractors have to be submitted by the
parties.

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 2. All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this
manual are also applicable.

13.9 CHECKLIST FOR FARM DEVELOPMENT LOANS

i. Application particulars :
a. Whether the applicant has furnished all the particulars in the application form?
b. Whether the applicant is small/marginal/big farmer?
c. Whether the past dealings of the party are satisfactory?

ii. Technical aspects :

a. Whether the proposed developments are absolutely required?

b. Whether the estimates given by the party for the proposed activities are
reasonable?
c. In case of sinking / digging of wells, whether the area has been surveyed by
directorate of ground water and cleared for sinking of wells. Whether the
party has produced feasibility certificate from the same authorities and
minimum spacing norms have been adhered to.
d. What is the proposed cropping pattern after developments? Whether the same
suits the climatic the soil conditions?
e. Whether water available is adequate to grow the proposed crops?

iii. Economic aspects:

a. Whether there are adequate marketing arrangements to market the produce?

b. What is the anticipated income from the proposed activity?
c. Whether the net surplus available is sufficient to repay the loan after meeting
the household expenses?
d. Whether the cost of production, yield anticipated and income compare well
with the average figure in the area?

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 CHAPTER – 14

DEVELOPMENT LOANS FOR PLANTATION/HORTICULTURE

14.1 PURPOSE

Loans are granted for establishment of estates / orchards clearing of jungle, leveling
of land, conversion of barren land into cultivable land, minor irrigation, fencing,
construction of labour lines, farm house, purchase of planting material, maintenance
cost till bearing and other inputs, rejuvenation/replanting. Generally, loans for
purchase of estate/land are not considered.

14.2 ELIGIBILITY

i. The applicant should own economic land holding depending upon the type of crop
proposed.
ii. The applicant should have experience/knowledge in the proposed activity.
iii. Technical advice on various aspects should be available from an extension agency
iv. Wherever commodity boards are constituted for the development/marketing
of such crops, registration with such boards to be insisted.
v. The applicant should be free from statutory dues.

14.3. TERMS OF THE LOANS:

14.3.1 Limit-scale of finance/margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

The margin amount required to be invested need not be brought in one lump sum and
it may be brought in stages. The labour put in by the applicant and members of family
can also be treated as margin.

14.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

For loans granted for land development such as land levelling and other on farm
developments (including loans for allied agricultural activities like poultry, dairy
development etc. which may also involve development work such as construction of
cattle/poultry sheds and other infrastructures required) the landed property on
which the developments are proposed to be carried out are to be mortgaged (apart

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 from hypothecation of moveable assets created out of our loan irrespective of value
of the land)

However, if the sanctioning authority feels that there is need for additional collaterals
depending on risk factors, the same may be insisted for loans above Rs.100000/-

14.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

14.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

14.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

14.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

14.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

14.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

Branch Manager/AEO/Officer should conduct pre-sanction visit to verify the technical

feasibility and economic viability of the proposal. During the visit, among other things,
following aspects should be considered.

i. Suitability of climate, soil, etc, for the proposed crops.

ii. Availability of required inputs, extension services, marketing facility, adequacy
of water source etc, should be examined.
iii. Experience of the applicant for carrying out the proposed activity

14.5 DISBURSEMENT

The loan is to be disbursed in stages depending upon the progress of work. Before
making each disbursement, Manager/AEO/Officer should visit the farm and satisfy

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 themselves regarding the progress of work carried out. In respect of development
loans where disbursements are spread over a period of time, relative disbursement
should be made only after satisfying about the developments carried out and in
stages.

14.6 REPAYMENT

Development loans should be repaid in 10 to 15 years in annual installments depending

upon the pattern of income generation. Suitable repayment holiday during gestation
period has to be permitted. Payment of interest and installment should be stipulated
to coincide with the expected receipt of income by the farmer.

Branches to refer Chapter 2 Item 2.7 for indicative repayment schedule for various
crops. In respect of borrowers where there is definite source of income, interest may
be recovered as and when debited. For loans granted to corporations such as
plantation development corporations, etc., interest during the gestation period should
be recovered as and when debited.

14.7 POST-SANCTION & FOLLOW UP VISITS :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

14.8 OTHER CONDITIONS:

All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this manual are
also applicable.

14.9 CHECKLIST FOR PLANTATIONS LOANS

i. APPLICATION PARTICULARS

a. Whether the applicant has furnished all the particulars in the application form?
b. Whether the applicant is small/marginal/big farmer?
c. Whether the past dealings of the party are satisfactory?

ii. TECHNICAL ASPECTS

a. Whether the proposed developments are absolutely required?

b. Whether the estimates given by the party for the proposed activities are
reasonable?
c. Whether the climatic and soil conditions are suitable for the proposed crop?

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 d. Whether water source is adequate for the proposed crops? Also whether
quality of water is suitable.
e. Whether technical guidance from the concerned agency is available?
f. Whether inputs like seedlings, cuttings, fertilizers, pesticides etc, are
available?

iii. ECONOMIC ASPECTS

a. Whether there are adequate marketing arrangements to market the produce?

b. What is the anticipated income from the proposed activity?
c. Whether the net surplus available is sufficient to repay the loan after meeting
the household expenses? Whether the cost of production, yield anticipated
and income compare well with the average figure in the area?

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 CHAPTER – 15

FARM FORESTRY LOANS

15.1 PURPOSE:

The loan can be granted for raising tree crops including Tree borne Oil seeds like
Jatropha (includes preparation of land, purchase of seeds/seedlings, fertilizers,
pesticides and towards other expenditure involved for raising trees till they reach
the age of bearing/harvest).

15.2 ELIGIBILITY:

i. The applicant should be a owner/lessee cultivator.

ii. Trees proposed to be raised by the applicant should have adequate demand
and should be suitable for cultivation in the proposed area.
iii. The State Govt. regulations, if any, should be adhered to.

15.3. TERMS OF THE LOANS:

15.3.1 Limit/scale of finance/margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

15.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

15.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

15.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

15.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

15.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

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 The columns which are not applicable in the above forms may be left blank. In
NF 520 page 3 under post development, the income of the farmer year-wise has to be
furnished.

15.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

15.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

During farm inspection, the following details should be mainly looked into:
i) Advantages of the project proposed compared to the existing, the crops now
cultivated and suitability of the crops proposed.
ii) Availability of the lands in which the developments are proposed as security.
iii) Technical feasibility of the proposal.

15.5 DISBURSEMENT:

The loan is to be disbursed in stages depending upon the progress of work. Before
making each disbursement, Manager/AEO/Officer should visit the farm and satisfy
themselves regarding the progress of work carried out. The receipts, bills/vouchers for
the full cost of the development should be lodged with the loan papers.

15.6 REPAYMENT:

The loans are to be repaid in 4-15 years by yearly installment including a gestation
period of 6-7 years depending on the crop or in a lumpsum depending on the maturity
and harvest. The repayment period may vary with the type of tree crop and on the
basis of its gestation period, yield and income from year to year. Therefore, these
aspects will have to be taken into account while fixing repayment period. Interest
accrued during the gestation period may be recovered along with the installments.
However, if the borrower has definite income from other sources, the interest may be
recovered as and when debited. In respect of loans granted to corporations such as
Forest Development Corporation, the interest has to be recovered invariably as and
when debited.

15.7 POST-SANCTION & FOLLOW UP VISITS:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

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15.8 OTHER CONDITIONS:

1. The yields may be in the form of timber, fuel, fodder, bark fruit, leaves,
resins, gums, etc. Wherever possible tie-up arrangement with any of the
marketing agencies in the area for purchasing the marketable surplus may be
ensured. Where large farm forestry programme is proposed to be undertaken at
the instance of any state government the feasibility of promoting a separate
marketing agency may be thought of.

2. All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this
manual are also applicable

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 CHAPTER – 16

DEVELOPMENT LOANS FOR FARM LEVEL STORAGE STRUCTURES

16.1 PURPOSE:

Loans are granted for construction of permanent farm level storage structures as
detailed below:

i) Warehouses, godowns, silos, storage bins.

ii) Cold Storages for farmers to store their own produce.

16.2 ELIGIBILITY:

1) The applicant should own agricultural land and should have space for
construction of storage structures.
2) Technical guidance and supervision for construction of storage structure should
be available.

16.3. TERMS OF THE LOANS:

16.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

16.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

16.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

16.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

16.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

16.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

In case of Loans above Rs. 10.00 lacs (For all categories of borrowers):
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 i) Comprehensive loan cum appraisal report-In NF 878 under Part B following is to
be incorporated:

"Whether technical guidance is available for construction of storage structures?

If so, inform the name of the agency".

ii) Under part `C' of NF 878 - Economic aspects to be substituted as under:

Particulars For the For the subsequent

Last year year
Income
Agriculture
Allied activities
Other sources
Total

Total expenditure
Cultivation expenses
Maintenance expenses
Other expenses
Loss due to storage in
Terms of value

Total
Excess of income over
Expenditure

16.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

16.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

Branch Manager/AEO/Officer should conduct pre-sanction visit to verify the technical

feasibility and economic viability of the proposal. During the visit, among other
things, the aspects furnished in checklist should be considered:

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16.5 DISBURSEMENT:

The loan is to be disbursed in stages depending upon the progress of work. Before
making each disbursement, Manager/ AEO/Officer/should visit the farm and satisfy
themselves regarding the progress of work carried out. In respect of development loans
where disbursements are spread over a period of time, relative disbursement should
be made only after satisfying about developments carried out and in stages.
Receipts/ bills/vouchers for full cost of the development should be lodged with the
loan papers. General guidelines (Chapter 2 & 3) may be referred to for waiver on Bills
& disbursement by way of reimbursement.

16.6 REPAYMENT:

As there is no direct income generation in this project a reasonable repayment

period of 5-7 years may be given based on income generation out of the farm of the
borrower. The loan may be repaid in half yearly/yearly instalments.

16.7 POST-SANCTION & FOLLOW UP VISITS :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

16.8 OTHER CONDITIONS:

All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this manual are
also applicable.

16.9 CHECKLIST FOR DEVELOPMENT LOANS FOR FARM LEVEL STORAGE STRUCTURES

i. APPLICATION PARTICULARS:

a. Whether the applicant has furnished all the particulars in the application form?
b. Whether the past dealings of the party are satisfactory?

ii. TECHNICAL ASPECTS:

a. Whether the applicant is having sufficient space to construct the storage

structure?
b. Whether necessary technical guidance is available from the concerned agency?
c. Whether required inputs are available nearby for construction of storage
structures?
d. Whether the cropping pattern adopted by the party requires storage structures
for storage of grains?

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 iii. ECONOMIC ASPECTS:

a. Whether the net surplus available from the farm is sufficient to repay the loan
after meeting the household expenses?

16.10 CHECK LIST FOR LOAN GIVEN FOR CONSTRUCTION OF COLD STORAGE UNITS.

1. Technical Aspects:

a. Name of the commodities to be stored, market survey and assessment of

the need for storage capacity-storage space available at present in the
locality vis-a-vis potential requirement of storage capacity.
b. Criteria for selection of cold storage.
c. Arrangements for procurement, storage and marketing of produce.
Availability of labourers for handling of stock.
d. Loading schedule and refrigeration capacity of plant supported by heat load
calculation.
e. Detailed cost estimates of the cold storage unit and auxiliary structures
prepared as per approved schedule of rates applied to site. Auxiliary
structure should include facility for drying, sorting and office space in case
of new units.
f. Details of drawings of various structures, including layout plans (Registered
Architect's certificate regarding the status of the site for use of land for
non-agricultural purposes).
g. Details of plant and machinery including fire-fighting equipments along
with copies of invoices/quotations.
h. Total Horse Power of motors/prime movers with detailed break up.
i. Power supply position and provision for generator set.
j. Details of insulation works and storage racks, soil strength to carry proposed
load.
k. Water requirement of the plant and its availability, water test report to be
enclosed.
l. Availability of technical staff with implementing agency for supervision of
work.
m. Availability of technical staff for supervision and scheme monitoring.
n. Comments on technical feasibility of the project.

2. FINANCIAL ASPECTS

a. Estimates of unit-wise aggregate income, expenditure and surplus from the

cold storage. Comments on financial viability of the project along with cash

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 flow, Benefit/Cost ratio, net present worth, financial rate of return, etc.
b. Comments on the financial position of the borrowers/implementing agency. In
case of companies, partnership firms, etc, an analysis of their financial
position, debt-equity and profitability alongwith copies of audited financial
statements, for last three years.

3. INFRASTRUCTURAL FACILITIES

a. Arrangements/availability of building materials/ refrigeration equipment.

b. Details of technical guidance, Government support.

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 CHAPTER – 17

PUMPSET LOANS

17.1 PURPOSE:

Pumpset loans are sanctioned for purchase of electrical motors, oil engines, pump
sets, submersible irrigation pump sets and accessories, pipelines including
installation charges for purpose of irrigation or for other farm operations. Loans
for construction of pump house may also be considered. Loans for installation of
windmills for lifting water from wells, streams, etc. for agricultural purpose. Loans
for installing Generator Sets for energisation of agricultural pump sets. Solar pump sets
can also be financed.

Branches may finance for purchase of oil engines as stand by for wells already
installed with electric motors to meet situations like power failure, voltage
fluctuation etc. subject to the following:

i. The Horse Power of stand by diesel engine proposed to be purchased should

be comparable with the HP of the electric motor already installed.

ii. The loan can be extended for farmers who have already cleared the loan in full
or part or pumpsets installed out of their own funds.

iii. In respect of farmers who have cleared their liability under the earlier loan or
own electric motor from their own funds, the repayment period as applicable
for pumpset loan scheme can be permitted.

iv. In respect of farmers who are having existing liability, a suitable repayment
period may be worked out for repayment of second loan keeping in view cash
generation.

17.2 ELIGIBILITY:

i. The farmers' land should have adequate source of water. In case any Public/
Government source is being used, water right certificate from the concerned
authority should be produced.
ii. In case of wells they should have sufficient recouping capacity to irrigate area
proposed to be brought under irrigation.
iii. He should own an economic land holding with a minimum of 2 acres. However,

172
 loans can be considered even if the benefiting area is less than 2 acres
provided the farmer is able to sell surplus water or viability of the project is
ensured.
iv. The minimum spacing to be maintained between dug wells / Borewells are
applicable for pumpset loans also. The same should be as per Government
guidelines for that area. It should be ensured that permission for lifting water
is available for a period which will cover at least 3 years longer than the entire
period of loan or should be renewed from time to time till closure of loan.
v. The diesel/kerosene and electric pump sets to be financed should confirm to the
norm of Complete Pumping System (CPS) as per Code No. IS 10804.86. The
submersible pump sets to be financed should be approved by BIS (formerly ISI).
vi. The farmer should obtain a feasibility certificate from the Electricity Board
indicating the probable date of energization. Energisation of pump sets should be
ensured within a reasonable time.
vii. Farmer shall submit water yield certificate from Dept. of Mines & Geology, Ground
Water Directorate in respect of bore well drilled.

17.3. TERMS OF THE LOANS:

17.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

“NIL” margin may be stipulated for purchase of pump set and accessories and also
for construction of pump sheds in case of farmers who have constructed open well
/ bore well from their own source subject to the following:

i) The farmers should have dug well or borewell from their own funds without
resorting to outside borrowings within a period of 6 months prior to application
for Pumpset / pump shed loan.

ii) Relative receipts/vouchers wherever available for having made the

pre-investment regarding minor irrigation should be lodged with loan papers.

iii) As far as possible, farmers should be educated to come to us at the initial stage
itself.

iv) However, the minimum margin stipulated/required under NABARD refinance

should be stipulated whenever the loans are eligible for refinance from
NABARD.

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17.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

17.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

17.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

17.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

17.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

17.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

17.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

Branch Manager/AEO/Officer, should conduct pre-sanction visit to assess the technical

feasibility and economic viability of the proposal. During the farm inspection, the
details as per checklist should be observed / verified.

17.5 DISBURSEMENT:

i. In the case of electrical pump sets 75% of the cost of pump sets and accessories
including the margin collected from the borrower should be disbursed directly to
the dealer. While sending the demand draft, a letter should be addressed to the
dealer to supply the pump set and accessories confirming to Complete Pumping
System (CPS) as per code IS 10804-86 and in case of SIP set to supply only brands
approved by BIS.

ii. The balance 25% of the cost is to be paid to the dealer only after the installation
of the complete pumping system and obtaining the certificate from the dealer as

174
 per Annexure 31 and a letter guaranteeing the satisfactory performance of the
pump set after energisation.

iii. In case of oil engines full payments to the dealer towards pump sets and
accessories should be made only after ensuring that the same have been supplied
to the borrower and obtaining the certificate as stated above from the dealer.
The bills / vouchers / stamped receipt obtained for the full cost of the asset
should be lodged with loan papers.

17.6 REPAYMENT:

Pumpset loans are repayable in 9 years by half yearly / yearly instalments depending
upon the income generation. The period of repayment of instalments should always
coincide with the harvesting and marketing of crops. In case of borrowers who have
been sanctioned composite loans for well and pump set, if the repayment of instalments
have been fixed even prior to installation / energisation of pump sets, period of
repayment of loan may be reckoned from the date of energisation of pump sets unless
the borrower is having some alternate arrangement for lifting water such as Persian
wheel, oil engine etc.

In case of lift irrigation scheme the repayment period is 15 years including grace period
of 36 months.

17.7 POST-SANCTION & FOLLOW UP VISITS :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

17.8 OTHER CONDITIONS:

1. Installation of electrical pump set should be undertaken within one month from
the date of disbursement of the loan.

2. All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this
manual are also applicable.

17.9 FINANCING SOLAR PUMPSET FOR IRRIGATION:

17.9.1 Purpose.

For installation of solar water pumping system. The scheme will help in harnessing the
solar energy for pumping water by water pumps

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17.9.2 Eligibility

i) The farmers' land should have adequate source of water. In case any Public/
Government source is being used, water right certificate from the concerned
authority should be produced.

ii) In case of wells they should have sufficient recouping capacity to irrigate area
proposed to be brought under irrigation.

iii) Farmer should own an economic land holding with a minimum of 10 acres.
However, loans to be considered even if the benefiting area is less than 10 acres
provided the farmer is able to sell surplus water.

iv) It is also possible that due to Technical limitation of solar pump set, it can work at
low Heads only (shallow water sources) and low capacity (2.50 HP pump sets) &
hence capacity to irrigate small area only (1-2 Hectares) due to small discharge.
In such cases, viability should be ensured and projected DSCR is not less
than 1.60.

17.9.3 Components.

i) Solar PV panel
ii) One of the following motor-pump sets compatible with the photovoltaic array:
• Surface mounted centrifugal pump set,
• Submersible pump set,
• Floating pump set,
• Submersible pump set.
iii) Any other type of motor-pump set, after approval from MNRE

17.9.4 Quantum

75% of the cost of the equipment

17.9.5 Margin

Minimum of 25%. If subsidy is available, the same to be considered as Margin

17.9.6 Security

Hypothecation of equipments and mortgage of land for aggregate exposure under

agriculture loans above Rs.1 lakh.

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17.9.7 Interest Rate

As applicable to agriculture Term loans advised from time to time.

17.9.8 Repayment Period

5-7 years

17.9.9 Other Conditions:

The Scheme should be on the lines of any Scheme brought out by NABARD

17.10 CHECK LIST FOR PUMPSET LOANS:

i. APPLICATION PARTICULARS:

a. Whether the applicant has furnished all the particulars in the application form?
b. Whether the applicant is a small / marginal / big farmer?
c. Whether the past dealings of the party are satisfactory?

ii. TECHNICAL ASPECTS:

a. What is the source of water?

b. Whether quality of water / soil suitable for irrigation purpose?
c. Whether water is available in adequate quantity for the proposed crops?
d. Recouping / recharging capacity of the well.
e. Whether the pumping unit proposed to be purchased is suitable for the size of
farm holdings, viz, HP of the pump set type etc.
f. Whether the applicant has sufficient land to utilize the water resource fully?
Whether there is scope for selling the surplus water?
g. Whether the feasibility certificate from Electricity Board has been obtained
for power connection?
h. Whether the pump set proposed to be purchased satisfy the norm of Complete
Pumping System (CPS) Code No. IS 10804-1994 / BIS approved (SIP set).
i. Whether the borrower is having accommodation to house the pump set?
j. Whether the minimum distance between the wells as advocated by the state
ground water directorate is adhered to?
k. Whether adequate after sales – service and repairing facilities are available in
nearby place?

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iii. ECONOMIC ASPECTS:

a. Whether there are adequate marketing arrangements to market the produce?

b. What is the anticipated income from the proposed activity?
c. Whether the net surplus available is sufficient to repay the loan after meeting the
household expenses?
d. Whether the cost of production, yield anticipated and income compare well with
the average figure in the area?

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 CHAPTER – 18

DRIP/SPRINKLER IRRIGATION LOANS

18.1 PURPOSE

i. Purchase of Drippers, Pressure regulators, Filters, pipes, accessories,

ii. Fertilizer mixers and pump sets.
iii. Construction of overhead tanks wherever necessary.
iv. Sprinkler irrigation loans are granted for purchase and installation of sprinkler
irrigation units.
v. Any other water saving devices/modern irrigation equipment.

18.2 ELIGIBILITY:

i. The beneficiary should be the owner of the land. The land holding should be
economical to the investment proposed.
ii. Loans for tenant cultivators could also be considered subject to fulfilling the
norms for granting of loans on lease hold lands.
iii. The installation of the system should result in judicious use of the water to cover
more area under cultivation than what is being presently cultivated with the
conventional system of irrigation methods or should result in improvement in the
intensity of cropping or result in conservation of the water resources for better
irrigation.

18.3. TERMS OF THE LOANS:

18.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

18.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

18.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

18.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

18.4.1 Documents to be produced by the applicant:

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 Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

18.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

18.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

18.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

18.5 DISBURSEMENT:

The loan is to be disbursed for purchase of the equipments directly to the dealer
supplying the same along with the margin money collected from the borrower against
stamped receipt.

18.6 REPAYMENT:

The loan is repayable in 10 to 15 years by half yearly / yearly installments depending

upon the income generation including a repayment holiday of 12 months. The due
dates of the installment should coincide with the harvesting and marketing of the
crops.

18.7 POST-SANCTION & FOLLOW UP VISITS :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

18.8 OTHER CONDITIONS:

All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this manual are
also applicable.

18.9 CHECKLIST FOR DRIP/SPRINKLER IRRIGATION LOANS:

i. APPLICATION PARTICULARS

a. Whether the applicant has furnished all the particulars in the application form?
b. Whether the past dealings of the party are satisfactory?

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ii. TECHNICAL ASPECTS

a. Whether the lands of the farmer are in a compact block?

b. Whether the proposed developments are absolutely required?
c. Whether the estimates given by the party for his proposed activities are
reasonable?
d. Whether the cropping pattern suits the systems to be introduced?
e. Whether the installation of the system would result in covering additional
areas under irrigation or would increase the cropping intensity, if the area is
limited?
f. Whether there are any service centres available nearby?
g. What is the availability of water and present pattern of its utilization and the
extent to which it is covered?
h. Whether quality of water is suitable?
i. Whether technical specification report and layout plan is obtained.

iii. ECONOMIC ASPECTS

a. Whether there are adequate marketing arrangements to market the produce.

b. What is the anticipated income from the proposed activities.
c. Whether the net surplus available is sufficient to repay the loan after meeting
the household expenses.
d. Whether the cost of production, yield anticipated and income compare well
with the average figure in the area.

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 CHAPTER - 19

FARM MACHINERY LOANS

(Tractor/Power Tiller/Trailer/Farm Machinery and other equipments)

19.1 PURPOSE:

Farm machinery loans are considered for purchase of tractor, power tiller, trailer and
accessories, combine harvester, grain threshers, sprayers, dusters, ploughs, drills
and such other farm implements and equipments needed for agricultural activity.

It is to be ensured that the HP of the tractor to be purchased suits the soil, cropping
pattern, size of land holdings of the applicant.

Further, only such Tractors/Power Tillers, Combine harvestors which are in our
approved list, are to be financed. The list of tractors/ power Tillers/Combine harvestor/
Rice transplanter which are In our approved list, are furnished in Annexure 32 besides
the guidelines on disbursement and monitoring.

19.2 ELIGIBILITY:

i. Tractors (Tractor with Trailer/Tractor alone):

a. The applicant should have at least 6 acres of perennially irrigated land or 12

acres of dry land so as to ensure sufficient work of atleast 1000 to 1200 hours
per year including a minimum of 500 hours of work on the farmers own
land.

(Land criteria can be relaxed by Circle DGM-CAC depending on merits

provided the tractor could be gainfully employed for a total period of 1000 to
1200 hours per annum either on own farm and/or custom hire).

b. Borrower shall be scored as per the scoring matrix as per Annexure - 33 to

assess the eligibility. Scoring matrix is applicable for financing both new and
second hand tractors.

c. In addition, branches/offices have to appraise the proposals and ensure that

the project is technically feasible and economically viable.

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ii. Power Tillers(alone/with trailers)/Trailers alone (for existing Tractors)

a. The applicant should have at least 3 acres of irrigated lands or 6 acres of dry
land(Criteria can be relaxed depending on merits provided the Circle DGM is
convinced that the power tillers can be gainfully employed for a total of 600
hours per annum either on own farm and/or custom hire)

b. Wherever, trailers alone to be financed, it is to be ensured that the borrower

owns the tractor.

If tractor is financed by other banks and loan is outstanding, such cases

shall not be considered for financing trailers.

If tractor is financed by other banks and loan is closed, such cases can be
considered for financing trailers subject to (i)The other bank’s lien stands
cancelled in RC book & (ii)Our lien shall be noted for both the existing tractor
and trailer to be purchased

iii. Combine Harvestors:

a. All the combine harvestor proposals shall be sanctioned by AGM-CAC at CO

and above upto their delegated powers.

b. Sanctioning authority to ensure that the harvestor can be used efficiently on

custom hiring basis looking into the potentiality for hiring.

iv. Other Farm Machineries:

The sanctioning authority is empowered to assess the minimum land requirement

depending upon the loan amount and the economic usage of the machinery to be
purchased on the own lands.

v. Other criteria common for all types of Farm Machineries:

a. The land holdings should preferably be in compact blocks.

b. There should be adequate facilities available for servicing in the locality.
c. In case of joint accounts, it is to be ensured that the borrowers are from the
same family and are not joining just for the purpose of meeting minimum land
requirement. Permission from the Circle DGM to be obtained for sanctioning
loans in cases, wherever the intending borrowers are not from the same
family.

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19.3. TERMS OF THE LOANS:

Branches to adhere to guidelines advised in Chapter 2 of this manual in respect of

margin, security and rate of interest apart from notes detailed hereunder:

19.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

19.3.2 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

19.3.3 Security:

1. New Tractors alone/with trailers/Combine harvesters/Power tillers/Other farm

machinery:

i) Loans upto Rs.1.00 lakhs:

Hypothecation of machinery/equipment to be purchased.

ii) For Loans above Rs.1 lakh:

Hypothecation of machinery/equipment to be purchased +

Mortgage of landed property value of which is at least equal to the loan
amount
(or)
Security of tangible assets like NSCs, KVP, the Bank’s FDs, surrender value of
LIC Policy, Gold (appraised value) etc., with requisite margin valued
equivalent to the loan amount.

2. Trailers alone for existing tractors:

If loans are considered for purchase of trailer only and the tractor loan is
outstanding, existing security of landed property offered for tractor loan shall be
obtained. However, the residual value of the security shall be equal to the
proposed loan amount. Wherever, there is deficit, additional security in the form
of immovable properties or tangible assets shall be insisted so that the value of
additional security together with residual value of the existing security is equal to
the loan amount.

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 Relaxation: Circle DGM-CAC is empowered to exercise the following discretion

New Tractors alone/with trailers:

a. Wherever, borrower meets the minimum land requirement criteria and yet, the
value of the land is not equal to the loan amount, branches shall obtain
co-obligation/guarantee of the third party and/or security of tangible assets as
above. The net worth of the co-obligant/guarantor and/or the value of such
tangible assets shall be at least equal to the deficit in the value of the mortgaged
property i.e. value of the mortgaged property and net worth of the co-obligant/
guarantor and/or value of tangible assets together shall be equal to the loan
amount. This is applicable to all borrowers who score 40 and above under the
rating matrix.
b. Under genuine cases, where borrower scores 70 and above as per the rating
matrix and mortgage is not possible for the reasons such as non-availability of
title deeds or not able to offer security of tangible assets, tractors can be
financed by obtaining third party co-obligation/guarantee in lieu of mortgage.
However, the net worth of the co-obligant/guarantor shall be at least equal to the
loan amount.

For Combine Harvestors:

Wherever, the value of the landed property (offered as security) is not equal to the
loan amount, branches shall obtain security of tangible assets as above. The value of
such tangible assets shall be at least equal to the deficit in the value of the mortgaged
property i.e. value of the mortgaged property and value of tangible assets together
shall be equal to loan amount.

For Power Tillers/ Other Farm machineries (other than Combine Harvestors) /Trailer
alone:

a. Wherever, borrower meets the minimum land requirement criteria and yet, the
value of the land is not equal to the loan amount, branches shall obtain
co-obligation/guarantee of the third party and/or security of tangible assets as
above. The net worth of the co-obligant/guarantor and/or the value of such
tangible assets shall be at least equal to the deficit in the value of the mortgaged
property i.e. value of the mortgaged property and net worth of the co-obligant/
guarantor and/or value of tangible assets together shall be equal to loan amount.

b. Under genuine cases, where mortgage is not possible for the reasons such as
non-availability of title deeds or not able to offer security of tangible assets,

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 Power Tillers/Trailers/Other Farm machineries (other than Combine Harvestors)
can be financed by obtaining third party co-obligation/guarantee in lieu of
mortgage. However, the net worth of the co-obligant/guarantor shall be atleast
equal to the loan amount

In case of power tillers, wherever registration is required as per the law, it has to
be done.

19.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

19.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

19.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

19.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

In respect of Tractor/trailer/Power tiller loans, the following blank RTO forms duly
signed by the borrower have to be obtained in duplicate:

a) Form 29 - Ownership transfer form

b) Form 30 - Report of transfer of ownership of motor vehicle.
c) Form 35 - Notice of termination of agreement of hire purchase.
d) Form 20 - Application in prescribed form signed by the borrower to RTO to
register the vehicle in his name and to note Bank's charge in RC.
e) Form 12 A-Transfer of tax card (wherever applicable).

Above set of forms have to be obtained separately for trailer/other equipments

which require registration.

19.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

i. Proposals should be within 16 KM from the branch for effective follow up, in
addition to compliances with other norms. For financing farm machinery loans

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 beyond 16 KMs, branches have to obtain prior permission from the Circle
DGM.

ii. The Branch Manager / AEO / Officer should conduct pre-sanction visit to assess
the technical feasibility and economic viability of the proposal. During
inspection, the following points should be observed in addition to the eligibility
clause, terms and conditions of the scheme.
a. Whether the prospective borrowers have experienced hands to drive the
tractor / power tiller?
b. Whether there is good scope for hiring the power tiller / farm machineries/
Combine Harvestors?
c. Whether the tractor selected by the borrower is of appropriate capacity and
economic size (HP) so as to ensure optimal utilization of the tractors on own
farm and for custom service.
d. In addition to the above, particulars mentioned in the checklist (Para 19.12 of
this Chapter) should be gathered.

19.5 DISBURSEMENT:

The loan amount should be disbursed by way of DD directly to the dealer / supplier
along with margin money collected from the borrower against stamped receipt. The
payment of the loan proceeds to the tractor dealers should be made only after the
Farm Machinery and all other accessories as per proforma invoice are supplied and our
lien painted on Farm Machinery and trailer. This has to be confirmed by inspection of
the asset. Payment to the dealer shall be released only after ensuring that the assets
have been delivered.

Guidelines to be followed at the time of disbursement (applicable to Tractor loans/

Power tiller loans & combined harvesters)

i. The quotations should clearly indicate the price of tractor / trailer / accessories
separately. It should be ensured that the margin norms are not circumvented by
inflated quotes on the cost of tractors / accessories.
ii. As soon as a tractor loan is sanctioned, a letter of confirmation is to be issued to
the dealers, indicating that the payment will be made once the tractor and trailer
(applicable) along with all accessories are supplied as per proforma
invoice.
iii. The following details are to be invariably incorporated on the reverse of the
Demand Drafts issued for disbursement of tractor loans to avoid misuse of the
DD:

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 “ This DD is issued for supply of ………………….. tractor and ………………… accessories
as per Performa Invoice No…………….. dated …………………. to Sri………………………..
S/o. ………………………………….(address)”.

iv. Branches should ensure that our lien is noted in the RC Book within 3 months of
disbursement of the loan and RC book copy should be obtained. This aspect has to
be very closely followed up by the branches. In case of undue delay, help should
be sought from the dealer who has supplied the tractor/tiller/trailer. For
recovery of overdue instalments also, the help from the dealers can be
enlisted.
v. Branches to ensure that borrower can effectively use the tractor as per the norms
and has ability to manage tractor.
vi. Branches to retain 5% of the value of the Tractor/ Power Tiller (wherever
registration with RTO authorities is required payable to the dealers till the RC
Book is received duly noting our lien.
Branch to disburse only 95% of the value of the tractor at the time of
disbursement. The full margin to be collected from the borrower. The full margin
and loan amount shall form 95% of the value of the project.

Ex: If total value of the tractor is Rs.5 lacs, say margin is 25%, borrower has to
bring in Rs.1.25 lacs. The loan amount would be Rs.3.75 lacs. The 95% of the
tractor value would be Rs.4.75 lacs. In this case, DD to be issued for Rs.4.75 lacs,
which includes Rs.3.5 lacs loan amount and Rs.1.25 lacs margin money.

Balance 5% of the tractor value i.e undisbursed portion in the loan account shall
be disbursed in the form of DD, directly to the dealer on receipt of the RC book
duly ensuring the bank’s lien.

19.6 REPAYMENT:

The loan is repayable within 5 to 9 years by half yearly / yearly instalments depending
upon the income generation. The due dates of instalments should coincide with the
harvesting and marketing period.

Wherever, trailers alone are financed, it is to be ensured that the repayment to be

fixed based on the residual economic life span of the tractor. Trailers shall not be
financed where the economic life span of the tractor is less than 3 years.

19.7. INSURANCE:

The assets charged to the bank should be insured at party's cost with an approved

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 insurer and the policy should be lodged with the branch duly assigned in favour of the
bank. Wherever insurance of vehicles or machinery or other equipment/ assets is
compulsory under the provisions of any law, insurance should be obtained
compulsorily irrespective of the loan amount.

19.8 POST-SANCTION & FOLLOW UP VISITS:

Post sanction visit is undertaken within 15-30 days of disbursement to ascertain

end use. Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered
to.

19.9 OTHER CONDITIONS:

i. The bank lien should be got noted in the Registration certificate and registered
with the RTO. It should also be painted on the tractor / power tiller / trailer and
other implements in bold letters. Display of hypothecation board is waived for
loans upto Rs.25,000/-.
ii. Copy of RC Book/RC Smart Card with details of hypothecation incorporated on
the card should be obtained and verified with the original RC/Smart Card duly
certified by the competent authority.
Wherever RC /Smart Card are issued in lieu of RC Book does not contain hypoth
ecation details incorporated in it, Original “B” Register extract from RTO is to be
obtained.
iii. The RC has to be verified for the first time soon after registration in the name of
the borrower with Hire Purchase endorsement in favour of the Bank. Thereafter
RC has to be verified once in a year preferably during the month of April to
confirm that the taxes have been paid upto date. In case of defaulted accounts,
the verification of RC has to be done as frequently as possible. The dates of
verification of RC has to be noted in the loan register along with observations, if
any.

iv. The sanctioning authority may waive the obtention of duplicate key.

v. Other guidelines on Financing Tractors, Power tillers, Combine Harvestors-

sanction, disbursement and Monitoring

a. The credit decision will be at the sole discretion of the branch based on
feasibility and viability (At present our bank does not have any MoU with any
of the tractor company)
b. Branches to ensure that borrower can effectively use the tractor as per the
norms and has ability to manage tractors.

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 c. A cap of 25 farm machinery loans per branch /year is fixed for branches where
the outstanding Farm Machinery portfolio is less than 50. After reaching the
cap of 50 farm machinery loans, the branches to seek prior clearance from
CO.
d. The branches with outstanding farm machinery portfolio of more than 50 loans
or recovery is less than 85% under the relative portfolio, have to obtain prior
clearance from CO for every block of 5 farm machinery loans proposed.

vi. Precautions to be taken while taking mortgage of properties:

a) Of late, many instances where Mortgages have been created on the strength
of fake land records and impersonations are being reported under tractor
loans.
b) The branches may make thorough local enquiries regarding the character and
background of the farmers and their title over the lands through independent
enquiries without merely relying on the paper submitted. A report confirming
that the land mortgaged are inspected, should be placed on record.
c) Branches to refer mortgage chapter of Documentation Manual for various
precautions to be taken while accepting security by way of Mortgage.

vii. Guidelines for Circles:

a) Ensuring independent appraisal by the branch.

b) Putting in an appropriate mechanism for ensuring proper end use, timely
registration with RTA and close monitoring of the loans.
c) The need to maintain Circle level liaisoning with the Tractor Manufacturing
Companies for suitable and timely intervention whenever required in the
matter of delayed delivery, non delivery of the machinery, non registration of
tractor etc
d) To have Circle level one-to-one meets with the leading Tractor manufacturing
Companies; bringing to the notice of the companies the various irregularities
committed by their Dealers and urging them to assist in setting right such of
those irregularities and taking steps for avoiding recurrence of such instances.
e) Black listing the names of those dealers who resort to malpractices/ collude
with the borrower by issuing stamped receipts for cash margin without
actually receiving the cash, not supplying the accessories, trailers and other
equipments and inflate the value of tractor/accessories thereby encouraging
borrowers who indulge in unfair practices.
f) To monitor the expansion of the portfolio of farm machinery (Tractor and
Power tillers) in relation to scope/potential of the command area of the
branches.

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 g) Circle to ensure that the branches make an independent assessment of the
dealers based on service provided. The same should be reviewed by the
branches periodically or atleast once in a year to take a view in continuing
with accepting his quotations or otherwise of the dealer.
h) Any campaign on credit matters to be moderated since excessive thrust has
resulted in flouting KYC norms at the branch level. The campaign should be
moderate, methodical to ensure credit quality. Credit quality shall not suffer
due to mass loaning

vii. All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this
manual are also applicable.

19.10. FINANCING SECOND HAND TRACTORS

A. ELIGIBILITY CRITERIA:

i. Tractor should be from our approved list.

ii. Tractor should not be more than 3 years old.
iii. Other criteria as applicable to loan sanctioned for purchase of brand new tractor
are also to be adhered to.
iv. Borrower shall be rated as per the scoring matrix (Annexure-33) for eligibility

B. LOAN AMOUNT:

Loan shall not be more than 60% of the value of the tractor as per valuation report or
sale consideration whichever is less.

C. MARGIN :

Margin shall be atleast 40% of the value of the tractors as per valuation report or sale
consideration whichever is less and it should be brought in by cash.

D. SECURITY:

Upto Rs.1 lakh Hypothecation of machinery/equipment to be purchased.

Above Rs.1 lakh 1. Hypothecation of machinery/equipment to be purchased +
2. Mortgage of landed property value of which is atleast equal to
the loan amount
Or
Security of tangible assets like NSCs, KVP, the Bank’s FDs,
surrender value of LIC Policy, Gold (appraised value) etc., with
requisite margin valued equivalent to the loan amount.

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 Circle DGM-CAC is empowered to exercise the following discretion:

Wherever, borrower meets the minimum land requirement criteria and yet, the value
of the land is not equal to the loan amount, branches shall obtain co-obligation/
guarantee of the third party and/or security of tangible assets as above. The Net worth
of the co-obligant/guarantor and/or the value of such tangible assets shall be at least
equal to the deficit in the value of the mortgaged property i.e. value of the mortgaged
property and net worth of the co-obligant/guarantor and/or value of tangible assets
together shall be equal to loan amount.

Under genuine cases, where borrower scores 70 and above as per the rating matrix and
mortgage is not possible for the reason of non-availability of title deeds or not able to
offer security of tangible assets, tractors can be financed by obtaining third party
co-obligation/guarantee in lieu of mortgage. However, the Net worth of the co-
obligant/guarantor shall be atleast equal to the loan amount.

E. REPAYMENT:

Maximum 5 years in half yearly / yearly instalments depending upon income

generation. However, repayment should be fixed within the economic life of the
tractor.

F. OTHER CONDITIONS:

i. The valuation report from approved automobile engineer/ panel valuer should be
obtained to determine the value of the tractor.
ii. Original “B” Register extract issued by RTO along with the loan application from
prospective buyer borrower should be obtained. The copy of RC book submitted
by the prospective borrower shall be cross verified with “B” register extract to
ensure the genuineness of the documents of the vehicle.
iii. Loan proceeds along with margin money should be remitted directly to the
vendor. In case the loan is outstanding against the previous owner then the loan
proceeds and margin money should be sent to the financing bank to clear the
liability. In such cases, it should be ensured that the loan stands cleared and the
lien / hypothecation in the RC book is got cancelled.
iv. Tractor should be fully insured.
v. Our lien should be noted in RC book.
vi. All other conditions as applicable to tractor loans and LHV scheme for advance
against used vehicles as detailed in Para 1.05 of Manual of Instructions on Loans
against Hypothecation of Vehicles (LHV) updated till 31.10.2010 should be
adhered to.

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 vii. In case the proceeds of the loan goes to clear earlier loans, it should be ensured
that no concession is given in interest rate (i.e. no compromise settlement) to the
earlier owner from whom tractor is purchased.
viii. All other guidelines stipulated for financing new tractors/farm machinery are to
be adhered.

19.11 GENERAL:

Wherever circle DGM is not posted and circles are headed by GM, the AGM-CAC of the
circle is empowered to exercise the discretion given to Circle DGM.

19.12 CHECKLIST FOR FARM MACHINERY LOANS:

i. APPLICATION PARTICULARS:

a. Whether the applicant has furnished all the particulars in the application form?
b. Whether the applicant is small / marginal / big farmer / unemployed
entrepreneur?
c. Whether the past dealings of the party are satisfactory?

ii. TECHNICAL ASPECTS :

a. Whether the lands of the farmer are in a compact block?

b. Whether there are any service centres available nearby?
c. What are the purposes for which the farmer will employ the tractor on his own
farm and what would be the number of hours of working on his own farm?
d. How does the farmer make use of the spare capacity of the tractor?
e. Whether there is scope for hiring? If so, for how many hours?
f. Whether the implements proposed to be purchased suits the make and HP of
the tractor?
g. Whether the HP of the tractor to be purchased suits the soil, cropping
pattern, size of land holdings, etc.?
h. Whether the make of the tractor proposed to be purchased is in our approved
list.

iii. ECONOMIC ASPECTS:

a. Whether there are adequate marketing arrangements to market the produce?

b. What is the anticipated income from the proposed activity?
c. Whether the net surplus available is sufficient to repay the loan after meeting
the household expenses?
d. Whether the cost of production, yield anticipated and income compare well
with the average figure in the area?

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 CHAPTER – 20

SCHEME FOR FINANCING AGRICULTURISTS

FOR PURCHASE OF VEHICLES (ALLHV)

20.1 PURPOSE :

The vehicles financed under the ALLHV Scheme should essentially serve the purpose of
transportation of agricultural inputs and outputs. Therefore, under the scheme, loans
can be granted for purchase of brand new vehicles such as two wheelers including
cycle, three wheeler carriages, jeep, van and such other light motor vehicles and
heavy vehicles such as lorries/trucks for supervising agricultural operation/
management of farm / estate and for transportation of agricultural produce/
inputs, labour, etc.

Cars should not be financed under ALLHV Scheme.

20.2 ELIGIBILITY:

i. The applicant should be an agriculturist, cultivating his own land or should be

engaged in allied activities such as Dairy, Poultry, Sericulture, Fish Farming,
etc.

ii. The loans are to be permitted only to persons engaged in production and
distribution of agricultural and allied commodities.

iii. The applicant should possess a valid driving license. However, ALLHV loans can
be sanctioned for purchase of 4 wheelers and heavy vehicles to eligible
borrowers who do not have a valid driving license but are capable of
engaging drivers possessing valid driving license.

iv. For financing Heavy Commercial Vehicles (HCV), the applicant should have
minimum 15 acres of perennially irrigated lands. Such proposals for purchase of
lorries / trucks which do not satisfy the condition of minimum acreage norms,
AGM/DM of CO are permitted to sanction loans relaxing the acreage norms. While
sanctioning such proposals by relaxing the minimum acreage norms it shall be
ensured that there is adequate surplus for repayment.

v. Cost incurred towards Life Tax, Registration Charges, Insurance premium and other
accessories shall also be considered for arriving at loan quantum.

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 NOTE: In respect of finance to commercial vehicles –

a. Applicant should posses a valid permit to run the vehicle.

b. Loans for MCVs/HCVs should be extended only to big farmers, State owned
Corporations, State Forest Development Corporation etc.
c. Small Farmers are not eligible for loans for purchase of MCVs/HCVs.

20.3. TERMS OF THE LOANS:

Branches to adhere to guidelines advised in Chapter 2 of this manual in respect of the

following:

20.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

20.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

20.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

20.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES.

20.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

20.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

20.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

In respect of motor vehicle loans, the following blank RTO forms duly signed by the
borrower have to be obtained in duplicate:
a) Form 29 - Ownership transfer form

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 b) Form 30 - Report of transfer of ownership of motor vehicle.
c) Form 35 - Notice of termination of agreement of hire purchase.
d) Form 20 - Application in prescribed form signed by the borrower to RTO to
register the vehicle in his name and to note Bank's charge in RC.
e) Form 12 A-Transfer of tax card (wherever applicable).

Above set of forms have to be obtained separately for trailer if financed along with
jeep.

20.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

Branch Manager/AEO/Officer should conduct pre-sanction visit to assess the need for
the vehicle by studying the following aspects.

a) Location of the farm and distance to main marketing/ servicing centres

b) Suitability of the vehicle to the road
c) Possession of driving licence wherever applicable
d) Extent of the farm/number of animals/birds/yield of produce etc.
e) Any other details relevant to the loan proposal.

20.5 DISBURSEMENT:

i) The entire cost of the vehicle has to be remitted to the dealer directly, along
with the margin amount collected from the borrower.
ii) DD/PO to be sent directly to supplier under regd. AD or panel courier. DD/PO shall
contain information on loan by Bank. The details may be incorporated on the
reverse of the DD/PO as follows:
“This DD is issued for supply of ………………….. and ………………… as per Performa
Invoice No…………….. dated …………………. to Sri………………………..
S/o. ………………………………….(address)”.
iii) Along with the remittance, necessary papers for registering the vehicle in the
name of the borrower and for registering Hire Purchase endorsement in Bank's
favour should be sent to the dealer with instructions to register the same and
return the RC to us.
iv) The Stamped receipt for full value of the asset is to be obtained and kept along
with the loan papers.

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20.6 REPAYMENT:

The loans are to be recovered in 3 to 5 years in monthly / quarterly / half

yearly/ yearly installments depending upon the income generation from the farm/
estate.

In respect of MCVs/LCVs loans are to be repaid in 5 to 7 years in monthly/quarterly

installments.

20.7 POST-SANCTION & FOLLOW UP VISITS :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

20.8 OTHER CONDITIONS:

1. The RC has to be verified for the first time soon after registration in the
name of the borrower with Hire Purchase endorsement in favour of the
Bank. Thereafter RC has to be verified once in a year preferably during the
month of April to confirm that the taxes have been paid up to date. In case
of defaulted accounts, the verification of RC has to be done as frequently as
possible. The dates of verification of RC has to be noted in the loan register
along with observations, if any.

2. Copy of RC Book/RC Smart Card with details of hypothecation incorporated on

the card should be obtained and verified with the original RC/Smart Card duly
certified by the competent authority.

Wherever RC /Smart Card are issued in lieu of RC Book don not contain
hypothecation details incorporated in it, Original “B” Register extract from RTO is
to be obtained.

3. Bank's lien should be got painted on the body of the vehicle with the words
"Hypothecated to Canara Bank", if the loan amount exceeds Rs.25,000/-.

4. If the loan is granted to Joint Stock Company, our charge is to be registered

with the Registrar of companies.

5. The loan has to be classified as "Direct Agricultural Advances" under category

"Other Farm Machinery and Implements" of PSR 29 under diversified purpose as
Farm Machinery.

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 6. The sanctioning authority may waive the obtention of duplicate key.

7. All other terms and conditions applicable to LHV loans also applicable to loans
granted under the scheme.

8. All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this
manual are also applicable.

20.9 FINANCING OF SECOND HAND VEHCILES:

Finance can be advanced for purchase of second hand vehicles on a selective basis,
subject to the following conditions:

i. The vehicle to be purchased should not be more than 5 years old and should be
free from encumbrance.
ii. Valuation report of the vehicle to be purchased, should be obtained from a
qualified person, acceptable to Bank.
iii. The quantum of loan shall not be more than 75% of the value of the vehicle as
per valuation report or purchase consideration, whichever is lower.
iv. The loan proceeds along with margin money collected from the party should be
remitted directly to the vendor of the vehicle.
v. Original “B” Register extract issued by RTO along with the loan application from
prospective buyer borrower should be obtained. The copy of RC book submitted
by the prospective borrower shall be cross verified with “B” register extract to
ensure the genuineness of the documents of the vehicle before sanction of loan.
vi. Vehicle should be insured for comprehensive risks for purchase consideration/
value of the vehicle, whichever is higher.
vii. The loan has to be repaid within 3 years in monthly / quarterly / half yearly /
yearly instalments, depending upon the income generation of the party.
viii. All other terms and conditions as mentioned in this chapter are to be followed.

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 CHAPTER – 21

BULLOCK/CAMEL/CART LOAN

21.1 PURPOSE :

Loans are sanctioned for purchase of Bullocks, Camel and animal driven carts.

21.2 ELIGIBILITY:

i. The applicants should be either farmers or agricultural labourers having

sufficient land or scope for hiring the bullock and cart for economical returns.
ii. The applicant must be in a position to meet the expenditure on the maintenance
like shoeing, feeding and replacement of ropes of bullocks, repairs on carts,
etc.
iii. It is preferable if applicant possesses shed to house the cart and bullocks etc.

21.3. TERMS OF THE LOANS:

The following terms will be as per guidelines specified in Chapter 2 of the Manual

21.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

21.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

21.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

21.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

21.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

21.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

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21.4.3 Documents to be executed by the applicant::

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

21.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

The Branch Manager/AEO/Officer should carry out a pre-sanction visit to assess the
genuineness of the requirements of the party. During the inspection, the following
points should be observed among others(as per Check list)

T Present crops grown, yield, net income, etc.

T Scope for hiring the cart and bullock
T Utility of cart and bullock on farmers own land
T The need for purchase of the asset.

21.5 DISBURSEMENT :

The loan should be disbursed directly to the dealer/supplier/vendor along with

the margin money collected from the borrower against stamped receipt. In case it is
not possible to make payment direct to vendor/supplier for any valid reasons, the
loan amount may be disbursed to the borrower. The assets should be inspected without
fail within 30 days from date of disbursement.

21.6 REPAYMENT :

Cart and Bullock loans are repayable in 5 to 7 years in quarterly/half yearly

installments depending upon the income generation. The period of repayment of
installments should always coincide with the harvesting and marketing of crops.

21.7 POST-SANCTION & FOLLOW UP VISITS :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

21.8 OTHER CONDITIONS:

All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this manual are
also applicable.

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21.9 CHECKLIST FOR BULLOCK, CAMEL, CART LOAN :

APPLICATION PARTICULARS :

a) Whether the applicant has furnished all the particulars in the application form?
b) Whether the applicant is small/marginal/big farmer or agricultural labourer?
c) Whether the past dealings of the party are satisfactory?

TECHNICAL ASPECTS :

a) Whether the breed of animal proposed to be purchased suits the climate of the
area?
b) Whether there is accommodation to house bullock, cart to be purchased?
c) Whether there is adequate supply of water?
d) Whether veterinary facilities are available?

ECONOMIC ASPECTS:

a) Whether there is adequate scope for hiring bullock, cart?

b) What is the anticipated income from the proposed activity?
c) Whether the net surplus available is sufficient to repay the loan after meeting the
household expenses?

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 CHAPTER – 22

DAIRY LOANS

22.1 PURPOSE :

i. Construction of cattle shed

ii. Purchase of high yielding milch cattle (yielding not less than 5 litres per day)
iii. Purchase of dairy equipments, cattle feed and for cultivation of green fodder.
iv. Expenditure incurred for transportation of animals where the animals are not
purchased locally.
v. Initial feed cost for a period of 1 month at the rate of 120 kgs. per animal for the
first batch of animals.
vi. Setting up of on farm processing and pasturisation plants.
vii. Rearing of heifers.

22.2 ELIGIBILITY :

i. The farmer should have cattle shed/arrangements enough to house the existing
animals if any and also those proposed to be purchased.
ii. The farmer should be cultivating green fodder or should have definite
arrangements for its supply.
iii. Drinking water should be available in the area.
iv. Veterinary facilities should be readily and easily available including facility for
artificial insemination.
v. The farmer should have experience/knowledge in maintaining dairy animals.
vi. There should be assured marketing facilities.

22.3. TERMS OF THE LOANS:

Branches to adhere to guidelines advised in Chapter 2 of this manual in respect of the

following:

22.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

22.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

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22.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

22.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

22.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

22.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

22.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

22.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

Branch Manager/AEO/Officer should visit the farm to assess the technical feasibility
and economic viability of the proposal. During the inspection, the following details
in addition to check list are to be observed :
a) Suitability of the breed of the animals and its availability.
b) Availability of infrastructural facilities such as Veterinary aid, marketing,
housing, supply of fodder, water etc.

22.5 DISBURSEMENTS :

i. Loans are to be disbursed directly to vendors as far as possible. In case it is

not possible to make direct payment to the vendors for any valid reasons or the
farmer has to go to distant places for purchase of animals, the loan amount
may be disbursed to the borrower. Later the asset should be inspected
without fail within 30 days from date of disbursement.
ii. When the loan is sanctioned for more than one animal, the disbursement
should be made in stages. For Eg. if the loan is sanctioned for 2 animals, it is
desirable that at the first instance disbursement is made for purchase of one
animal. The amount for the second animal may be made available within 4 to 6
months after the purchase of first animal so that by the time the first animal

203
 goes dry, the second animal is purchased. By phasing the purchase in this
manner, the farmer gets regular income. By this time, the bank will also
know the performance of the borrower. This will enable the Bank to take
decision regarding disbursement for balance amount. The same principle can be
applied to loans for purchase of larger number of animals for regular dairy
farms so that they can maintain regular supply of milk to their customer. For
existing farms it may not be necessary to phase disbursement, as the loan
itself is intended to maintain a constant herd of animals in lactation.
iii. The bills/vouchers/stamped receipt obtained for the full cost of the asset
should be lodged with loan papers.
iv. Wherever animals are purchased through purchase committees, the proceeds of
loans have to be released to the borrowers as advance and representatives of
the Bank can accompany the committee to assist in purchasing quality animals
and also to ensure enduse.
v. Age of animals : The normal economic life of a milch buffalo is 5-7 lactations and
that of a cow is 10 lactations. Milch animals should be bought at the first or the
second lactation stage. Then the farmer can avail the benefit of the most
economic and productive life period of animals. We may consider financing
animals upto a maximum age of their 3rd lactation, beyond which it is
uneconomical for the farmer. It is possible that the farmer may be tempted to
purchase an animal at an advanced lactation period at a low price. Manager
should in such cases, have a discussion with the borrower, regarding his
intentions before sanctioning the loan.

22.6 REPAYMENT:

i. Loans granted for purchase of dairy animals should be recovered in a period of 5

years in suitable monthly/quarterly instalments. The quantum of instalment is
to be stipulated after making reasonable allowance for domestic consumption
of milk.
ii. Gestation period/grace period should be linked with lactation period to cover
dry period of the animal.
iii. Wherever possible, tie-up arrangements should be made with purchaser of the
milk for recovery of loan. Tripartite agreement as per annexure 34 may be
obtained where the milk is marketed through MPCS.

22.7 POST-SANCTION & FOLLOW UP VISITS :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

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22.8 OTHER CONDITIONS:

i. For identification of the animals hypothecated to the bank the animals are to be
tattooed with indelible ink or ear tagged. This should be noted in the
hypothecation agreement. Wherever earlier tattoo marks or ear tags have
disappeared, fresh ear tags should be used for the animals if it is difficult to
tattoo again. Branches have to duly note the new tag number in the ledger apart
from writing to insurance company by regd. Post AD explaining the reasons for
fixing new tag and requesting them to note the same in their records. There is no
need to obtain fresh hypothecation agreement under above circumstances.

ii. Veterinary Doctor's certificate should be obtained wherever insurance has

been stipulated and also where the sanctioning authority has stipulated the
same in terms and conditions of sanction. In respect of loans granted under
Government Sponsored Schemes, branches may include the clause relating to
the health of the animals purchased in the existing certificate of the purchase
committee (which will include a veterinary doctor) and no separate health
certificate is required.

iii. All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this
manual are also applicable.

22.9 RAISING CROSS BREED HEIFERS

22.9.1 PURPOSE :

i. Loans can be extended for purchase of Crossbred heifer and/or for its rearing
till it reaches lactation period.
ii. Known cattle breeders and technically qualified entrepreneurs can be financed
for purchase of non descript cows for getting crossbred progeny and for its
rearing upto maturity or till it is sold, whichever is earlier.
iii. As this scheme warrants constant technical supervision/guidance, hence it
is advisable to grant such loans wherever proper technical assistance is
available.

22.9.2 ELIGIBILITY :

Apart from the eligibility conditions mentioned under dairy finance, the following
should also be considered :
a) Artificial insemination facilities should be available within easy reach.
b) The Heifer should be of good breed and in good health.

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22.9.3 APPLICATION & ENCLOSURES :

As per Annexure 35

22.9.4 DISBURSEMENT :

i. The loan amount for the maintenance of heifer should be disbursed only in
stages for purchase of feeds/medicine till the heifer reaches lactation period.

ii. When the loan is extended for purchase of non descript cows for upgradation of
the progeny, no loan need be granted for maintenance of such cows during
the lactation, since farmer will be getting income from the sale proceeds of the
milk which would take care of maintenance.

22.9.5 OTHER CONDITIONS :

All other terms and conditions mentioned under security, margin, documents, interest,
pre-sanction, post sanction, follow up, insurance and other conditions mentioned under
dairy loans are applicable to this loan also.

22.9.6 REPAYMENT :

1. When the loan is granted for rearing of heifers for ultimate production of milk,
the loan may be recovered within a period of 5-6 years including initial grace
period of 30 months.
2. When the loan is granted for rearing of heifers for selling purpose, loan is
recovered in lump sum when sale is effected but not later than two and half
years from date the of grant.

22.10 CHECK LIST FOR DAIRY LOANS

1. APPLICATION PARTICULARS :

a) Whether the applicant has furnished all the particulars in the application
form?
b) Whether the applicant is small/marginal/big farmer or an agricultural
labourer?
c) Whether the past dealings of the party are satisfactory?

206
2. TECHNICAL ASPECTS :

a) Whether location of the farm is ideal from the point of view of marketing,
veterinary aid etc.?
b) Whether the breed of animal proposed to be purchased suits the climate of
the area?
c) What is the need for purchasing additional animals?
d) Whether the present accommodation is sufficient for existing as well as for
the animals proposed to be purchased?
e) Whether there is sufficient space for grazing of animals?
f) Whether there is sufficient supply of green fodder and adequate water?
g) Whether the party is having sufficient experience in the line?

3. ECONOMIC ASPECTS :

a) Whether there are adequate marketing arrangements to market the milk?

b) What is the anticipated income from the proposed activity?
c) Whether the net surplus available is sufficient to repay the loan after
meeting the household expenses?
d) Whether the cost of production, yield anticipated and income compare well
with the average figure in the area?

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 CHAPTER – 23

SHEEP & GOAT REARING LOAN

23.1 PURPOSE:

Loans can be considered for –

i. Purchase of sheep suitable to the area and construction of stall for housing the
animal.

ii. Purchase of goats suited to the area for rearing either under stall or free grazing
conditions.

Note : Goats are detrimental to soil conservation, forestry and settled agriculture.
Therefore, goat rearing should be financed only in the areas identified by Animal
Husbandry / Forestry Department where adequate grazing facilities are available.
Therefore, a certificate from the Animal Husbandry / Forestry Department
recommending goat rearing in the area and the breeds of goat suited for the area has to
be necessarily obtained before considering such loans. However, this certificate is not
required for stall-fed goat rearing.

23.2 ELIGIBILITY:

i. The selected breed should be suitable for the tract, and easily available at
reasonable cost.
ii. There should be sufficient grazing facilities and accommodation to house the
animals.
iii. Good quality drinking water should be available.
iv. Veterinary assistance should be easily and readily available.
v. There should be good demand for mutton, wool, leather and other sheep
products and assured marketing facilities.
vi. The farmer should preferably be a member of a co-operative sheep rearing
society or association, which would be able to extend various facilities to its
members and assist the bank in identification of borrowers, in disbursement,
supervision and recovery.

23.3. TERMS OF THE LOANS:

Branches to adhere to guidelines advised in Chapter 2 of this manual in respect of the

following:

208
23.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

23.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

23.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

23.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

The following terms will be as per guidelines specified in Chapters 3 & 4 of the Manual
in addition to the Note/s.

23.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

23.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

23.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

23.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

Branch Manager / AEO / Officer should conduct the pre-sanction visit to assess the
economic viability and technical feasibility of the proposal. During the farm
inspection, among others, the following & other details(check list) should be noted:

i) Suitability and availability of breed of sheep / goat in the area

ii) Grazing facilities
iii) Veterinary facilities
iv) Marketing arrangements
v) Housing, availability of drinking water, etc.

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23.5 DISBURSEMENTS :

i. As far as possible, the disbursements should be made for the vendors/suppliers

directly against stamped receipt.
ii. In case it is not possible to make payment directly to the suppliers for any valid
reasons, and/or the farmer has to go to distant places for purchase of animals,
disbursement may be made to him. Later the animals should be inspected without
fail within 30 days from the date of disbursement.

23.6 REPAYMENT :

i. For sheep : The loan is to be repaid in 5 years with a gestation period of 12

months by half yearly/yearly instalments from the sale proceeds of progeny.
ii. For goat : The loan is to be repaid within 4 to 5 years by quarterly / half yearly
instalments inclusive of gestation period of 12 months.

23.7 POST-SANCTION & FOLLOW UP VISITS :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

23.8 OTHER CONDITIONS:

i. For identification of the animals hypothecated to the Bank, the animals are to be
tattooed with indelible ink or eartagged. This should be noted in the
hypothecation agreement. Wherever earlier tattoo marks or ear tags have
disappeared, fresh ear tags should be used for the animals if it is difficult to
tattoo again. Branches have to duly note the new tag number in the ledger apart
from writing to insurance company by Reg. Post AD explaining the reasons for
fixing new tag and requesting them to note the same in their records.
ii. There is no need to obtain fresh hypothecation agreement under above
circumstances.
iii. Veterinary doctors certificate should be obtained wherever insurance has been
stipulated and also where the sanctioning authority has stipulated the same in
terms and conditions of sanction. In respect of Govt sponsored Schemes loans the
clause may be incorporated in certificate of purchase committee and no separate
health certificate is required.
iv. All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this
manual are also applicable.

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23.9 CHECK LIST FOR SHEEP HUSBANDRY LOAN / GOAT LOAN

APPLICATION PARTICULARS :

a) Whether the applicant has furnished all the particulars in the application form?
b) Whether the applicant is small / marginal / big farmer or agricultural labourer?
c) Whether the past dealings of the party are satisfactory?

TECHNICAL ASPECTS :

a) Whether location of the farm is ideal from the point of view of marketing,
veterinary aid, etc.
b) Whether the breed of animal proposed to be purchased suits the climate of the
area?
c) What is the need for purchasing additional animals?
d) Whether the present accommodation is sufficient for existing as well as the
animals proposed to be purchased?
e) Whether there is sufficient area for grazing?
f) Whether there is adequate supply of water?
g) Whether the party is having sufficient experience in the line of activity?

ECONOMIC ASPECTS :

a) Whether there are adequate marketing arrangements to market the produce?

b) What is the anticipated income from the proposed activity?
c) Whether the net surplus available is sufficient to repay the loan after meeting the
household expenses?
d) Whether the cost of production, yield anticipated and income compare well with
the average figure in the area?

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 CHAPTER – 24

POULTRY & DUCK REARING

24.1 PURPOSE:

i. For Poultry:
a) Establishing/improving layer/broiler farms and hatcheries including purchase
of chicks, feeds and medicines up to laying / marketing stage, equipments,
feed mixing plants, construction of poultry sheds.
b) Working capital limits for purchase of chicks, feed, medicines can be
considered either as a single transaction loan or as working capital limits.
ii. For Duck Rearing:- Purchase of ducks, portable enclosure, feeding
equipments, transportation charges, supplementary feed, veterinary expenses
and purchase of other inputs.
iii. For rearing turkeys/quails.

24.2 ELIGIBILITY:

i. The applicant should have experience/knowledge in poultry farming/duck

rearing.
ii. The farm should have sufficient accommodation for the birds proposed to be
purchased.
iii. Good quality, adequate drinking water facilities should be available in the farm.
iv. The farm should be located in a calm area, free from disturbances, dust,
noise, etc.
v. Veterinary facilities, marketing facilities should be available in nearness to the
farm.
vi. Availability of day old chick, feeds, etc and also facility for replacement of
ducklings.

24.3. TERMS OF THE LOANS:

Branches to adhere to guidelines advised in Chapter 2 of this manual in respect of the

following:

24.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

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24.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

24.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

24.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

24.4.1 Documents to be produced by the applicant:

In addition to guidelines as advised in Chapter 4 Item 4.3 of this Manual, following

documents shall be produced by the applicant:

i) Proforma invoice for purchase of equipments, cages, birds.

ii) Plan and estimate for construction of building.
iii) Copies of land records regarding land owned/leased, certified by concerned
Revenue Authorities. However, land records need not be insisted for loans upto
Rs.10000/-

24.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

24.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

24.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

Branch Manager/AEO/Officer should conduct pre-sanction visit to ensure the technical

feasibility and economic viability of the proposal.

During the farm inspection, the following details should be noted:

i) Applicants experience/knowledge in poultry farming/duck rearing.

ii) Availability of accommodation to house the birds of existing and proposed batches.
Availability of drinking water facility/electricity in the farm.

213
 iii) Availability of chicks/ducklings of reputed breeds according to the production
plan of the farmer.
iv) Availability of feed at all times at reasonable costs.
v) Availability of adequate facility for veterinary aid at all times.
vi) Demand for poultry/duck products in the area.
vii) Whether the applicant would be able to get economic price?
viii) Marketing arrangements:- Whether the applicant has made definite
marketing arrangements to supply to regular consumers such as large hotels,
hostels or with any co-operative marketing society from whom arrangements
can be made by the Bank to receive the sale proceeds directly

24.5 DISBURSEMENT:

i. As far as possible disbursement is to be made directly to the supplier of the chicks

/ birds/ducklings/feeds/equipments. In case of loan towards construction of
shed, the same may be disbursed in stages depending on the progress of the work.
Loan towards feed should also be disbursed in stages.
ii. Where composite loans are permitted for purchase of chicks, feed, equipment,
construction of poultry shed etc. the working capital portion such as loans for
chicks/ducklings, feeds and medicines for initial batches of birds may be
capitalized and can be permitted in the form of term loan.

24.6 REPAYMENT :

For Poultry:-

i) Poultry loan granted for purchase of chicks and feeds for layer farm should be
repaid within 18 months in monthly instalments. The first of such instalment
falling due after six months from the date of disbursal or when egg production
has commenced whichever is earlier. The initial repayment holiday depends on
the age of birds proposed to be purchased.

ii) Loans granted for purchase of broiler chicks and feeds should be repaid within
3 - 3 1/2 months or soon after marketing of birds whichever is earlier.

iii) Repayment schedule for loans granted for hatcheries, commercial farm should be
fixed according to the production programme after income generation and
working out the cash flow statement.

iv) Composite loan for construction of poultry shed/purchase of equipments and

other investments may be repaid in 7-9 years by monthly/quarterly instalments
inclusive of gestation period of 12 to 18 months.

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 For Duck Rearing:-

Loans granted for duck rearing are to be repaid within 4-5 years by quarterly/half
yearly instalments inclusive of a gestation of 12 months.

24.7 POST-SANCTION & FOLLOW UP VISITS :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

24.8 OTHER CONDITIONS:

a) Borrowers should keep records of feed consumption, mortality, vaccinations, egg

production, number of culled birds and body weight of the birds (body weight in
the case of broilers only).

b) In case of borrowers where quantum of loan is huge, such borrowers should

submit monthly production, sales and expenditure statements.

c) All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this
manual are also applicable.

24.9 WORKING CAPITAL REQUIREMENTS FOR POULTRY UNITS:

The practice that is widely prevalent is to capitalize items of expenditure recurring

in nature for one cycle under term loan itself. But as input suppliers demand
advance payment and output takers are making payments after a lead time and in
order to keep the unit working, there is a need to consider working capital
requirements in addition to term loan.

It should be noted that working capital finance facility can be extended to such units
after undertaking case to case analysis and depending upon requirements taking into
account the local situation.

24.9.1 METHODOLOGY OF ASSESSING WORKING CAPITAL REQUIREMENT:

(i) FOR LAYER FARM:

Additional working capital requirement may be calculated based on following

methodology, over and above the working capital costs capitalized.

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a) Cost of inputs for one extra batch such as:

i) Cost of day old chicks

ii) Feed cost of 7-7.5 kgs feed/bird
iii) Cost of labour for first 5 months
iv) Cost of medicines & vaccines for first 5 months.
v) Misc. costs - costs of litter, electricity, water, etc, for first 5 months.
vi) Any other costs up to point of lay.
vii) Receivables - Egg sales of one week.

b) For units which are manufacturing own feed, limit may be considered
towards purchase of following inputs in addition to items a(i) to a(vii) above
except a(ii).

i) Maize :For 6 months requirement

ii) Rice bran :For 4 months requirement
iii) Rice polish :For 4 months requirement
iv) Groundnut Cakes :For 4 months requirement
v) Soya meal :For 4 months requirement
vi) Other oil cakes :For 4 months requirement
vii) Fish meal :For 2 months requirement
viii) Vitamins & minerals :For 4 months requirement

If already OCC limit has been sanctioned, the limit for units manufacturing
their own feed may be provided as key shut cash credit (KCC). The limit should
be arrived accordingly to the proportion as per feed mixing formula.

(ii) FOR BROILER FARMS - WORKING CAPITAL ASSESSMENT:

In case of broiler farms, expenses towards chicks, feeds, medicines are to be

capitalised till the point of achieving break even. Working capital loan needs to be
given to one batch of day old chicks and its insurance, feed and medicine cost for
all batches on the farm till next batch of birds is culled and also a provision for sundry
debtors to the tune of 25% of the monthly sales.

For example in case of broiler farms, where batches are inducted fortnightly, breakeven
point is achieved at 10th week after induction of first batch. In effect, 5 batches
would have been inducted and two batches would have been culled. This amounts to
18 weeks of start period and 8 weeks of finish period for various batches inducted.
Hence the cost of chicks, feeds, vaccination and medication, etc, needs to be
capitalised till the second batch of birds are culled.

216
 In addition to the capitalised cost, working capital limit by way of OCC may be
considered for following items:
(i) Cost of one batch of day old chicks and its insurance.
(ii) Feed & medicine costs for all batches on the farm for a period of 2 weeks.
(iii) Provision for sundry debtors to the tune of 25% of monthly sales.

24.9.2 A model for working out the working capital requirement of a layer and broiler farm
are worked out in the Annexure -36.

24.9.3 Branches should note the following while sanctioning working capital limits for
poultry units.

i. The project should have been fully implemented and working satisfactorily.
ii. There should be no overdues in the existing accounts and all the sanction terms
and conditions are complied with. If overdues exist on account of certain
genuine reasons, proposals for WC requirement of such accounts to be taken
up with next higher authority.
iii. WC limit is to be made available only after satisfactory utilization of
capitalized costs by the borrower as per project envisaged.
iv. For arriving at the drawing limit branch should carefully study the flock
replacement schedule and should verify whether the borrower has inducted
batch for brooding as per schedule. Drawing limit is to be arrived on the basis of
flock strength of the chicks at brooder and grower stage on the farm, age of the
chicks, their feed requirements, etc, after providing sufficient margin as per
existing guidelines.
v. Value of eggs is not to be included in the stock statement.
vi. When OCC limits are sanctioned, monthly inspections are to be conducted and
all other terms applicable to OCC limits have to be followed for these limits also.
vii. The documents as applicable to other OCC loans are to be obtained.
viii. OCC limits be granted to both broiler/layer farms with a tenability of one
year.
ix. All other guidelines as applicable to poultry loans/OCC advances/WC limits
as per this Manual and manual on working capital finance updated till 30.06.2005
are to be adhered to.

24.10. GUIDELINES ON WAIVER OF INSURANCE OF POULTRY BIRDS:

As per guidelines, all the assets created out of Bank finance (fixed assets like Buildings/
Sheds, cages and current assets like feed raw material, birds etc) have to be insured to
protect the Bank’s interest in the event of any adverse scenario. However the same can
be waived by the next higher authorities.

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In case of poultry loan accounts, the matter of insurance of birds has often been viewed
in the backdrop of issues and perceived difficulties like high premium, unfavorable
terms of settlement etc. It is observed that in case of poultry loans the credit
proposals are often accompanied by proposals for waiver of insurance of birds. Hence,
to facilitate decision making process, Branches/Offices may adhere to the following
guidelines:

1. A scoring Matrix as per the format furnished in the Annexure-37 is to be prepared

2. Waiver of insurance of birds may be permitted by the sanctioning authorities

themselves subject to satisfying the following conditions –

i) Scoring more than 75 as per the scoring matrix advised in Annexure -37.

ii) Availability of security by way immoveable property/ies secured by mortgage

to a minimum extent of 150% of the loan/exposure as Prime and collateral
securities

3. In other cases where the above stipulations (Para 2) are not satisfied, the power
for waiver of insurance will vest with the next higher authority.

4. Wherever waiver of insurance cover for the poultry birds is waived, a corpus fund
at individual account/borrower level should be stipulated as a collateral as
under:

i) The creation of a corpus fund will be by way of a Recurring Deposit (converted

to KDR at certain intervals) as a risk mitigant and tide over any contingency.

ii) The amount of corpus fund will be based on the surplus generated by the unit.
The indicative monthly RD arrived at based on the approximate surplus that
the unit will be able to achieve is given in the following cases:

Type of Poultry farm Annual RD amount Monthly RD

Commercial Layer 1.50% of the Loan Amt 0.125% of Loan Amount
Commercial Broiler 3% of the Loan Amount 0.25% of the Loan Amount
Parent Broiler 2.5% of the loan Amount 0.20% of the Loan Amount

iii) A maximum of Rs.50000/- per month per unit may be stipulated in general,
even if the calculated amount is more than Rs.50, 000/-.

iv) However based on the profitability of the units, the Sanctioning Authority/
Next Higher Authority as the case may be, may stipulate a higher RD also

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 taking into account other parameters like availability of security, past
dealings and performance of the unit.

v) The RD (and KDR made out of RD at certain intervals) should continue to be

held as collateral security during the pendency of the loan. Every care should
be taken to ensure that RD is continued without any break.

vi) Even where the RDs mature, the same shall continue to be held as collateral
security by converting it as a KDR, during the pendency of the Loan.

vii) No VSL / OD loan shall be granted against the RD/ KDR held as collateral
security.

viii)The corpus fund(in part/full) may be utilized to tide over any contingency
arising from loss of any batch of birds and for replacement of birds/start up
inventory of such a batch but it should be permitted in exceptional
circumstances very selectively, only by the Circle Head(for loans up to Circle
Head powers) /concerned Sanctioning authorities at HO

24.11CHECK LIST FOR POULTRY/DUCK REARING LOANS

1. APPLICATION PARTICULARS:

a) Whether the applicant has furnished all the particulars in the application form?
b) Whether the applicant is small/marginal/big farmer or agricultural labourer?
c) Whether the past dealings of the party are satisfactory?

2. TECHNICAL ASPECTS:

a) Whether location of the farm is ideal from the point of view of marketing,
veterinary aid etc.
b) Whether the breed of bird proposed to be purchased suits the climate of the area?
Whether the performance of the breed is satisfactory.
c) What is the need for purchasing additional birds?
d) Whether the present accommodation including brooder / grower / layer house
is sufficient for existing as well as the birds proposed to be purchased?
e) Whether there is adequate supply of good drinking water?
f) Whether the party is having sufficient experience in the line of activity?
g) Whether electricity is available?

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h) Whether minimum distance of 500 ft. is maintained between poultry layer and
broiler units? Whether sufficient distance is maintained between brooder, grower
and layer sheds.
i) Whether breed characteristics are specified.

3. ECONOMIC ASPECTS:

a) Whether there are adequate marketing arrangements to market the produce?

Whether the applicant has made definite arrangements to supply the regular
consumers such as large hotels, hostels or with any co-operative marketing
society from whom arrangements can be made by the bank to receive the sale
proceeds directly?
b) What is the anticipated income from the proposed activity?
c) Whether the net surplus available is sufficient to repay the loan after meeting the
household expenses?
d) Whether the cost of production, yield anticipated and income compare well
with the average figure in the area?
e) In case of project lending, detailed cash flow has to be worked out. Average DSCR
should be not less than 1.5.
f) Whether repayment and grace period is fixed on the basis of realistic cash flow
analysis.

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 CHAPTER – 25

PIGGERY LOAN

25.1 PURPOSE:

Piggery loans are sanctioned for improving/establishing piggery farms for fattening/
breeding including purchase of boars, sows, feeds and construction of pig sty.

25.2 ELIGIBILITY:

i. There should be sufficient accommodation for the existing animals as well as

those proposed to be purchased.
ii. Veterinary assistance should be readily available.
iii. Suitable breeds of pigs should be easily available.
iv. Feeds should be easily available at reasonable cost.
v. There should be good demand for pork, bacon, ham and sausage.
vi. Necessary permission from municipal authorities wherever needed.

25.3. TERMS OF THE LOANS:

Branches to adhere to guidelines advised in Chapter 2 of this manual in respect of the

following:

25.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

25.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

25.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

25.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

The following terms will be as per guidelines specified in Chapters 3 & 4 of the Manual
in addition to the Note.

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25.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

25.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

25.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

25.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

The Branch Manager/AEO/Officer should conduct pre-sanction visit to assess the

economic viability and technical feasibility of the proposal. During farm inspection,
among others, the following details should be noted:

i) Applicant's experience/knowledge in pig farming.

ii) Accommodation for the existing animals as well as for those to be purchased.
iii) Demand for piggery products in the area-whether the applicant would be able to
get good price and have enough surplus after meeting household expenses.
iv) Marketing arrangements-whether the applicant has made a definite marketing
arrangement to supply to regular consumers such as big hotels, hostels or with
any co-operative marketing society from whom arrangements could be made by
the bank to receive sale proceeds directly.
v) Availability of feeds at all times and at reasonable costs.
vi) Availability of piglets of suitable breeds according to the production plan of the
farmer.

25.5 DISBURSEMENT:

As far as possible disbursement should be made to the vendors/suppliers directly

against stamped receipts. In case it is not possible to make payment directly to the
suppliers for any valid reasons, and/or the farmers have to go to distant places for
purchase of animals, disbursement may be made to them.

Later, the animals should be inspected without fail within 30 days from the date of
disbursement.

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25.6 REPAYMENT PERIOD:

i) When the loan is granted for breeding of pigs for production of piglets for sale &
construction of pig sty, loan should be repaid within 4-5 years in yearly instalments
including initial repayment holiday of 12 months.

ii) When the loan granted is for purchase of piglets for fattening, loan should be
repaid in one lump sum within 12 months or marketing, whichever is earlier.

25.7 POST-SANCTION & FOLLOW UP VISITS :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

25.8 OTHER CONDITIONS:

i. For identification of animals hypothecated to the bank, the animals are to be

tattooed with indelible ink or ear tagged. This should be noted in the
hypothecation agreement. Wherever earlier tattoo marks or ear tags are
missing, fresh ear tags should be used for the animals, if it is difficult to
tattoo again. Branches have to duly note the new tag number in the ledger apart
from writing to Insurance Company by Regd. Post AD explaining the reasons for
fixing new tag and requesting them to note the same in their records. There is no
need to obtain fresh hypothecation agreement under the above circumstances.
ii. Veterinary Doctors Certificate should be obtained wherever insurance has
been stipulated and also where the sanctioning authority has stipulated the
same in the terms and conditions of the sanction.
iii. All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this
manual are also applicable.

25.9 CHECKLIST FOR PIGGERY LOAN

APPLICATION PARTICULARS:

a) Whether the applicant has furnished all the particulars in the application form?
b) Whether the applicant is small/marginal/big farmer or agricultural labourer?
c) Whether the past dealings of the party are satisfactory?

TECHNICAL ASPECTS:

a) Whether location of the farm is ideal from the point of view of marketing,
veterinary aid, etc.?

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b) Whether the breed of animal proposed to be purchased suits the climate of the
area?
c) What is the need for purchasing additional animals?
d) Whether the present accommodation is sufficient for existing as well as the
animals proposed to be purchased?
e) Whether there is sufficient space for exercise/wallowing for the animals?
f) Whether there is adequate supply of water?
g) Whether the party is having sufficient experience in the line of activity?

ECONOMIC ASPECTS:

a) Whether there are adequate marketing arrangements to market the produce?

What is the anticipated income from the proposed activity?
b) Whether the net surplus available is sufficient to repay the loan after meeting the
household expenses?
c) Whether the cost of production, yield, anticipated income compare well with the
average figure in the area?

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 CHAPTER – 26

BEE KEEPING (APICULTURE)

26.1 PURPOSE:

The loans are considered for purchase of equipment such as bee boxes, bee hives,
honey extractor and smokers, bee colonies, foundation combs, sugar, etc., for
rearing bees.

26.2 ELIGIBILITY:

The applicant should have experience/knowledge in the activity.

The cropping pattern of the area should be suitable so as to have sufficient
availability of flower throughout the year and there should be facilities for migration
of bees.

26.3. TERMS OF THE LOANS:

Branches to adhere to guidelines advised in Chapter 2 of this manual in respect of the

following:

26.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

26.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

26.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

26.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

The following terms will be as per guidelines specified in Chapters 3 & 4 of the Manual
in addition to the following Note/s.

26.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

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26.4.2 Application and enclosures:

As per Annexure-18.

26.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

26.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

The Branch Manager/AEO/Officer should undertake pre-sanction visit to the farm where
the borrower proposes to set up the bee colonies to assess the technical feasibility and
economic viability. During inspection, the aspects mentioned in checklist should be
looked into, among other things.

26.5 DISBURSEMENT:

As far as possible, the loan amount should be disbursed directly to the suppliers of
equipments, bee colonies, etc. Usually, KVIC arranges for supply of required
equipments.

26.6 REPAYMENT :

The loan should be repaid in 3 to 4 years in annual instalments with an initial holiday
period of 1 year. However, as the parties will be getting the benefit of increased
production by cross pollination, the loan may be recovered from the sale proceeds
of crops also.

26.7 POST-SANCTION & FOLLOW UP VISITS:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

26.8 OTHER CONDITIONS:

All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this manual are
also applicable.

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26.9 CHECKLIST FOR BEE KEEPING

APPLICATION PARTICULARS:

a) Whether the applicant has furnished all the particulars in the application form?
b) Whether the applicant is a small/marginal/big farmer or agricultural labourer?
c) Whether the past dealings of the party are satisfactory?

TECHNICAL ASPECTS:

a) Whether there is availability of flowering plants throughout the year. If not, what
are the arrangements made by the party during the off-season?
b) Whether adequate facilities are available for migration of bees?
c) Whether bee colonies and other required equipments are available?
d) Whether any extension support from KVIC/KVIB is available?
e) Whether there is any benefit of cross pollination?

ECONOMIC ASPECTS:

a) Whether there are adequate marketing arrangements to market the produce?

b) What is the anticipated income from the proposed activity?
c) Whether the net surplus available is sufficient to repay the loan after meeting the
household expenses?
d) Whether the cost of production yield anticipated and income compare well with
the average figure in the area?

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 CHAPTER – 27

FISHERIES LOAN

There are two types of fishery loans extended to farmers.

i. Marine Fisheries
a) Finance for fishing boats
b) Finance for fishing vessel

ii. Inland fisheries

27.1. MARINE FISHERIES:

27.1.1.PURPOSE:

i. For purchase / construction of mechanized boats.

ii. Mechanization of country boats with inboard / outboard engine.
iii. Non-mechanized boats.
iv. Catamarans.
v. Nets and other fishing equipments.

Need based working capital requirement for two voyages comprising fuel and oil
costs, consumables and stores, salary and crew wages, repairs and maintenance costs,
processing and storage costs are considered as a separate short term loan or as a
composite loan along with term loan.

27.1.2. ELIGIBILITY:

i. The applicant should be well experienced / professional fishermen.

ii. Applicant should be able to manage the craft and have trained crew to
operate the craft / vessel. Skilled crew members should be available in the
area.
iii. The applicant should be local resident and the place of residence of applicant
should be within 16 KM’s from the branch.
iv. There should be good potential fishing grounds in the command area of coastal
tracts and fish varieties which have good demand (inland / export) should be
available in large quantities.
v. There should be adequate harbour facilities for landing, berthing and sheltering
of boats.

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vi. The area should be well served by rail and road network to facilitate quick
transport of fish catch to the processing/marketing centres.
vii. Adequate servicing and repairing facilities for the craft should be available.
viii. There should be adequate cold storage / processing / freezing / canning
facilities. For marketing, refrigerated and insulated transport vehicles must be
available.
ix. The party should be preferably a member of Fish Marketing Federation, which
assists the fishermen for marketing the catch and also undertakes to remit the
sale proceeds to the bank.

27.1.3. TERMS OF THE LOANS:

Branches to adhere to guidelines advised in Chapter 2 of this manual in respect of the

following:

27.1.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

27.1.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

27.1.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

27.1.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

27.1.4.1 Documents to be produced by the applicant:

In addition to guidelines as advised in Chapter 4 Item 4.3 of this Manual, following

additional documents has to be produced by the applicant:

a) Copy of license / inspection certificate issued by port authority of the area.

b) Copy of the Registration certificate issued by Marine Products Export
Development Authority (MPEDA) and from Fisheries Department wherever
necessary.
c) Proforma invoice / estimate for the boat to be purchased / constructed.

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27.1.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

27.1.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

27.1.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

Branch Manager / AEO / Officer should undertake pre sanction visit to assess the
technical feasibility and economical viability of the proposal. Further, discrete
enquiries are to be made with the port authority, Dept. of Fisheries as to the viability
of the proposal having regard to the number of boats in operation, other
infrastructural facilities available, potential etc.

27.1.5 DISBURSEMENT:

Loans should be disbursed directly to builders and suppliers of boats & other
accessories. The loan amount for construction of boat should be disbursed in
stages depending on progress of work. Bills/vouchers/stamped receipt obtained for
the full cost of the asset should be lodged with loan papers.

27.1.6 REPAYMENT:

The loan is repayable in 4-7 years for non-mechanized boat and 8-12 years for
mechanized boats in monthly instalments spread over the fishing season. Repayment
holiday upto 4 months in a year during off-season (monsoon season) may be
permitted.

27.1. 7 POST-SANCTION & FOLLOW UP VISITS :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

27.8 OTHER CONDITIONS:

i. Our lien on the boat should be registered with Port Authorities \ MPEDA and
also with State Fisheries Dept., wherever the boat is registered under State Act
also. Duplicate keys of the boat should be lodged with the loan papers.

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 ii. Tripartite agreement among the borrower, our Bank and the vessel builder should
be executed to ensure that the vessel is built in time as per the agreed terms and
conditions. The agreement is to be approved by R & L section of the concerned
circle office.

iii. All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this
manual are also applicable.

27.2. FINANCING FOR DEEP SEA FISHING VESSELS:

27.2.1. PURPOSE:

Loans are sanctioned for purchase/construction of vessels / trawlers, fishing

equipments. Need based working capital requirement of two voyages comprising of
fuel and oil costs, consumables and stocks, processing and storage costs are
considered as separate short term loan or as composite loan along with term loan.

As per the definition given by NABARD, fishing vessel having a OAL (overall length) of
15 meters to 25 meters are termed as medium vessel and those above 25 meters are
termed as Deep Sea Fishing Vessel.

27.2.2. ELIGIBILITY:

a) Promoters should be having long standing experience in the line of fishing activity
and/or one of the promoters must be a qualified skipper.
b) The vessel proposed to be built/acquired should be designed to catch fishes
like tuna, squids, lobster etc.
c) Adequate potential for catches should be available in the area.
d) There should be adequate harbour facility for landing, berthing and sheltering
of the vessel.
e) The area should be well served by rail and road network to facilitate quick
transport of fish catch to the processing/marketing centre.
f) Adequate facility for servicing any repairs for the vessel should be available in the
area.

27.2.3. TERMS OF THE LOANS:

The following terms will be as per guidelines specified in Chapter 2 of the Manual in
addition to the following Note/s

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27.2.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

27.2.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

Besides, Personal guarantee of Directors in respect of advances made to limited

companies.

27.2.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

27.2.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

The following terms will be as per guidelines specified in Chapters 3 & 4 of the
Manual in addition to the following Note/s

27.2.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

27.2.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

27.2.4.3 Documents to be executed by the applicant:

The following documents are to be executed in consultation with R & L section,

Circle Office:

a) Tripartite agreement among the vessel builder, borrower and the bank.
b) Performance guarantee / letter of undertaking from the vessel builder with
regard to construction of vessel as per specification and delivering the same
within the stipulated time.
c) NF 481 - pronote and take delivery letter.
d) Other related documents for creating charge on the assets of the company with
registrar of companies.

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27.2.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

Branch Manager / AEO / Officer should undertake pre sanction visit to assess the
technical feasibility and economic viability of the proposal. During pre-sanction
visit the scope for off-shore fishing / availability of catches should be carefully
assessed or otherwise it will have bearing on the economics of the scheme and
repayment schedule.

27.2.5. DISBURSEMENT:

Loans are to be disbursed only after borrower invests their margin and it should be
paid to vessel builder as first instalment and the end use of this amount should be
ensured. Loan should be released in stages depending upon the progress of the vessel
under construction and the final instalment of 10-15% of the cost is to be paid to the
builder only at the time of delivery.

The vessel building yard is to be visited and satisfied that the builders are having
adequate infrastructure to construct the vessel. Bills / vouchers / stamped receipt
obtained for the full cost of the assets should be lodged with loan papers.

27.2.6 REPAYMENT:

Entire loan is to be repaid within a maximum period of 8 years in monthly/quarterly

instalments, with one year repayment holiday.

27.2.7 OTHER CONDITIONS:

i. Second hand vessel should not be financed.

ii. The debt equity ratio of the firm should not be less than 3: 1.
iii. The stability and other aspects related to construction parameters are to be
checked up. Hence for this purpose, suitable / qualified personnel (licensed
surveyor or naval architect) are to be identified to undertake inspection and
valuation of the vessel under construction. The inspection report/valuation
certificate to this effect is to be obtained. Inspection / valuation of the vessel
can also be entrusted to Central Institute of Fisheries Technology (CIFT) or other
types of institutions who undertake valuation works. The inspection fee etc. should
be borne by the party.
iv. Tripartite agreement among the borrower, our Bank and the vessel builder should
be executed to ensure that the vessel is built in time as per the agreed terms and

233
 conditions. The agreement is to be approved by R & L section of the concerned
circle office.
v. Promoters have to submit the statement indicating the voyage-wise details
regarding catches, expenditure, etc.
vi. The proposal is to be appraised by the technical committee consisting of
representatives of NABARD, Fishery survey of India, Central Institute of
Fisheries, Nautical and Engineering Training/Integrated Fisheries Project, MPEDA
and Ministry of Agriculture in respect of vessels of 20 meters and above.
Wherever appraisal is not being done by the above committee the project has to
be appraised in consultation with the expertise available in the field like CIFT,
CMFRI etc.
vii. In respect of advances to Companies, all our norms applicable to such advances
are to be adhered.

viii. All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this
manual are also applicable.

27.2.8. INSURANCE:

As per the definition given by NABARD, fishing vessel having a OAL (overall length) of
15 meters to 25 meters are termed as medium vessel and those above 25 meters are
termed as Deep Sea Fishing Vessel.

a) INSURANCE COVER FOR MEDIUM SIZE VESSEL:

The insurance cover should be comprehensive having SRCC clause and cover marine
and fire risk for total loss, constructive loss, salvage charges due and labour
charges, whereas for hull and engine, the insurance coverage is only for partial loss to
cover damages which may occur due to collision.

In case the vessel is to be operated even during off- season (monsoon period)
off-season risk cover at an additional premium should be taken.

Whenever parties intend plying the vessel in more than any one zone, an additional
risk is to be covered by paying premium to cover the plying in more than one zone.

b) DEEP SEA FISHING VESSEL:

Insurance cover should be obtained for the full value of the vessel.
The risks to be covered by comprehensive policy should include risk against war,
strike, riots and civil commotion.

234
As in the case of medium size vessel, the insurance cover for partial loss is to be
taken only for hull and engine to cover any damage that may occur due to collision.

NOTE : Insurance cover for fishing nets need not be insisted in both the cases.

27.2.9 POST SANCTION VISIT:

Before every stage of disbursement, branch should inspect the vessel in the
construction yard to satisfy about the progress in construction of the vessel. Branch
should send its inspection report to respective CO after each inspection along with
valuation certificate given by the approved valuer.

27.2.10 FOLLOW UP VISITS:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

27.2.11. PROCEDURE FOR VERIFICATION OF STOCK:

Branches have to verify the stock as follows in respect of loans granted for Deep Sea
Fishing Vessel.

i) Verify the stock on board of the vessel at the time of unloading the catch at
jetty.
OR
ii) Verify the stock by sample checking and based on records maintained for
submission to appropriate authority.

Parties have to submit monthly statement as per Annexure-38. Branches have to visit
the site at the time of unloading on a random basis and such visits shall not be less than
3 in a year. Further, branches have to watch over the movement of goods
hypothecated to Bank besides verifying export documents to ascertain the value of
export of catches and the quantity exported. The borrower has to maintain daily
production, catches sold/exported and stored statement. This should be verified by
the financing branch and satisfy that whatever party has declared in the statement is
correct.

The above procedure of verification of stock is applicable to deep sea fishing activities
where the catches are stored below zero degree temperature.

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27.3. INLAND FISHERIES :

27.3.1. PURPOSE:

Loans are sanctioned for rearing of fishes in all its aspects i.e. such as construction/
deepening/widening desilting of ponds, purchase of fingerlings, equipments,
manures, feeds and labour inputs.

27.3.2. ELIGIBILITY:

i. The applicant should be experienced / professional fisherman/ trained

entrepreneur.
ii. The applicant should own/take on lease land/water tanks/swamps brackish
water areas.
iii. Technical guidance from Fisheries Dept. should be available.
iv. Fingerlings should be easily available.
v. The area should be well served by rail/road to facilitate quick transport of fish
catches to processing/marketing centres.
vi. There should be adequate cold storage/processing/freezing/ canning facilities.
Refrigerated and insulated transport vehicles must be available for marketing
the products.

27.3.3 TERMS OF THE LOANS:

27.3.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

27.3.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to. Branches
may also note the following:

For loans granted for construction/deepening of tank, the security norms will be as
advised in the farm development loan of this manual.

In case of composite loans, Eg. Construction of pond+ rearing of fish, if the

development loan component exceeds Rs. 100,000/-, mortgage of landed property
is required.

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27.3.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

27.3.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

The following terms will be as per guidelines specified in Chapter 3 & 4 of this
Manual in addition to the following Note/s.

27.3.4.1 Documents to be produced by the applicant:

27.3.4.2 Application and enclosures:

27.3.4.3 Documents to be executed by the applicant:

27.3.4.4 Pre sanction visit:

Note: Branch Manager / AEO / Officer should visit the farm to assess the technical
feasibility and economic viability of the proposal. During the inspection, the
following details are to be observed:
a) Suitability of the pond and water for fish culture.
b) Availability of infrastructural facilities such as fingerlings, fertilizers, manure,
labour, marketing facility.
c) Availability of technical guidance from MPEDA/Fisheries Dept. of State Govt.

27.3.5 DISBURSEMENT:

Loans are to be disbursed directly to suppliers of equipment, fingerlings as far as

possible. In respect of loans for development of tank/pond, loan is to be disbursed
in stages depending upon the progress of work. Before making each disbursement,
Manager/AEO/Officer should visit the farm and satisfy themselves regarding the
progress of work made.

27.3.6 REPAYMENT:

1. Loan for purchase of fingerlings, manuring of ponds etc. shall be repaid as

follows:
a) Culturing of shrimps: Loan is to be repaid in one year with 2 or 3 equal
instalments and first of such instalments shall fall due after 4 months from
the date of stocking.
b) Culturing of fishes: Loan is to be repaid within one year in one lumpsum or
after harvest of fishes whichever is earlier.

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 2. Loans granted for repairing / desilting of tanks are to be repaid in 5-8 years in
case of pond fish culture and 5-10 years for brackish water fish / prawn culture
in half yearly instalments with an initial repayment holiday of 11 months. The
due dates of instalment should always coincide with the period of harvest of
shrimps / fishes.

27.3.7 POST-SANCTION & FOLLOW UP VISITS :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

27.3.8 INSURANCE:

Insurance cover cannot be waived where insurance of vehicles or machinery or other

equipment/ assets is compulsory under the provisions of any law or where such a
requirement is stipulated in the refinance scheme of any refinancing agency or as
a part of a government sponsored programme such as SGSY/NRLM etc. insurance
should be obtained compulsorily irrespective of the loan amount.

However, Sanctioning Authority may waive Insurance cover on fish crops and bund
structures in respect of Working Capital limits for Inland Fisheries Projects, subject to
the following:

i) Obtention of a corpus Fund as collateral at the rate of 3% of the limit.

ii) If the limit/loan is secured by way of Immovable Properties for minimum of 100%
of the exposure.
iii) Experience of the borrower in the line of Inland fisheries for 3 years and above.
iv) Satisfactory past dealings of the borrower for more than 3 years.

In case any of the above conditions is/are not satisfied, the proposal for waiver of
insurance should be referred to the next higher authority as per usual guidelines.

27.3.9 OTHER CONDITIONS:

All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this manual
are also applicable.

27.4. CHECKLIST OF INLAND & MARINE FISHERIES :

APPLICATION PARTICULARS:

a) Whether the applicant has furnished all the particulars in the application form?

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b) Whether the applicant is small/marginal/big farmer or agricultural labourer?
c) Whether the past dealings of the party are satisfactory?

TECHNICAL ASPECTS:

i) MARINE FISHERIES:

a) The number of days of operation expected.

b) Distance of fishing ground from operation base.
c) Availability of fishes in the operation bases.
d) Whether any embargo has been imposed by the state government for introduction
of new boats?
e) Facilities available for repairs, servicing, berthing, etc. for the boat and the
engine.
f) Whether there are adequate arrangements for marketing/ processing units
including freezing, ice plants, etc.?

ii) INLAND FISHERIES:

a) Whether the site selected and water are suitable for the activity?
b) Whether the supply of fingerlings is assured?
c) Whether there are adequate processing/marketing facilities?

3. ECONOMIC ASPECTS:

a) Whether there are adequate marketing arrangements to market the produce?

b) What is the anticipated income from the proposed activity?
c) Whether the net surplus available is sufficient to repay the loan after meeting
the household expenses?
d) Whether the cost of production, yield anticipated and income compare well
with the average figure in the area?

27.5 CHECKLIST FOR FINANCING DEEP SEA FISHING ACTIVITIES :

1. Whether the party has obtained permission from appropriate authorities for
import of vessels (wherever applicable)?
2. Whenever vessels are to be imported whether satisfactory OPL about the foreign
suppliers / builders has been obtained?
3. Whether the project has been appraised by the technical committee (while
importing vessel) appointed by the Ministry of Agriculture?

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4. Whether the trawler builder is having adequate infrastructure and experience
to build trawler as envisaged?
5. Whether clearance from RBI/Ministry has been obtained for utilising the services
of foreign crew?
6. Whether one of the promoters is a qualified skipper?
7. Whether cold storage facilities are available at on-board and off-board?
8. Whether adequate arrangements made for on-board processing / off-board
processing wherever processed catches are proposed to be exported?
9. Whether adequate harbour facility / repairs / dry-docking facilities available?
10. Whether expert's opinion regarding potentialities of catches available in the
proposed fishing grounds of the project is available?
11. Whether price of catches proposed to be sold/exported assumed in the project
is realistic having regard to the prevailing market price?
12. Whether proportion of different types of catches and their quantity assumed is
realistic?
13. Whether number of voyages proposed to be undertaken and catches per voyage
assumed in the project is realistic having regard to the potentiality available,
provisions made for dry docking, repairs, etc.?
14. Whether financial statements have been furnished by the party and sources of
meeting the margin has been satisfied?
15. Whether security of immovable properties to the extent of 50% of loan is
available and whether the party is having valid title to mortgage these
properties?
16. Whether tripartite agreement has been entered between the trawler builder,
borrower and the bank (wherever applicable) and such agreement covers the
following clauses, among other things:
a) Specific time to deliver the trawler and penalty payable by the builder in
case of delay.
b) Borrower authorizing the bank to directly remit the loan proceeds to the
builder.
c) Builder to undertake insurance cover.
d) Builder to furnish performance guarantee.
17. Whether value of vessel under construction have been assessed by the experts
(licensed surveyor or naval architect or experts from CIFT/other institutions)?
18. After completion of construction whenever indigenously built or arrival of the
trawler to Indian Coast whether registration as per Merchant Shipping Act
formalities have been completed?
19. Whether charge on the vessel in our favour has been created with the
authorities?
20. Whether insurance cover on vessel has been taken and our lien has been noted?

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27.6 National Fisheries Development Board (NFDB)

National Fisheries Development Board (NFDB) is set up by Government of India during

2006 to give a fillip to fisheries development with the main objective of improving the
production and productivity, processing, storage, transport and marketing of products
of culture and capture fisheries thereby creating a platform for nutritional and food
security, employment generation and export earnings. Recognizing the importance of
fisheries development in the private sector as well as in the public sector through
Public Private Participation (PPP) mode, NFDB has taken up various developmental
initiatives for the overall development of the sector.

The Board with the approval of GOI has introduced a number of subsidy schemes for
supporting activities like intensive aquaculture in ponds and tanks, Mari culture, coastal
aquaculture, seaweed cultivation, fish dressing centers & solar drying of fish, domestic
marketing, deep sea fishing, tuna fishing etc.

The details of these programmes / schemes and the formats of the application are
available in the NFDB website www.nfdb.ap.nic.in. Under the scheme, the individual
beneficiaries, companies/ corporate firms, SHGs, Fisheries Cooperative Societies, Fishery
Federations etc., will be provided with a subsidy ranging from 20% - 50% as the case
may be. The subsidy will be back ended and not necessarily credit linked and the
implementation will be monitored by the respective State Fisheries Departments. The
subsidy will be released by the NFDB, Hyderabad through the respective State Fisheries
Departments which are the implementing agencies.

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 CHAPTER – 28

SERICULTURE LOAN

28.1. PURPOSE:

The loans are granted for cultivation of mulberry, rearing of silk worms, construction
of rearing house, purchase of equipments and purchase of wire mesh.

28.2. ELIGIBILITY:

i. The applicant should obtain license or permission from the sericulture

department for rearing silk worms in the area, wherever required.

ii. Technical assistance from sericulture department or any other organizations dealing
with sericulture development should be available on continuous basis.

28.3. TERMS OF THE LOANS:

The following terms will be as per guidelines specified in Chapter 2 of the Manual

28.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

28.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

28.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

28.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

The following terms will be as per guidelines specified in Chapters 3 & 4 of the
Manual and subject to Note/s

28.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

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28.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

28.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

28.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

Branch Manager / AEO / Officer should visit the farm to assess the technical
feasibility and economic viability of the proposal. During the inspection, the
following details are to be observed:

a) Suitability of the climate for taking up sericulture activity.

b) Availability of infrastructural facilities such as assured marketing, disease free
layings, equipments, labour, etc.
c) Borrower’s experience / knowledge in sericulture.

28.5 DISBURSEMENT:

As far as possible disbursement is to be made directly to the supplier of equipments.

In case of loan for construction of rearing house, the same may be disbursed in stages
depending on the progress of the work.

28.6 REPAYMENT :

The loan for cultivation of Mulberry, rearing of silk worms, construction of rearing
house, purchase of equipments, etc. is repayable in 3 to 7 years in half yearly
instalments including a gestation period of 11 months.

The loans granted for cultivation of mulberry and silkworm rearing should be
recovered within a year by quarterly instalments or marketing of cocoons whichever
is earlier.

28.7 POST-SANCTION & FOLLOW UP VISITS :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

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28.8 OTHER CONDITIONS:

All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this manual are
also applicable.

28.9 CHECKLIST FOR SERICULTURE LOANS :

1. APPLICATION PARTICULARS

a) Whether the applicant has furnished all the particulars in the application form?
b) Whether the applicant is a small / marginal or agricultural labourer?
c) Whether the past dealings of the party are satisfactory?

2. TECHNICAL ASPECTS:

a) Whether the party is having sufficient experience in the line of activity?

b) Whether disease free layings and equipments are readily and easily available?
c) Whether labour is readily available as the activity is a labour intensive one?
d) Whether the climate of the area is suitable for raising mulberry crop and rearing
silk worms?
e) Whether technical know-how from the concerned department is available?

3. ECONOMIC ASPECTS:

a) Whether there are adequate marketing arrangements to market the produce?

b) What is the anticipated income from the proposed activity?
c) Whether the surplus available is sufficient to repay the loan after meeting the
household expenses?
d) Whether the cost of production, yield anticipated and income compare well with
the average figure in the area?

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 CHAPTER – 29

BIOGAS PLANT LOAN

29.1 PURPOSE:

The loans are considered for digging pits, masonry work, purchase of gas holder, gas
stove, pipelines, accessories and other installation charges.

29.2. ELIGIBILITY :

i. The applicant must have sufficient number of cattle to feed the Bio-gas plant
with cow dung.
ii. There should be sufficient accommodation for the animals and adequate
arrangements for the fodder besides requisite water source.
iii. Technical guidance from KVIC / KVIB / BDO / Dept. of Agriculture should be
ensured for selection of site, erection / installation of the gas plant and also for
its periodical inspection.
iv. The party should produce technical feasibility certificate from KVIC / KVIB / BDO
/ Dept. of Agriculture.

NOTE : A beneficiary who has been earlier assisted under other subsidy linked
programmes can be financed under bio-gas scheme provided he is a non-defaulter.

29.3. TERMS OF THE LOANS:

Branches to adhere to guidelines advised in Chapter 2 of this manual in respect of

margin, security and rate of interest apart from notes detailed hereunder:

29.3.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

29.3.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

29.3.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

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29.4 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

The following terms will be as per guidelines specified in Chapters 3 & 4 of the Manual
in addition to the following Note/s

29.4.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

29.4.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

29.4.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

29.4.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

Branch Manager / AEO / Officer should conduct pre-sanction visits to assess the
technical feasibility of the proposal. During the visit, the following aspects among
others, should be taken into consideration:

a) Number of livestock owned by the borrower and the quantity of cow dung
available for feeding the Bio-gas plant. While assessing the availability of
cowdung, the feeding methods (stall fed or free grazing) followed by the farmer
should be taken into account, as the quantity of cow dung available would be less
if the cows are sent out for grazing.
b) The size of the plant with regard to quantity of cow dung available.
c) Suitability of climate especially the temperature.
d) Suitability of the site of plant for digging pit.
e) Availability of any other organic waste for use in the gas plant.

29.5 DISBURSEMENT:

The loan may be disbursed in two instalments, the first instalment for excavation of
pits and on starting masonry work. The second instalment should be made to the
approved fabricators / suppliers for the cost of gas holder only after they deliver the
same and on receiving an acknowledgement from the beneficiary to this effect. Stamped
receipts for the drum and other equipments should be obtained.

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29.6 REPAYMENT :

The loan amount should be repaid in 7 years in half yearly / yearly instalment.

29.7 POST-SANCTION & FOLLOW UP VISITS :

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

29.8 OTHER CONDITIONS:

All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this manual are
also applicable.

29.9 RECTIFICATION OF FAILED BIO-GAS PLANTS :

The salient features of the scheme are as follows :

i. Loan amount for rectification of defective plants can be fixed based on the
estimates furnished by agencies such as MYRADA, Agricultural Universities, KVIC
etc., who are undertaking rectification works. Branches have to obtain technical
feasibility report / estimate from concerned agencies / Govt. Department.
ii. Loan can be granted on similar terms and conditions as being considered for the
loan granted for installation of bio-gas plants.
iii. Subsidy is available from Govt. of India for rectification of failed biogas plants.
Subsidy if available may be treated as margin and matter may be followed up with
concerned Department for its prompt release.
iv. Loans granted under the subject scheme are eligible for NABARD refinance.
v. The repayment period of existing biogas loans (excluding subsidy) may be
rescheduled depending on income of the farmer.
vi. Branches to ensure receipt of eligible subsidy for construction of plant as well as
rectifying the same.
vii. Branches can grant loan under the subject scheme on a selective basis to the
eligible borrowers.

29.10 CHECKLIST FOR BIOGAS PLANT LOAN :

APPLICATION PARTICULARS:

a. Whether the applicant has furnished all the particulars in the application form?
b. Whether the applicant is small / marginal / big farmer or agricultural labourer?
c. Whether the past dealings of the party are satisfactory?

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TECHNICAL ASPECTS :

a. Whether the number of livestock with the farmer and the quantity of cowdung
available is sufficient to feed the proposed gas plant. Any other organic waste is
available to be used for the plant.
b. Whether there is adequate availability of water to mix it with the cowdung?
c. Whether the site selected is suitable for construction of the plant?
d. Whether model proposed is suitable to local conditions.

ECONOMIC ASPECTS :

a. What are the sources of income of the farmer and the items of expenditure?
b. Whether the surplus available is sufficient to repay the loan after meeting the
house hold expenses?

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 CHAPTER – 30

SCHEME FOR FINANCING FARMERS FOR PURCHASE OF LAND FOR AGRICULTURAL

PURPOSE

30.1. PURPOSE

The scheme aims at providing term loan to small/marginal farmers including share
croppers/tenant cultivators to purchase agricultural land as well as fallow and
wasteland production/ to develop and cultivate it with a view to increase production/
productivity. It also enables them to diversify the present activities and to take up
allied activities.

30.2. ELIGIBILITY

i. Small and marginal farmers i.e., those who would own maximum of 5 acres of dry
land or 2.5 acres of irrigated land including the land to be purchased.

ii. Share' croppers / tenant farmers cultivating upto 2.5 acres of irrigated land or 5
acres of dry land as the case may be.

iii. The total land holding of the borrower after the purchase of the land under the
scheme should not exceed 2.5 acres of irrigated land or 5 acres of dry land or
equivalent.

iv. Entrepreneurs with agricultural background are also eligible (Provided State laws
permit purchase of agriculture lands by such persons)subject to the above
ceiling. Entrepreneurs/applicants should be from an agricultural family or/and
an agricultural graduate, seeking to establish an agriculture enterprise relating to
agriculture (including allied activity).

30.3. QUANTUM OF LOAN/CEILING

Maximum ceiling on loan: Rs.10 lakhs.

The quantum of loan will depend upon valuation as assessed by the Branch or Guidance
value/Circle rate fixed by the State or the registration value whichever is lower plus
value of stamp duty, registration charges for sale / mortgage deed

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30.4. TERMS OF THE LOANS:

The following terms will be as per guidelines specified in Chapter 2 of this Manual
subject to following Note.

30.4.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

Margin may be reduced to 10% by the Sanctioning Authority on merits

30.4.2 Security;

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

30.4.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

30.5 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

30.5.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

30.5.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

For appraisal branch may use additional sheets if need be. It may include besides
cost of land, value of stamp duty, registration charges for sale/mortgage deed

30.5.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

All other documents as applicable to developmental loans are to be executed.

30.5.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

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 Branch Manager / AEO / Officer should visit the farm to assess the technical feasibility
and economic viability of the proposal

30.6 DISBURSEMENT

i. The loans are disbursed in two stages. Initially, a DPN Loan will be sanctioned on
the security of the other collateral (if any) to purchase the land. Later, on receipt
of the original sale deed/certified true copy, term loan is to be disbursed on
putting through EMT. The liability under DPN to be cleared by granting term
loan.

ii. Before disbursing DPN, LSR from panel advocate on the proposed land/s to be
obtained and the lands should have clear and marketable title. LSR should be
verified and approved by the Branch. Valuation Certificate should be
obtained.

iii. All original title deeds and documents listed in LSR of the existing properties /
properties to be purchased should be obtained before disbursing the DPN limit.

iv. The LSR among other things should specify –

a. Whether the borrower qualifies for purchase of land as per the provision of
the Land Reforms Act, etc., prevailing in the State.
b. Ensuring that there are no pending legal proceedings / litigation / tax dues on
the property to be purchased.

v. The draft sale deed shall be got approved by our panel advocate before
disbursing DPN.

vi. The loan is to be disbursed by way of demand draft in favour of vendor after
collecting margin from the party or after ascertaining advance paid supported by
proof of documents.

vii. The proceeds of loan shall be directly remitted / paid to vendor at the time of
registration in the presence of sub-registrar / registering authority.

viii. An authorization letter addressed to Registering authority to be obtained from

the purchaser (borrower), authorizing the Bank to receive the original registered
documents. Wherever required borrower’s signature on the reverse of the
acknowledgement issued by the registering authority is to be obtained.

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 ix. An undertaking from the borrower to create mortgage on receipt of documents is
to be obtained.

x. Acknowledgement from the registering authority for having received the

documents / sale deed for registration should be obtained. This should be kept
with other loan documents and should not be handed over to the borrower. A true
copy of the sale deed should also be obtained from the registering authority duly
certified by him.

xi. Mortgage shall be created by taking the certified true copy of the original sale
deed (which is tendered for registration) together with lodgement of all other
original documents as per approved LSR.

xii. Once the EMT is put through based on the certified true copy of the sale deed,
there is no need to put through fresh EMT on receipt of registered original sale
deed from registering authority.

xiii. Ensure that the property offered as security is not encumbered to any of the
financial institutions by obtaining no dues certificate from them. In case the
liability exists, the arrangements to clear them before disbursing the loan is to be
clearly indicated. Branches to obtain no due certificate from the concerned Bank
/ agency.

xiv. Receipt from the vendor for having received the consideration / sale proceeds in
full shall be kept along with the loan papers.

xv. Branches should pursue the matter with the borrower / registering authority to
ensure receipt of original registered sale deed within a period of 3 months. If the
original sale deed is not received within the specified period, the same should be
reported as irregularity and accordingly reported in the concerned review return

xvi. As there is every possibility of the borrower obtaining the original registered sale
deed from the registering authority and creating EMT with other Banks / FIs, the
branches should exercise utmost caution and diligence in obtaining the same at
the earliest. The receipt of original sale deed from the registering authority is to
be noted on the ledger sheet under due authentication.

30.7. Repayment period:

1. Loan is to be repaid in 7-10 years in half yearly / yearly instalments including a

maximum moratorium period of 24 months. The moratorium period may be fixed

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 taking into account the gestation period of the project and cash flow. Interest
may be funded during gestation period in the case of those farmers where in the
income is not sufficient to service the interest. For others, the interest to be
collected on a half yearly or yearly basis to coincide with the income / instalments.

2. If the project involves further development of the land, such as long term orchard
development, the branch to fix the repayment schedule synchronizing with the
income generation.

3. The repayment schedule should be fixed with due reference to the income
generation and taking into consideration the repayment of all other loans/
advances. A minimum DSCR of 1.5 is to be ensured.

30.8 Repaying Capacity :

The branch should satisfy itself that the borrower/s would have adequate income
surplus from their production activities on the land presently owned and or being
purchased and other sources, to repay the loan with interest and the repayment period
may be fixed accordingly.

If the repayment of loan is to be made out of the other sources of income, supporting
documentary proof of the same is to be furnished or Branch Manager is to confirm the
same.

30.9 Valuation :

a) For the purpose of valuation of the land for fixing the quantum of finance the
offer price of the seller may be cross checked with average registration value
available with the Registrar / Sub-Registrar of the area and a view taken by the
Recommending Authority / Sanctioning Authority. Valuation report to be furnished
by the Manager / AEO as per prevailing norms.

b) The valuation reports from the panel valuer / technical consultant is to be

obtained for lands to be purchased and collateral security of existing immovables
offered (in those cases wherein it exceeds the power of Manager / AEO).

30.10. Sanction :

1. The delegation of powers as applicable to Agricultural Loans to be reckoned.

2. Branch Manager / AEO / Officer should conduct pre-sanction visit of the farm
proposed to be purchased and also of the existing farm offered as security

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 pre-sanction inspection report should be submitted along with the proposal indi
cating area under different crops, potential of farms and level of maintenance in
respect of existing farm which gives an indication about purchaser’s commitment.

3. Branches to examine carefully the economic viability and technical feasibility,

keeping in view the crops, market trend, productivity etc.

4. Crop history of the farm to be purchased as well as existing farms wherever to be

ascertained in the appraisal.

5. The cash flow statement for the period of repayment should be submitted.

6. Sources of margin should be specified.

30.11. Other aspects to be considered:

a) The land to be purchased should not be a fragmented holding and there should be
resultant increase in the productivity.
b) The requirements of the farm for development and investment activities and
working capital limit are to be considered based on the merits under the ongoing
schemes of the Bank.
c) Whenever farmers avail themselves of loan for purchase of virgin lands, it should
be ensured that such lands are developed and put under cultivation without any
delay.
d) Wherever land development involves digging of open wells / drilling of bore wells,
the possibility of getting electricity supply on priority basis shall be ensured.
Further, if the lands to be purchased are situated in the dark / grey area with
reference to the ground water potential, care should be taken to ensure that the
viability of the project will in no way be affected by such restrictions and its
impact on valuation should be looked into.
e) Whenever farmers are financed for purchase of unirrigated land, the farmers
should be encouraged to go in for suitable crops like horticulture / plantation
crops depending upon the climatic conditions and also take up activities like
dairy, poultry, etc.
f) The scheme aims at boosting the production and productivity of land purchased.
The finance provided should not result in acquisition of land for investment and
encashing on rising prices of the land or any such speculative activities.
g) In certain states / regions, State Govts. have imposed restrictions on sale /
purchase of agricultural land (e.g. Tribal belt, SC/ST hill areas, etc.). Branches
should take note of such instructions. Further, if lands are notified by Urban /
Industrial Development Authorities such lands should be excluded. Circles to
issue guidelines to branches / offices in the matter.
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 h) The loan shall be classified as direct agricultural loans under priority sector.
i) Loans to purchase areca garden and estates growing traditional plantation crops,
viz., coffee, tea, rubber & cardamom can also be considered under the scheme
subject to compliance of eligibility norms as detailed above.
j) The branches should adhere to the other usual norms and guidelines applicable to
agricultural loans / advances.

30.12. POST-SANCTION & FOLLOW UP VISITS:

Guidelines as enumerated under Chapter 3, Para 7 of this manual should be adhered to.

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 CHAPTER- 31

SCHEME FOR PROVIDING CREDIT TO TENANT FARMERS & ORAL LESSEES FOR RAISING
CROPS THROUGH JOINT LIABILITY GROUPS(JLG’s)

31.1. Objective:

The objective is to provide crop loans through institutional agencies to tenant farmers
/ oral lessees including share croppers and farmers having land without proper records
who are not being extended adequate credit support by the agencies due to the
inability of the farmers in providing tangible securities and / or producing records
regarding their rights on the crops cultivated.

Loans will be channeled through Joint Liability Groups .

31.2. Eligible Farmers:

Farmers eligible to become members of JLGs are those undertaking crop cultivation on
lands not owned by them such as:
a) Tenant farmers or oral lessees including share croppers
b) Farmers holding land without proper records

31.3. Formation of JLGs and Role of NGO’s / Voluntary Organisations (VAs) :

The eligible farmers will be encouraged to join together as an informal group on the
pattern of Self Help Groups (SHGs). These groups will be known as JLGs. Such groups
can be formed with the active involvement of reputed NGOs / Voluntary Agencies.
The agencies involved in the formation of the groups may assist the groups in capacity
building by giving inputs on credit management techniques, scientific farming
practices, judicious use of resources, etc. These groups are meant as a channel for
credit product and not a thrift, wherein lies the crucial difference as compared to
SHGs.

Wherever reputed NGOs / VAs are not available, Branches on their own may initiate the
exercise of formation of JLGs and guide them.

31.4. Constitution of the Group:

The membership of a group shall not be more than 20. However, it is preferable to
have 4-10 members for better cohesion. The various other aspects of JLGs such as
byelaws, office bearers, holding of / attendance in meetings, opening of accounts with

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banks, maintenance of registers and books of accounts, members’ pass-books, etc.,
shall be on the same lines as that of SHG enumerated in Chapter 36 of this
Manual.

31.5. Assessment of Limits for Crop production:

1) Though JLG works on the principle of SHGs, the Scheme is a Credit product rather
than a thrift product. Hence the following stipulations of SHGs are not applicable
for financing JLGs.

a) Active existence for atleast a period of 6 months.

b) Successful undertaking of savings and credit operations from its own resources.
c) Credit rating of the Group.

2) The Joint Liability Group has to submit to the branch the particulars of crops
proposed to be raised by its members as per format given in Annexure 39.

3) The quantum of loan is to be arrived on the basis of scale of finance for particular
crop.

4) Total quantum of loan to the group for raising of crops should be limited to @
Rs.50,000 per member. However, exposure per group for the purpose of raising of
crops shall not exceed Rs.5 lacs.

31.6. Security :

Loans given to JLGs are to be treated as clean advances.

31.7. Application and Documentation:

[Application and documentation shall be similar to financing Self Help Groups].

Following applications and documents shall be obtained :

1. NF 951 - Application to be submitted by JLG for loan assistance.

2. NF 953 – Sponsorship letter from NGO / VA( in case JLG is promoted by them).
3. Particulars of crops raised as per format as per Annexure 39.
4. NF 950 - Interse Agreement to be executed by the members of JLG
5. NF 952 – Articles of Agreement.

(In the formats, the words SHG should be replaced with JLG under authentication)

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31.8. Delegation of Powers for sanctioning of loans:

As applicable to loans / advances to SHGs

31.9. Rate of Interest:

As applicable to Loans granted for crop cultivation and per member limit is to be
considered. The rate of interest to members for raising of Crops should be made
available at the same rate and interest subvention wherever applicable should be
extended.

31.10. Repayment :

Repayment of the loan shall be specified linking to marketing of the crops. It shall not
exceed 12 months for short duration crops and 18 months for long duration crops.

31.11. Post sanction inspection:

To be conducted as in the case of crop loans granted under Kisan Credit Card Scheme
and shall be made at least in case of 25% of members in a group.

31.12. Norms for Asset Classification:

Norms as applicable to crop production loans are to be followed.

31.13. Fixation of Exposure Limit per Branch:

The concerned Circle Offices shall fix an exposure limit to each branch for extending
loans to JLGs. Branches shall note to operate within the exposure limit so fixed.
However, after exhausting the limit, in case enhancement is required, branches may
take up the matter with their Circle Offices seeking enhancement.

31.14. Classification:

The loans extended under the Scheme shall fall under Direct Agriculture.

31.15. Reporting :

In Flash report (PSR 1) to be treated as Direct Agriculture as well as ‘SHG’ and

accordingly to be reported.

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The performance under JLGs should be reported as performance under SHGs in the
quarterly statement on SHGs also (PSR 76) and in PSR 80.

31.16. Crop Insurance :

Since the loan is granted for crop cultivation, loan should be mandatorily covered
under Rashtriya Krishi Bhima Yojana (RKBY) / in case of notified crops in notified areas.

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 CHAPTER-32

AGRICULTURAL D R I LOANS

32.1. PURPOSE:

Loans can be considered for both working capital and term loan for any agricultural /
allied activity as per our various schemes under agricultural finance.

NOTE: ALDRI loans should not be granted wherever subsidy is available.

32.2. ELIGIBILITY:

i. The family income of borrower from all sources should not exceed Rs.24000/-p.a.
in urban and semi-urban areas, Rs.18000/- p.a. in rural areas.
ii. The size of the land holding should not exceed 1 acre irrigated land or 2.5 acres
un-irrigated land. However, borrowers belonging to SC/ST are eligible for loan
irrespective of their land holdings.
iii. The applicant should not have availed any financial assistance from other
financial institutions.
iv. The applicant should not engage any paid employees on regular basis for the
activity. However, assistance from family members or joint partners can be availed.

32.3. MARGIN:

Not to be insisted upon.

32.4. SECURITY:

Hypothecation of moveable assets created out of Bank finance will form the security
for this loan.

32.5. DOCUMENTS TO BE PRODUCED BY THE PARTY:

The documents to be produced by the borrower will be as indicated in various schemes

depending on the purpose for which loan is sought for. These have to be obtained /
verified. In case of development loans since landed property, as security is not
insisted, the available documents / title deeds may be called for and verified to satisfy
that the applicant is in actual possession of landed property. Branches should not insist
on production of income certificate from the applicants but may ascertain the same by
discrete enquiries.

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32.6. DOCUMENTS TO BE EXECUTED:

NF 469-Application cum credit report for loans under DRI Schemes(To be signed in all
pages)

1. Debit slip in triplicate is to be signed on the reverse

a) On the original cash slip signature of the borrower is to be obtained across

requisite revenue stamp and the same should be kept with the loan papers.
b) Dummy slip is to be sent to the cashier for payment to be preserved along with
cash paid vouchers.
c) Triplicate is to be preserved in slip bundle.

2. Wherever assets are purchased, receipt from the vendor should be obtained along
with the full description of the asset mentioned therein. On the back of the
receipt signature of the borrower should be obtained for having received the
assets in good condition.

32.7. PRE SANCTION VISIT, DISBURSEMENT, POST SANCTION, REPAYMENT AND FOLLOW UP
VISITS:

As required under individual schemes depending on the purpose of loan.

32.8. OTHER TERMS AND CONDITIONS:

i) Loans upto Rs. 15000/- for agricultural purpose can be granted under the scheme
either in the form of working capital, as term loan or as a composite loan.
ii) Two copies of the photo of the borrower should be obtained. The cost of
photograph will be borne by the Bank.
iii) Simple rate of interest at 4% p.a. should be charged for the loan.
iv) Compound interest is to be charged only when the entire loan becomes overdue.
v) All the General guidelines and other conditions as in Chapter 2, 3 & 4 of this
manual are also applicable.

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 CHAPTER – 33

SCHEME FOR REDEMPTION OF DEBTS OF FARMERS FROM NON-INSTITUTIONAL SOURCES

33.1. Purpose:

To provide relief and to remove the debt burden of identified acutely distressed
farmers who are under burden of debt from non-institutional sources (eg. money
lenders) by providing them loan for debt redemption.

33.2. Eligibility:

Individual farmers who have raised loans from non-institutional sources.

33.3. Identification of the Farmer:

i. The eligible farmers should give a declaration indicating the source (name and
address), amount of debt, date of creation of debt and other relevant details and
an undertaking that no borrowing would be made from Non institutional sources
during the pendancy of loan, in case loan is permitted.
ii. Declaration given by the farmer is to be certified by Gram Panchayat Member or
by existing reputed customer of the Branch or by the President / Secretary of a
reputed NGO operating in the Block or office bearers of the Farmers' Clubs
promoted by the branch.

33.4. Loan Quantum/Loan Ceiling:

i. Term Loan upto the extent of indebtedness of the farmer to non-institutional

sources can be considered provided it is within 150% of Gross annual income of
the farmer from all sources, subject to a maximum of Rs.50,000/-.
ii. Cost of title investigation, mortgage, etc, if any, will also be included for arriving
at the loan limit.
iii. Loan would be sanctioned only if it is sufficient to clear the entire dues
outstanding from non-institutional sources.

33.5. TERMS OF THE LOANS:

Branches to adhere to guidelines advised in Chapter 2 of this manual in respect of the

following:

33.5.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

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33.5.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

33.5.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

33.6 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

The following terms will be as per guidelines specified in Chapters 3 & 4 of the
Manual in addition to the following Note/s

33.6.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

33.6.2 Application and enclosures:

NF 987 - Common application cum appraisal form for agriculture advances upto
Rs. 50,000/-& Declaration by the applicant

33.6.3 Documents to be executed by the applicant

33.6.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

Branch Manager / AEO / Officer should visit the farm to assess the technical
feasibility and economic viability of the proposal

33.7. Disbursement:

a) Based on the declaration, loan is to be disbursed directly to the non-institutional

lenders by way of DD or by cash.
b) Proper receipts / discharge / cancelled loan documents is to be obtained as
evidence of redemption of non-institutional debt and the same are to be kept
along with loan paper.

33.8. Repayment:

Loan is to be repaid within 5 years in quarterly / half yearly / yearly instalments

based on income generation of the farmer.
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33.9. Other Conditions:

a) Existing borrowers of the Bank who are willful defaulters will not be eligible
under the scheme.
b) The Scheme shall not be extended to such borrowers who are of doubtful
character.
c) The borrower should undertake not to resort to non-institutional borrowings in
future during pendency of the loan availed under this scheme.
d) Copies of the title deeds deposited / Documents executed, if any in favour of the
non - institutional lender is to be secured back and kept with the loan papers.
e) Future credit requirements for developments / investments / working capital
needs can be considered as per extant guidelines based on merits.
f) Branches shall make best efforts to bring the eligible borrowers into the fold of
Self Help Groups to educate and empower them further.
g) Loan is to be classified under Priority Advances - Direct Agriculture.
h) The farmers are eligible for availing further finance for crop cultivation under
KCC or other schemes. Financing for other term loan requirements should be
based on the need, income generation and capacity to service the existing and
proposed limits.

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 CHAPTER - 34

HI-TECH AGRICULTURE

34.1. Agriculture today is a commercial venture unlike its subsistence nature in the past.
In order to meet the demands of the growing population on one hand and to exploit
the emerging world market on the other there is a need to increase
productivity. Hi-tech agriculture, which is generally capital intensive and is based
on frontier areas of science, provides economically useful and viable alternatives
for meeting these challenges.

The characteristic features of hi-tech agriculture technology include:

a. Innovation
b. Sophistication & precision
c. Labour saving
d. Capital intensive
e. Mass production
f. EfficiencyHigh productivity
g. Quality Automation & superior
h. High value / value added products technology
i. High density planting

The following fields are identified as areas of hi-tech agriculture:

1. Biotechnology:

The application of biotechnology has lead to a sea change in the age old
food-production pattern, the world over. Biotechnology is not a single science, but a
whole gamut of specialized areas. It is a blend of disciplines - genetics, molecular
biology, biochemistry, embryology, cell biology, etc. It extends from traditional
biotechnological processes like animal breeding to the most advanced form of gene
manipulations viz., cloning, etc. The economic value of the biotechnological
innovations has been recognized and widely exploited.

Tissue culture & Hybrid seed productions are important areas from the point of view
of financing wherein the principles of biotechnology are applied.

2. Floriculture:

Intensive floriculture (cut flowers) has been identified as a thrust area for export.

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 The following are the advantages our country enjoys over major flower growing
countries.
i. Availability of diverse agro climatic conditions suitable for floriculture.
ii. Availability of skilled/unskilled man power at comparatively low costs.
iii. Cultivation is possible even during the winter months which is the peak season
for exports. Most of the European and North American countries are not in a
position to grow flowers due to severe winter.
iv. There is growing domestic market for cut flowers.

3. Mushroom:

Mushrooms are the fruiting bodies of fungi, a group of organisms separate from plants
and animals. They are vegetarian food, non-chlorophyll plants, unable to produce or
synthesize their own food, hence they are called parasites. The most popular
varieties of edible mushrooms are white button mushrooms, oyster mushrooms or dhingri
& paddy straw mushrooms.

Now mushrooms are cultivated both on small scale as well as large scale (intensive).
Mushroom exports from India are competitive mainly on account of less labour cost
especially in cultivation stages and availability of raw materials.

4. Aquaculture:

Aquaculture is farming of aquatic organism like fish, molluscs, crustaceans and

aquatic plants. Aquaculture is practiced both in fresh water and brackish water system.
Shrimp culture in brackish water aquaculture is widespread. The modern shrimp
aquaculture is based on construction of farms, pumping in brackish water, stocking
the ponds with shrimp seed produced in hatcheries, feeding the fish with
locally formulated feeds like oilcake, fresh water and also with industrially
produced feed and harvesting it after a few months when adequate growth is
witnessed.

5. Miscellaneous:

Various other activities have been taken up by Indian farmers/Corporates under

hi-tech agriculture to cater to the export markets. Some of the successful and
profit making venture include Gherkins, strawberry, bio-fertilizers, high value
integrated poultry, post harvest management like pre-cooling, etc. Another area
which offers immense potential is processing and preserving of fruits and
vegetables.

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34.2. APPRAISAL OF HI-TECH AGRICULTURAL PROJECTS - TERM LOANS:

Agricultural credit no longer means credit for seasonal agricultural operations

and investment credit provided for traditional activities. Agricultural credit in
the current context would embrace all areas which are of recent origin and which
have a high export potential. Besides the newer areas like floriculture, tissue culture,
hybrid seed production, mushroom production, it may cover areas like agro
processing, marketing arrangements and all other forward and backward
linkages.

In order to encourage foreign investments, improve the export market and develop
non-traditional activities, Govt. of India has identified floriculture, mushroom,
tissue culture, seed production as major thrust/focus areas for
development.

In view of the high investment, high technology involved in these projects, they are
termed as hi-tech projects.

The normal appraisal procedure adopted for traditional activities would not hold
while appraising high tech agricultural projects as one has to sharpen ones appraisal
skills, understand the risks and assess the credit requirements, duly examining all the
aspects.

A linkage in CANNET is provided in the name of Agricultural Consultancy Services

wherein various model projects are furnished which can be used as reference
purpose.

The various points that are to be examined are as under:

34.2.1.PROMOTERS:

i. Background of promoters - age, qualification, experience in the related fields,

income tax and wealth tax assessment orders for the last 3 years.
ii. Write up on the group companies if any, their activities, marketing net work,
audited balance sheet for last 3 years and highlights of last 3 years of major
concerns.
iii. Availability of technically qualified/experienced person on the board.
iv. Auditor's certificate regarding capital to be invested in the project.
v. Proposed share holding pattern.

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34.2.2.TECHNOLOGY/TECHNICAL COLLABORATION:

i. A note on state of art technology being adopted - include historical

background, latest technological development, present status and
comparison with technologies practiced in the country. Adoption of technology
in Indian conditions.
ii. Performance of various units based on the similar technology, various
advantages of technology in the country.
iii. Minimum economic size of the plant at international level and Indian context.
iv. Collaboration agreement relating to performance guarantee of the plant with
regard to quality and output, buy-back arrangement, assistance in
marketing, etc. availability of collaborators/after sales service facility in
India.
v. Background of collaborators, financial performance for the last 3 years, status
report from their banker abroad/credit rating agencies through Foreign
Department / ID.
vi. Technology transfer fee should be reasonable and as per Government
guidelines.

34.2.3. RAW MATERIALS / CONSUMABLES:

i. Availability, price trends / present price of major raw materials.

ii. Demand and supply position of raw materials.
iii. Lead time required for procurement of raw materials. In case of import of raw
materials, consumables - International availability, transport arrangement,
economic order quantity, lead time and prevailing duties, etc.
iv. Power : Availability /status of supply of power from State Electricity Boards
(SEBs), details of captive power generation. Obtention of necessary
certificate.
v. Water: Quantity / quality of water required, quality & suitability, storage
capacity, arrangements for obtaining sufficient water.
vi. Fuel: Quantity required, storage capacity, arrangements proposed for
procurement, lead time for supply.
vii. Availability of preservatives, packing materials, pesticides, fertilizers, growth
regulators, etc.
viii. Any other factors connected with raw materials.

34.2.4. PRODUCT/PROCESSING / MARKETING:

i. Product concept, target, market segment, application and product features

such as seasonality of consumption, applicability of ISI and ISO standard.

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ii. Product substitutes and likely obsolescence.
iii. Domestic and International demand and supply: Present status and futuristic
estimates.
iv. Government controls (if any) on prices, distribution, imports, etc.
v. Present tariff of excise duty, sales tax, etc.
vi. In case of exports - comparative advantage of the product on export market.
Falling back onto domestic market if export market is not performing well.
vii. Marketing strategy proposed - Net work, distribution channel, discounts offered,
agents / dealers commission and positioning to the market segment. Exim
market, domestic market in case export market fails.
viii. Description of the process involved.
ix. Quality control measures.
x. Terms and marketing agreement/commission and other charges, report on the
standing of the marketing agent.
xi. Establishment of brand name in the market.

34.2.5.MANPOWER PLANNING / PROJECT IMPLEMENTATION:

i. Availability of sufficient professional/skilled man power.

ii. Recruitment policy and programme of company.
iii. Arrangement for take over from foreign collaborator.
iv. Team of professionals to be associated with the project.
v. Collaborators team to be in charge of commissioning/erection of the plant.
vi. Proposed arrangements for awarding contract.
vii. Implementation schedule of the project.

34.2.6. COST OF THE PROJECT AND MEANS OF FINANCE:

i. Break up of project cost and means of finance in respect of land and

development, plant & machinery, technology transfer fee, preliminary and
preoperative expenses, working capital margin, contingencies, etc, should be
furnished.
ii. Items have to be supported by documents like plan, estimates, quotations,
details of machinery, etc.
iii. Report on the suppliers of important inputs such as machineries - Techno-
economic assessment - Opinions (OPL) on the suppliers .Arrangements made for
execution of the projects.

34.2.7. FINANCIAL ANALYSIS / ECONOMIC VIABILITY:

i. Cost comparison with existing, preferably recently implemented/proposed

project should be made.

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ii. Projects should be analyzed on the basis of its strength, weakness, opportunities
& threats (SWOT Analysis).

iii. Financial appraisal of the project must be made with reference to internal rate
of returns (IRR), debt equity ratio, debt service coverage ratio (DSCR), break
even analysis, pay back and fund flow.

34.2.8.GOVERNMENT & OTHER CLEARANCES:

i Land conversion if required.

ii SLA approval for foreign collaboration for 100% Export Oriented Units (EOU).
iii Green card for 100% EOU.
iv Foreign Investment Promotion Board (FIPB) approval if stipulated.
v RBI approval for technology transfer fees.
vi Import & Export code (RBI) & from Director General of Foreign Trade (DGFT).
vii Pollution Board clearance.
viii Agricultural Processed Foods Export Development Authority (APEDA) registration.

34.2.9. LENDING NORMS:

i. Rate of interest: As advised by HO from time to time.

ii. Security: Basing on the present status, strength of the company, appropriate
security is to be obtained.
iii. Repayment period:7 -15 years based on the income generation capabilities
and economic life period of asset.
iv. Disbursement: To be made in stages.Project implementation progress
report (PIPR) as per Annexure-9 is to be obtained every quarter during
execution of the project. Once the project is complete, completion certificate
should be obtained.

34.2.10.POST SANCTION FOLLOW UP:

i. Close monitoring by frequent unit inspections during implementation stage.

ii. Reasons for delayed implementation to be identified and necessary corrective
steps to be initiated and permission got from the Sanctioning Authority/Circle
Head in case of HO power accounts.
iii. Slight changes/deviations may be required from the original project, which should
be specifically identified.
iv. Post sanction inspection at regular intervals to be carried out to ensure
satisfactory working of unit.
v. Feedback statement at monthly /quarterly intervals and their review should be
obtained and reviewed.
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34.2.11.FEEDBACK STATEMENTS:

Following are the feedback statements to be obtained from the borrower / firm.

For Term Loan :

Monthly : Production statement/export details
Monthly : Income - Expenditure statement.
Quarterly : Project implementation progress report

For WC limits :

Monthly : Stock statement

Monthly : MSOD statement (Monthly select operation data)
Monthly : Production - export statement
Quarterly / : Quarterly operating statement (QOS)
Half yearly : Half yearly operating statement (HOS)

34.3. WORKING CAPITAL FOR HI-TECH AGRICULTURAL ACTIVITIES:

Hi-tech agricultural activities involve higher investment and improved / innovative

technology and hence the need for working capital assistance on an ongoing
basis.

34.3.1. WORKING CAPITAL ASSESSMENT FOR AGRO-PRODUCTS:

i. In the case of agricultural products where there is no rest period / seasonality

eg, mushrooms, aquaculture, tissue culture, poultry, etc, the WC assessment
shall be as per the modified MPBF system as advised in Part I, Chapter II, Manual
of Instructions – Working Capital Finance (updated till 30.06.2005). The system
of monitoring as applicable to general advances should be followed.

ii. In case the branches are not in a position to apply the MPBF method due to any
reason, they can adopt the projected sales turnover method if the working
capital limits requirement is up to Rs.2 crores.

iii. In the case of some commodities with seasonal production pattern a rest
period is involved eg, grapes, floriculture, etc, during which expenses will be
incurred but there will no production / sales. The WC limits should be fixed
on the basis of cost of cultivation of one crop cycle.

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 iv. The branches shall obtain the estimated cost of cultivation for one crop cycle
from the borrowers. The cost projections furnished shall be in tune with the
prevailing prices, past performance of related units. An illustrative proforma
for arriving at cost of cultivation is furnished as under:
PROFORMA FOR CALCULATING COST OF CULTIVATION

Last 2 years Projected

(Actuals) (Rs.)
1. Land development / inter cultivation expenses.
2. Cost of fertilizers.
3. Manures and other nutrients.
4. Pesticides.
5. Irrigation / water / power / fuel charges.
6. Labour charges.
7. Salary / wages.
8. Harvesting expenses.
9. Other misc. expenses.
10. Add marketing costs
a) Packing material
b) Brokerage / commission
c) Freight & insurance
d) Post harvest labour cost
e) Other admn. charges, etc.
Total cost per cycle

a. The limit shall be fixed after stipulating margin on total cost of production cycle.
b. The disbursement would be in stages as per the need on lines of crop loans.

v. Where the DLTC / NABARD is advising scale of finance for the crops eg, grapes,
the branches can fix WC limits on that basis and monitor the accounts as for crop
loans. The costs involved in packing & marketing can be loaded for finance.

vi. The limits shall be released in stages depending on the need. The WC limits in
case of cost of cultivation method should be repaid within two months of
harvesting or marketing of crops, whichever is earlier.

34.3.2. EXPORT CREDIT FOR AGRO-PRODUCTS:

To promote exports of floriculture, grapes & other agro products, pre-shipment

(packing) credit for working capital purposes in respect of export related activities
of all agro products are permitted.

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34.3.2.1 Eligibility:

i. Packing credit can be granted for financing the purchase / processing /

manufacturing/packing of agro products for exports and shall include
purchase of fertilizers, pesticides, other inputs, post harvest expenses for
making shipment, etc.

ii. The branch should be able to clearly identify the activities as export related and
satisfy regarding the export potential. Wherever orders /LC's are available as a
business practice, packing credit should be against orders/LCs.

iii. The PC facility cannot be extended for investments such as import of foreign
technology, equipments, land development, planting material or any other
capital item which cannot be regarded as working capital.

34.3.2.2 TERMS & CONDITIONS:

i. The usual terms and conditions relating to packing credit and post-shipment credit
such as period, quantum, liquidation, rate of interest, etc, will be applicable as
advised by HO from time to time.

ii. The advance should not be covered by direct/indirect finance scheme of NABARD
or any other agency.

iii. In addition to PC documentation, branches shall obtain the agreement for

agricultural loans (NF 459) for hypothecation of standing crops, commodities,
inputs, etc. The common hypothecation agreement as advised in Para 1.29 of
Volume II of Documentation Manual updated till 30.4.2012 are to be obtained
wherever applicable.

iv. This credit facility shall be permitted only in Specialized Hi-tech AF branches/
VLBs/ELBs/Overseas branches within the delegated powers. Other branches shall
have to take up with circle office for extending this facility.

v. Other terms and conditions as detailed in Export Credit Manual (General) updated
till 30.6.2011 and Export Credit Manual-other than bills (updated till 30.11.2006)
should be adhered to.

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34.3.2.3.Procedural matters:

i. Normally, PC is released against firm orders/contracts/LC. However, in case of

exports on consignment basis, where orders/LCs are not available as a
business practice, the sanctioning authority can permit PC on a case to case
basis duly satisfying about the export potential of the activity.

ii. The PC shall be granted for a maximum period of 180 days. However where rest
period is given and the time required for getting the produce is more,
branches may extend the period of PC as per the guidelines in vogue.

iii. Where the exports are on consignment basis or otherwise, the outstanding
packing credit is to be converted to post shipment advance once the shipment
takes place.

iv. Where parties cannot give stock statements for the fertilizers & other inputs as
they are already applied to the soil, branch shall make inspections to ensure
that the health of plants and crop stand is satisfactory and the farm inspection
report should be on record.

v. The facility should be granted only to export oriented units and branches
should ensure that parties have sufficient infrastructure, expertise,
technical know-how to undertake exports and good crop stand has to be ensured.
It is also to be ensured that finance provided is used for export purposes and the
facility should be provided for the required number of days/period only.

34.3.2.4.ASSESSMENT OF EXPORT CREDIT:

i. In the case of units where the entire output is exported, the entire working
capital requirement can be financed under packing credit.

ii. The goods may be sold in both domestic and export markets. In such cases,
branches have to fix separate credit limits for export and domestic purposes. The
agro exports may be backed by firm orders / LCs or may be on consignment
basis where there are no specific orders. Hence, the share of Concessional
credit (PC) in the total limits has to be arrived properly linking to the
domestic and export sales.

iii. The assessed WC is bifurcated in the proportion of projected export and domestic
sales accepted by the bank. The projection shall be in tune with past levels,
industry prospects, orders on hand, etc.

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 iv. The limits shall be fixed after stipulating the required margin on WC.The
disbursements shall be made pro-rata for the domestic and export limits.

34.3.3.WORKING CAPITAL FOR FLORICULTURE:

i. In case of floriculture, the following procedure may be adopted for granting of

pre-shipment and post-shipment advance.

ii. Overall working capital limit has to be assessed and limit should be fixed both for
pre-shipment and post-shipment.

iii. Limit so fixed may be bifurcated into PC & OCC/OD depending on the proportion
of export and domestic sales.

iv. The limit for PC shall be released in stages in different accounts (say PC 1/12,
PC 2/12, etc) depending on the need of inputs like fertilizers, pesticides,
packing material, labour costs, etc.

v. Each sub-account (PC 1/12, 2/12 etc,) should be cleared within 180 days of its
grant. In exceptional cases, where time required is more, PC period can be
extended as per existing guidelines on packing credit.

vi. As export of flowers is on consignment basis, the value of export proceeds will
not be known at the time of shipment. For the purpose of customs clearance &
completion of GR formalities a provisional invoice is to be drawn on the agent.

vii. Upon shipment of the goods and submission of export documents the PC amount
may be liquidated by granting Rupee advance with suitable margin.

viii. The advance is to be liquidated in due course by the remittance received from
abroad in payment of the consignment sold duly ensuring that the remittance
received is towards the export of the flowers financed under the PCs.

ix. The remittance received from abroad will be accompanied by a statement of

account by the agent / consignee giving details of sale of goods sent on
consignment basis viz, the price at which goods are sold on various dates,
warehousing and transport cost, his commission and handling charges etc. The
sale proceeds may differ from the provisional invoice amount on the above
account. The GR / PP form may be released to RBI duly enclosing this statement
of account.

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x. In case of short realization with regard to post-shipment advance the amount
short realized should be recovered immediately and interest should be charged
on the short realized amount at specified rate from the date of granting
post-shipment till recovery.

xi. Wherever short realization is noticed as a frequent phenomenon, margin should

be increased.

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 CHAPTER – 35

AGRICULTURAL LOANS TO EMPLOYEES OF OUR BANK AND NNND AGENTS

35.1. FOR OUR BANK EMPLOYEES

35.1.1. PURPOSE:

Loans can be granted for:

a) Development purposes
b) Cultivation of crops
c) Purchase of tractors / power tillers, bullock & cart loans if required for ploughing
of lands and transport of produce.

However, loans should not be given for allied activities like dairy, poultry and for
construction of farm house etc.,

35.1.2. ELIGIBILITY:

i. Employee should be confirmed in the services of the Bank.

ii. The landed property which the employee owns should have been inherited and
not acquired.
iii. Further, the landed property which the employee including ex-servicemen owns
should have been granted / assigned / allotted by the government to employee
prior to joining the bank.
iv. The cultivation should be carried on either by hired labour or by employee's
family members. It should not, in any way, interfere with the employee's duties in
the Bank.

Note: In respect of loans to part time employee who are on consolidated wages the
normal guidelines as applicable to customers are to be followed.

35.1.3. OTHER TERMS AND CONDITIONS:

a) Agricultural Loan proposals of employees should be sanctioned by the DM-CAC of

the concerned Circle Office. However, the proposals falling beyond the powers of
the DM-CAC are to be placed to the concerned sanctioning authority.

b) Rate of interest, security norms, repayment and other terms and conditions will
be the same as applicable to others as mentioned under individual schemes.

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35.1.4. FORMS:

Depending upon purpose of loan, the required application should be obtained.

35.2. FOR NNND AGENTS:

35.2.1 Branches can consider agricultural loan proposals from NNND agents. However, normal
appraisal eligibility and other terms and conditions as applicable to other
customers should be adhered to.

35.2.2. Commission income of NNND agent should be reckoned to determine the repayment
capacity while considering loan proposals.

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 CHAPTER- 36

SCHEME FOR FINANCING THROUGH SELF HELP GROUPS (SHG’s).

36.1. PURPOSE:

a) The objectives of SHGs is to inculcate the habit of thrift, banking culture in

availing loans for productive purposes and repaying the same over a period of
time and in the process to gain the economic prosperity through loan / credit.

b) SHG – Bank Linkage Programme, which was initiated as a pilot project during
1992-93, has come a long way to emerge as one of the largest microfinance
programme in the world. The success led to concept of Group Lending being
extended to Government Sponsored Schemes such as SGSY/NRLM.

36.2. Criteria for selection of SHGs:

i. The group should have been in active existence for at least a period of six months.
ii. The group should have successfully undertaken savings and credit operations out
of its own resources.
iii. Democratic working of the group, wherein all members feel that they have a say
should be evident.
iv. The group should be maintaining proper accounts /records.
v. The branch should be convinced that the group has not come into existence only
for the sake of participation in the project and availing benefits there under.
There should be a genuine need to help each other and work together.
vi. The SHG members should preferably have homogenous background and interests.
vii. The interest of the NGO or the Self Help Promoting Institution (SHPI) concerned,
if any, in the group is evident and the agency is helping the SHGs by way of
training and other support for skill up gradation and proper functioning.
viii. In addition to criteria mentioned above, following criteria should be followed:
a) Village Panchayat leaders should not normally be the office bearers or leaders
of SHG.
b) There should not be any interference from local authority/ies.
c) Satisfactory internal savings and credit activity for at least 6 months.
d) Proper book keeping system and procedures for lending and savings.
ix. If any of these criteria are not met, steps should be taken to remedy the situation
by training, by arranging visits to SHGs working well etc, if necessary, with the
assistance of an NGO/NABARD/Bank.
x. It would be prudent to select SHGs only from a compact & smaller geographical
area so as to provide effective guidance and exercise proper supervision.

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 xi. Branches may be required to provide training to members of SHG in book keeping,
financial management, income generating` activities etc., with the help of an
NGO.
xii. No credit be extended to SHG without training or before ensuring its members
have the necessary capability to participate in SHG.

36.3. Project location and selection criteria:

a) For the convenience of implementation and monitoring the projects, it is

preferable to launch the projects in clusters of blocks or districts rather than in a
scattered manner over the entire territory.
b) Where NGOs/SHPIs and SHGs are already operating and are chosen to be covered
under project, the branch in whose service area the SHGs operate would
participate in the project.
c) The service area branches should fix their own program for lending to SHGs as in
the case of other activities under priority sector.
d) Names of the NGOs dealing with SHGs need to be indicated on a block wise basis
in the background papers for Service Area Credit Plan and the Service Area Branch
Managers should have constant dialogue and rapport with NGOs and SHGs for
effective linkage.
e) If NGO/SHG feels more confident and assured to deal with a particular branch
other than service area branch and that service area branch is not willing to
finance, such NGO/SHG may at its discretion deal with a branch other than the
service area branch, obtaining prior permission from next higher authorities.
f) Branches should plan and note to include lending under SHGs in their Branch
Credit Plan. The lending to SHGs by the branches should be included in the Lead
Bank reporting system and reviewed at BLCC/DCC/SLBC level.
g) The Lead District Managers should identify the various NGOs/VAs operating in the
district and the SHGs organized by them and supply the information so collected
to the concerned service area branches in the districts as an input for formulating
the Branch Credit Plan. Lead District Managers should work in close association
with active NGOs in the field and render them all assistance.
h) Branch Managers may also identify NGOs/Voluntary Agencies operating and the
SHGs existing in their service areas and assess their credit needs for onward
lending which may be suitably incorporated in the Branch Credit Plan.

36.4 Opening of Savings Bank Account:

Branches are permitted to open Savings Bank accounts of SHGs, registered or

unregistered, which are engaged in promoting the savings habit among their members.
SHGs need not necessarily have availed credit from the branch before opening Savings
Bank account.
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36.5 Size of the group:

The group size should preferably be between 10 and 20 members to enable effective
participation. In case the SHG consists of more than 20 members, it should be
registered as a company under Companies Act and if it is not registered, the group
would be covered by the prohibition under section 11(2) of companies act. Such
association will not be recognized by law and it cannot sue to recover any debt or other
property nor can be sued to recover money lent to it to carry out its objectives. As
such, it is necessary to have SHGs with not more than 20 persons for linkage activities.

36.6. Linkage Programme :

Once the SHGs and branches are identified, the linkage Programme can be explored.
The branch should make a formal assessment of the strength of the group dynamics by
a process of rating the group. This is an important step as the success of financing is
dependent on maturity of the group. The likely linkage could be in the following
manner:

The branch is expected to provide credit in bulk directly to the group, which may be
informal or formal (i.e. registered). The group in turn would undertake on-lending to
the members. The quantum of credit given to the group should be in proportion to the
savings mobilized by the group. The savings /Own Funds / Corpus of the SHG includes
the following:--

• SHG's amount kept in SB & other accounts

• Cash Balance
• Loan amount receivable from members
• Interest / fine collected
• Grant / donations received.

The proportion of savings/corpus to loan should gradually increase from 1:1 to 1:4
depending on the assessment of the SHG by the Branch. It may go beyond 1:4 provided
SHGs have submitted micro credit plans.

36.6.1 Ratios of savings and Type of credit:

1. Type of Credit:

a) Cash Credit limit:

Cash credit limit to be sanctioned to SHGs in the ratio of 1:1 to 1: 4 taking into
account the notional savings of 5 years. Total savings of the group at present +

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 savings projected for next five years will be worked out & based on which the CC
limit would be fixed. However the drawing limit would be fixed / refixed, every
year after review, in the ratio of savings as prescribed by RBI.

b) Term loans to SHGs:

Term loans may be sanctioned to SHGs only in the following cases:-

i) SHG Loan sanctioned under Govt. Sponsored Scheme where the release of
subsidy is linked to prompt repayment of the loan.
ii) Further, the SHGs shall be extended term loans whenever they under take
group activities and the term loans are taken by the Groups to undertake such
group activities.

2. Quantum of loan:

The loan requirement of a group shall be assessed taking into account the rate of
savings at the time of assessment. The total savings of the group for five years at this
rate shall be calculated. The amount which a Group will be entitled to have in the ratio
of 1:4 after projected savings of 5 years shall be arrived. Thus the branches shall
sanction cash credit limits to SHGs for a period of 5 years.

The following procedure shall be followed for fixing the cash credit limits:

a) Total savings of the group for 5 years to be worked out based on the regular
savings by the members.
b) Limit at the rate of 1: 4 of the savings be fixed as the limit for five years.
c) Drawing limit be fixed based on the present savings.
d) Drawing limit to be reviewed every year and enhanced if eligible, based on
savings.
e) The interest to be recovered from the group savings every month
f) The documentation to be obtained for full limit as arrived as above.
g) The letter of revival or Acknowledgement of Debt to be obtained as and when
required as per the rules.

3. Disbursement limit/Drawing limit:

Even though the cash credit limit requirement for five years is sanctioned to the SHGs,
the drawing limit shall be permitted after six months. For this purpose, the total
savings of the group for the initial period of six months shall be taken. The quantum of
loan shall be 1:1 of the savings. The disbursement limit would be reviewed thereafter
every year and enhanced in the ratio of savings as prescribed by RBI. The maximum

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 limit can be sanctioned to the SHGs would be 1:4 Beyond this, the Group should submit
Micro credit plan for considering loans beyond the ratio of 1:4

For Example:

Assume a SHG group with 20 members save Rs.25/-each per month.

The Cash credit limit is calculated as under:
Savings per month = Rs.25 X 20 = 500
Savings of six months = Rs.500 X 6 = 3000
Savings for next four years= Rs.6000 X 4 = 24000 + 3000 (saved during the first 6 months).
Limit that can be sanctioned for five years would be = 27000 X 4 ( 1:4) = 1,08,000

Drawing limit: Drawing limit would be calculated as under:

The drawing limit will not be permitted during the first six months, which period will be
utilized for internal savings.

Savings for the first six months = Rs.25 X 20 (members) X 6 (months) = 3000

Year Particulars Calculation Eligible

of eligible amt. Amt.
1st Drawing limit after six months (1:1) 3000x1 3000
2nd Drawing limit after one year from the
first disbursement [i.e 18 months after
the initial Group formation ] (1:2) 500x18x2 18000
3rd Drawing limit after 30 months (1:3) 500x30x3 45000
4th Drawing limit after 42 months (1:4) 500x42x4 84000
5th Drawing limit after 54 months (1:4) 500x54x4 108000
5th If group submits Micro credit Plan (1:5) 500x54x5 135000

Sanction of cash credit limit will help to avoid repeated documentation which involves
lot of activity for the Group as well as for the branch of the bank.

The drawing limit is gradually increased based on increasing SHGs own corpus built
through augmentation of savings and their increasing credit requirements.

4. Loans from SHGs to members:

Even though Cash credit limits are permitted to the SHGs, the loans from SHGs to its
members will be based on existing fixed terms to ensure and maintain repayment
ethics of TL at members' level.

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5. Recovery of Interest:

It is necessary to recover the monthly interest debited to the account regularly by the
branches to avoid the accounts slipping to NPA, if the interest debited is not serviced
within 90 days.

The SHGs have to be educated on the mode of operations of the cash credit accounts.
As the SHGs are new to the cash credit operations a close monitoring of the account is
essential to watch the end use of the funds.

Even though, the limit is permitted to the SHGs by way of cash credit, the loans from
SHGs to its members shall be based on existing fixed terms to ensure and maintain
repayment ethics of TL at members’ level.

The other terms and conditions such as conducting of meetings, maintenance of books
and registers, internal lending operations, grading of the groups etc shall be followed
by the groups

36.6.2 The following points are to be taken into consideration while sanctioning loans to
Self Help Groups:

a. It should be ensured that internal savings are genuine savings of the group and its
members and it has not been borrowed from external sources.

b. Branch may go beyond the ratio of 1:4 in deserving cases of repeat financing,
financing for productive/income generating purposes with definite Micro Credit
Plan.

c. In case of SHG's with extraordinary track record and whenever micro credit plans
are submitted by groups for second or subsequent linkage, even higher amount of
loan can be considered after satisfying about genuineness and the need.

d. Presently, the issue of subsequent loan, when the earlier is outstanding, is not
covered in the policy. Since the SHGs are savings related models (savings: Credit
in ratios ranging from 1:2 to 1: 4 ), the Bank may consider subsequent loans to
SHGs, having good track record and satisfactory dealings, even when the earlier
loan is outstanding, within an overall ceiling that has been stipulated (i.e the
total exposure not to exceed the ratio of 1:4 of the savings/corpus). This
norm can be relaxed as stated above wherever micro credit plans are
submitted.

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e. In case of SHGs where the local bank branch does not have adequate confidence
in lending to them or in case where SHGs for various reasons are not willing to be
linked directly with the bank, the branch may finance such SHGs through the
voluntary agencies (VA) or Non-Government Organisations (NGOs) or the Self Help
Promoting Institutions (SHPI) that has promoted the SHG, if it is willing to borrow
from the branch and the branch is prepared to lend to the VA/NGOs/SHPI. In
such cases, bulk financing of VAs/NGOs/SHPI could be considered.

f. In case some members of SHGs require large loans than that could be covered
under the savings related loaning, the SHG could appraise the requirement and
recommend the proposal to the bank for direct lending by the bank to the
concerned member. In such cases the SHG should be willing to accept the
responsibility for proper credit utilization and repayment by the member and for
monitoring the same. Also, the SHGs might apply to the bank for a loan creating
common service facilities or for certain group activities.

g. Lending in such cases to the individual members of the SHGs or the SHG for
common activities would be subject to our usual terms and conditions of
lending.

h. The purposes for which the group will lend to the members should be left to the
common wisdom of the group.

i. Assessment of credit:

i) To help branches/offices for assessing of SHG's while extending credit, a credit

rating format has been evolved, as per the rate matrix. However, rating norms
are indicative and branches/ offices may decide on credit linking based on
their experience with SHG's. It is mandatory to rate the SHG every year or at
the time of permitting/ recommending enhancement of credit limit/s. The
same should be kept with loan papers. In cases where SHGs do not score
minimum marks and if for any reasons, branch intends to extend finance such
SHGs, the same is to be done with the permission of Circle Office.

ii) It would be necessary that the group prepares a credit plan for its members
and an aggregate of that is submitted to the branch. To ensure flexibility in
the lending operations of the group, this document would have to be simple
giving an indication of the proposed credit requirements.

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36.7. Rate of interest:

i. Rate of interest to be charged to loans given to SHG's (direct lending) and to

VA's/NGO's for on-lending is as advised by Head Office from time to time.
ii. Interest is to be debited to loan accounts on monthly basis.
iii. SHG's are free to decide rate of interest to be charged for on lending to SHG's and
members respectively.

36.8. Delegation of powers:

As per powers delegated from time to time.

36.9. Repayment period:

a) Cash credit limit shall be sanctioned to SHGs tenable for five years. Hence only
the interest shall be payable on a monthly basis as and when debited.
b) The SHG would be free to prescribe appropriate repayment period and terms for
loans to its members as determined by the group.
c) Maturities should be differentiated and not uniform. Particularly, all loans should
not be at the recommended maximum maturity.
d) Shorter maturities have two advantages which should be strongly emphasized in
consultation with NGOs, SHGs and members. They are easier to handle and thus
less risky. They permit a more dynamic growth of the loan portfolio.
e) First loans under Bank to NGOs, SHGs or members could have shorter maturities.
Subsequent loans may have longer maturities, if justified.

36.10. Security and documentation:

i. Security:

The SHGs will not be in a position to offer any collateral security. One has to rely
on group dynamics and peer pressure for recovery. However where assets are
created out of SHG finance, the same can be taken as prime security. It is to be
noted that deposits/savings mobilized by the members need not be taken as
security.

However, whenever the SHG Members avail the loan for starting an income
generating activity, then the assets purchased out of our finance is to be taken as
Security to the Bank loan.

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 ii. Documentation:

The following documents have to be obtained while extending loans to the SHG's.
a) NF 950-Inter-se Agreement to be executed by the members of the SHG-
b) NF 951- Application to be submitted by SHG while applying for loan
assistance.
c) NF 952-Articles of Agreement for use while financing SHGs.
d) NF953- Sponsorship letter from NGO/SHPI wherever applicable.
e) Hypothecation agreement with the details of the assets purchased wherever
applicable as per Annexure -40.

Note: If there is no change in the membership of the SHG group and the representative
capacity of the respective members mentioned in the inter-se agreement continues to
remain same, then while granting fresh limit there is no need to get fresh inter-se
agreement. However, a link letter signed by all members confirming earlier inter-se
agreement is to be obtained.

36.11. Classification of loans granted to SHGs:

Loans to self-help groups of individual farmers engaged in agriculture and allied

activities are eligible for classification under Priority – Direct Agriculture. In respect of
loans other than agriculture, the loans are to be classified under Priority as per
guidelines on Priority sector credit.

36.12. Monitoring and Review of SHG lending :

Having regard to the emerging potential of the SHGs and related non-familiarity of
some of the branches with lending to SHGs, CO should closely monitor the progress at
regular intervals. The progress in financing SHGs is to be reviewed on a quarterly
basis.

36.13. Reporting :

Branches should send the Micro finance progress report (as per PSR 76) on a half yearly
basis as on 30th Sept. & 31st March of each year to the respective Circle Office before
10th of the succeeding month. Circle Offices in turn should send a consolidated report
to HO, so as to reach before 20th of the succeeding month to enable the Bank to report
the progress for Bank as a whole to RBI and NABARD.

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36.14. Training:

It is an important step in launching the linkage programme and hence the concerned
staff of the branch should have an exposure programme with the concerned NGO / SHPI
and SHGs. Further, the Branch Manager may also impart short duration training to
selected office bearers/members of the SHG in book keeping, maintenance of records
and financial discipline. Such training can be organized with the involvement of the
NGO / SHPI.

36.15. Presence of defaulters in SHGs:

The defaults of few members of SHGs and / or their family members to the financing
branch / other branches should not ordinarily come in the way of financing SHGs per se
provided the SHG is not in default to it. However, the Bank loan should not be utilized
by such SHGs for financing defaulter member of branch / Bank.

36.16 DO'S AND. DONT'S FOR LINKING SELF HELP GROUPS

1. Selection of NGO's for collaboration.

a) Though the NABARD will select a few reputed NGOs, branches/offices may
also select NGOs which are capable of providing adequate guidance to SHG's.
The list of NGOs will be circulated by Circle Offices. Branches can make use
of it.
b) An NGO selected should meet the following criteria.
• It should have a good track record and should not be blacklisted
• Maintain a proper system of book¬keeping and audited balance sheets for
the last 3 years.
• Possess basic financial management capability.
• History of promoting and working with groups of people belonging to weaker
sections.

2. Lend First Cycle of loans without a grace period:

a) First loans from banks or NGOs to SHGs and from SHGs to members should be
without a grace period.
b) Exceptions should be carefully examined. Even if a loan is used for
agricultural purposes, borrowers usually have income from various sources
which permit monthly repayments.
c) If short grace periods (e.g. one, two or three months) are given, the loan
amount should be kept small.

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 3. Insist on timely repayment:

a) Banks, NGOs and SHGs must insist on timely repayments. This is to be strongly
emphasized at the time of lending, during discussions prior to lending and in
training programmes.

b) Loans from banks or NGOs to SHGs and from SHGs to members must be repaid
in regularly.

4. Monitor Groups:

The activities of groups are to be monitored closely at least during the initial one
to two years and thereafter also based on performance of the group and
requirement. Branch Manager/AEO/Officer may attend group meetings, review
savings and repayment position and advise the groups.

5. Loan repayment in installments:

a) Loans from bank to SHGs could be repaid normally in regular monthly

installments or as determined at the time of loaning based on local
conditions, activities undertaken by members, etc.

b) Loans from SHGs to members should be repaid in appropriate installments

which may be daily/weekly on market days, fortnightly, monthly, etc.

6. Deliver credit publicly:

a) If possible, credit delivery to SHGs and members should be simultaneous and

in public ie., during the regular meeting of the SHG.

b) If this is not possible, credit delivery to a SHG should always be in the

presence of several office bearers of SHG and selected members at least one
or two of the respective borrowers of the Branch.

36.17. Documenting experiences:

The branches may document their experience in the linkage projects by way of case
studies and papers for evaluations of the project. This may be shared with parties and
submitted to Circle Offices and Head Office for documentation.

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36.18. Credit Rating of SHGs

To help branches / Offices for assessing of SHGs while extending credit, a credit rating
format as in Annexure 41 of this manual respectively has been evolved. However, rating
norms are indicative and branches / offices may decide on credit linking based on their
experience with SHGs.

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 CHAPTER-37

LENDING TO MICRO CREDIT GROUPS (MCG’s)

37.1 Objectives:

The objective of the scheme is for providing credit to groups of persons belonging to
the economically disadvantaged sections of the society in Rural/urban areas for taking
up any income generating activity. It is a scheme for Micro Credit for financing the
economically disadvantaged sections irrespective of the areas by financing them in
groups, for taking up any Income Generating Activities, falling within the purview of
priority Sector definition.

The lending to Micro Credit Groups is based on the spirit of Joint Liability Group of
NABARD and Bangladesh Grameena Model, (which is primarily a credit linked model)
empowering the groups through micro credit from the beginning, as against the SHG
thrift linked model of NABARD, with some changes.

The scheme is credit linked and not savings linked. In other words the savings is not a
pre condition, though it is desirable and to be encouraged. The following are not
applicable to Micro Credit group:-

a) Active existence of the Group for at least a period of six months.

b) Successful undertaking of savings and credit operations from own resources.
c) Rating of the Group.

37.2 Eligibility/ salient features

The loan can be sanctioned to Micro credit groups, provided.

1. The group consists of people not exceeding ten belonging to economically

disadvantaged sections. The minimum and maximum number of members in a
group is restricted to three (3) and five (5) in urban areas and five (5) and ten (10)
in rural and Semi urban areas.

2. Branch may consider finance to groups of more than 10 members selectively.

3. The group shall consist of members whose individual income does not exceed
Rs.50000/- P A.

4. The individual members should be permanent residents of the area for the last
three years.
291
 5. The applicants should be residing within a radius of 16 KMs from the branch and
all the members preferably shall reside in a cluster.

6. Not more than one person from a family can be included in a group.

7. Individual members will be financed against an agreement executed by the group

members to make all the members jointly and severally liable for the loans availed
by the Members.

8. The group members should not be a member of any other SHG/MCG. The MCG or
its members should not be a borrower/defaulter to any other Banks/Financial
institutions and Co operative societies. The group members have to give a
declaration in this respect.

9. For availing the debt swap loans, the members in the groups should have availed
the loan from the money lender before one year from the date of applying for the
loan.

10. For availing the debt swap loans, the members in the groups should give
undertakings that he/she will not borrow from money lender again.

37.3 Formation of groups and role of NGOs/Voluntary Agencies (VAs)

The Micro Credit Groups (MCGs) is an informal group of 3-10 members coming together
for the purposes of availing bank loan through group mechanism against mutual
guarantee. The management of the MCG is to be kept simple with minimum financial
administration within the group.

The groups can be formed with the active involvement of reputed NGOs/Voluntary
Agencies. The agencies involved in the formation of the groups may assist the groups
in capacity building by giving inputs on credit management techniques, scientific
farming practices, judicious use of resources, etc,.

37.4 Constitution of the group:

The membership of the group shall be between 3 -5 in Urban and Metro areas and 5-10
in Rural and Semi urban areas.

The members should be of similar socio economic status and background carrying out
any income generating activity and who agree to function as a Micro credit group. The
groups must be of like minded persons.

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 The members should be preferably residing in the same cluster and should know and
trust each other well enough to take up Micro credit group.

37.5 Coverage:

The Programme will be applicable to the disadvantaged sections in Rural/Semi Urban/

Urban / and metro regions.

37.6 Purpose:

The finance can be granted for starting/improving / expanding any type of income
generating activity, including allied activity under agriculture, so as to enable the group
members to improve their earning and living standard. Along with loan for income
generating activity, loans could be given to the group up to a maximum of
Rs.25000/- per member, for debt swap also, within the overall limit of Rs.50000/- per
member.

37.7 Assessment of the limit:

1) The group has to submit the particulars of activity to be undertaken by the

members. The activities need not be similar, that is to say, the members of a
group can take up different activities.

2) The total quantum is to be arrived basing on the individual requirement, for the
activity proposed.

3) All members in the group may be encouraged to undertake similar activity.

However the same is not mandatory.

4) The maximum amount that can be sanctioned to an individual in a group shall not
exceed Rs.50000/-.

5) The maximum loan that can be permitted to the group is restricted to Rs.2,50,000
in urban areas and Rs. 5,00,000/- in rural areas and semi urban areas.

6) Whenever the Bank considers loans to the group of more than 10 members, in
such cases the maximum ceiling of the loan need not apply. The loans are to be
followed up for the recovery by using group dynamics and peer pressure.

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37.8 Mode of disbursement:

The loan can be disbursed to credit of SB account of MCG for on lending to its
members.

The proceeds of the loan provided under debt swap shall be paid to the money lender
directly against the receipt and acknowledgement for discharge of debts.

37.9 Margin:

No Margin need to be brought in by the MCGs for direct lending by the Bank.

37.10 Security:

The loans given to the groups are to be treated as clean loans, since the assets created
out of the above loans are of smaller in value and get disposed off easily. The scheme
is mainly operating on the premise of group guarantee & peer pressure. However the
branches to ensure that the individual is running an income generating activity at the
time of release of the loan and thereafter. The end use to be verified.

37.11 Repayment:

The loans permitted under the scheme is to be treated as Single Transaction Term loans
and should be repaid in monthly/quarterly/half yearly installments, with repayment
holiday of three months in the beginning. The maximum repayment period that can be
generally permitted is 48 months. The terms of repayment can be extended up to 60
months depending upon the income generation. The interest is to be recovered as and
when debited. The entire interest debited to the account during the repayment
holiday is to be recovered along with the first six installments.

Alternatively, the repayments in EMIs can also be permitted wherever the income
generated is sufficient to pay back the installments along with the interest.

37.12 Rate of interest:

The Rate of interest shall be on par with the SHG lending in case of MCGs.

37.13 Application of interest:

The interest application can be monthly in case of Non Agriculture activity based
accounts/half yearly in case of agriculture activity based accounts, basing on the
income generation from the activity taken up.
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37.14 Application and documentation:

The following application and documents shall be obtained;-

a. Application cum appraisal to be submitted by MCG cum loan request letter from
MCG group (Annexure 42)
b. Inter-se agreement (Annexure 43)
c. Articles of agreement for Micro Credit Groups (Annexure 44)
d. Demand promissory note and take delivery letter (NF481).
e. Resolution of the group members (Annexure 45)

37.15 Review and Reporting:

The review and reporting is as applicable to the SHG finance. The loans sanctioned to
the groups directly for agricultural allied activities can be classified as direct
agriculture advance and others can be treated as finance to Micro Credit Group. These
loans should be reported in the flash report (PSR1 under Micro Credit).

37.16 Delegation of Powers:

The loans to MCGs for on lending to its members and to NGOs/mFIs/mFI-NBFCs for on
lending to MCGs are clean loans. Hence the delegation of powers as applicable to clean
loans shall be applicable to various authorities.

Circles would fix suitable limits under Micro Credit Groups (MCGs) for Micro Finance
Branches & other Branches.

37.17 Savings by the group/group members:

The Micro Credit Group (MCG) is intended primarily to be a credit group. However,
opening of the Savings Bank account by the Micro Credit Group is necessary to route the
loan transactions. The members if they want can open the SB account in the joint
names of the group members. The individual members can also open BSBD/NO-FRILL
account in the individual name and a RD account with appropriate monthly
contribution of say Rs.50/- per month for three years to be encouraged, which is
voluntary.

37.18 Asset classification:

The accounts are to be classified as Non Performing assets, where the installment/
interest is not recovered for a period of 90 days from the due date.

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 CHAPTER- 38

SCHEME FOR FINANCING MICRO FINANCE INSTITTUTIONS(mFI’s)

38.1. Overview:

In spite of the pro poor policy of the government and expansion of the Banking
network, considerable gap exists between demand and supply for all financial services
in India. The formal financial sector in India (Banks, Co operatives etc.) has not been
able to bridge this gap.

Despite all the pro poor policies of the Government, poverty has not been mitigated to
required level. Financing through the group models have also not mitigated the poverty
to the required level. A quicker and effective outreach is made possible by the Micro
financing institutions {mFIs) in lending through Group model/ lending to the
individuals. However, the resources available with them for extensive coverage is
limited. With these ideas, the Bank has come out with a scheme for financing the
intermediaries (mFIs), since, proved to be cost effective and satisfactory recovery
performance.

38.2. Need for separate loan policy for lending through mFIs.

The financial sector reforms and entry of private and foreign banks have changed the
Indian Banking sector. Since the urban demand is saturated, foreign and private sector
banks are making inroads to rural areas, despite absence of branches through Direct
Selling Agents and MFIs. In the present scenario, when the spreads are thinning and
competition is acute, increasing the business volume has become crucial.

Though our bank has a well structured holistic loan policy, it is aimed at general
advances where some kinds of collaterals and or third party guarantees are available.
Micro financing institutions could not fit in the general loan policy. The policy
document is of a comprehensive nature.

38.3. Objectives of policy:

1. The overall objective of the policy is to promote credit linkages through MFIs,
both at individual and group levels, so that the poor people can access the
financial services through the MFIs.

2. The policy aims to enlarge the client base of rural and under privileged segments
through the vehicle of micro credit.

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 3. The policy aims to establish a commonality of approach regarding credit appraisal
skills and strategies.

4. The policy aims to seize market opportunities by introducing new product/s,

aiming at wider and quicker outreach and also ensuring reasonable returns to the
Bank.

5. The policy aims at the financial inclusion of the disadvantaged and strives to
meet the socio economic obligations cast on the bank.

6. The policy aims at optimum exposure levels to mFI sector in order to ensure
orderly growth of assets.

7. The policy aims at mitigating the risks associated with lending to mFIs.

38.4. Scope:

This policy would govern all types of MFIs /NGOs/SHPI/NBFC-MFIs etc. on credit
related exposures, medium term fund based facilities.

38.5. Definition of micro finance:

Micro finance will cover not only lending for productive activities but also for
consumption and also other credit needs such as housing and shelter improvement
while other financial services like savings and insurance are also included under it.

38.6. Need for micro finance:

People though living in poverty, like everyone else also need diverse range of financial
facilities to run their business, building assets, stabilize consumption, shield
themselves against risks. The financial services needed by the poor include
consumption loan, working capital, term loan, savings, insurance, pension and money
transfer services.

Poor people access in a limited way, financial services through formal financial sector.
They mainly address their requirements through informal sectors like commercial and
non commercial money lenders.

The financial services for the poor have proved to be a powerful instrument for poverty
reduction that enables the poor to build assets, increase incomes, and reduce their
vulnerability to economic stress.

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38.7. Micro finance model - Group lending through financial intermediaries that are
prevalent in India:

1. Finance to MFIs for on lending to the Self Help Groups/Joint Liability Groups
(NABARD Model):
2. Finance to MFIs for on lending to Micro Credit Groups/Joint Liability Groups
(Grameen Model).

38.8. Definition and Types of Micro Finance Institutions (MFIs):

38.8.1 "Micro finance institution" means an entity whose principal object or principal
business is the provision of micro finance services to eligible clients.

Micro Finance institutions comprises of:

a) Micro Finance Organisations (mFOs).

b) Micro Finance institution- NBFCs (Non Banking Financial Companies).

38.8.1.1 "Micro Finance Organisations "(mFOs) mean an entity registered in any of the
following legal forms whose principal object or principal business is the provision of
micro finance services and are not regulated by Reserve Bank of India;

a) A society registered under the Societies Registration Act, 1860.

b) A public Trust registered under the Indian Trust Act, 1880 or any enactment
governing religious or charitable public Trusts.
c) A company registered under Section 25 of the Companies Act, 1956 and
specifically exempted from registration by the RBI.
d) A co-operative society registered under the provisions of the State Co operative
Societies Act or under Mutually Aided or Mutual Benefit Co operative Societies
Act, or Multi State Co operative Societies Act,2002 or under any other law
relating to Co operative Societies in force in India.

The NGOs registered under any of the above acts and involved in the Micro Finance
activities are called NGO mFIs.

Non Governmental Organisations (NGO):

A non Governmental Organisations (NGO) is a legally constituted organization created

by private organisations or people with no participation or representation of any

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 government. In cases in which NGOs are funded totally or partially by governments, the
NGO maintains its non-governmental status by excluding the representatives of the
government from membership in the organization.

38.8.1.2 Non Banking Financial Company- Micro Financing Institution (NBFC- mfi):

A separate category of Non Banking Financial Company- Non Banking Financial

Company- Micro Financing Institution (NBFC-MFI) is created as per RBI’s directions.

The details of Non Banking Financial Company – MFI is furnished here below:

1. Extent of the Directions

The Directions issued by RBI shall apply to every Non Banking Financial
Company-Micro Finance Institution (NBFC-MFI) as defined in these Directions.

2. Definition of NBFC-MFI

An NBFC-MFI is defined as a non-deposit taking NBFC (other than a company

licensed under Section 25 of the Indian Companies Act, 1956) that fulfils the
following conditions:

i) Minimum Net Owned Funds of Rs.5 crore. (For NBFC-MFIs registered in the
North Eastern Region of the country, the minimum NOF requirement shall stand
at Rs. 2 crore).
ii) Not less than 85% of its “net assets” are in the nature of “qualifying assets".

For the purpose of (ii) above,

“Net assets” are defined as total assets other than cash and bank balances and
money market instruments.

“Qualifying asset” shall mean a loan which satisfies the following criteria:

a) loan disbursed by an NBFC-MFI to a borrower with a rural household annual

income not exceeding Rs. 60,000 or urban and semi-urban household income
not exceeding Rs. 1,20,000/-
b) loan amount does not exceed Rs. 35,000 in the first cycle and Rs. 50,000 in
subsequent cycles;
c) total indebtedness of the borrower does not exceed Rs. 50,000/-

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 d) tenure of the loan not to be less than 24 months for loan amount in excess of
Rs. 15,000 with prepayment without penalty;
e) loan to be extended without collateral;
f) aggregate amount of loans, given for income generation, is not less than
75 per cent of the total loans given by the MFIs;
g) loan is repayable on weekly, fortnightly or monthly installments at the choice
of the borrower.

iii. Further the income of an NBFC-MFI derives from the remaining 15 percent of
assets shall be in accordance with the regulations specified in that behalf.

iv. An NBFC which does not qualify as an NBFC-MFI shall not extend loans to micro
finance sector, which in aggregate exceed 10% of its total assets.

38.8.2 Regulatory Framework for NBFC-MFIs

1. Entry Point Norm

As stated above, all new NBFC-MFIs except those in the North Eastern Region of
the country should have a minimum Net Owned Funds (NoF) of Rs 5 crore and
those located in the North eastern region should have a minimum NoF of
Rs. 2 crore for purposes of registration. The existing NBFCs to be classified as
NBFC-MFIs will be required to comply with this norm w.e.f April 01, 2012.

2. Prudential Norms

a) Capital Requirement

All new NBFC-MFIs shall maintain a capital adequacy ratio consisting of

Tier I and Tier II Capital which shall not be less than 15 percent of its
aggregate risk weighted assets. The total of Tier II Capital at any point of
time shall not exceed 100 percent of Tier I Capital. The risk weights for
on-balance sheet assets and the credit conversion factor for off-balance
sheet items will be as provided in Para 16 of the Non-Banking Financial
(Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve
bank) Directions 2007.

Note:
i. Among the existing NBFCs, to be classified as NBFC-MFIs, those with asset
size less than Rs. 100 crore will be required to comply with this norm w.e.f
April 01, 2012. Those with asset size of Rs. 100 crore and above are already
required to maintain minimum CRAR of 15%.

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ii. The CRAR for NBFC-MFIs which have more than 25% loan portfolio in the
state of Andhra Pradesh will be at 12% for the year 2011-2012 only.
Thereafter they have to maintain CRAR at 15%.

b) Asset Classification and Provisioning Norms:

Asset Classification Norms:

i) Standard asset means the asset in respect of which, no default in

repayment of principal or payment of interest is perceived and which
does not disclose any problem nor carry more than normal risk attached
to the business;

ii) Non-performing asset means an asset for which, interest/principal

payment as remained overdue for a period of 90 days or more.

Provisioning Norms:

The aggregate loan provision to be maintained by NBFC-MFIs at any point

of time shall not be less than the higher of:

i) 1% of the outstanding loan portfolio

OR
ii) 50% of the aggregate loan installments which are overdue for more than
90 days and less than 180 days and 100% of the aggregate loan
installments which are overdue for 180 days or more.

c) Other Regulations:

1) Pricing of Credit

i) All NBFC-MFIs shall maintain an aggregate margin cap of not more

than 12%.The interest cost will be calculated on average fortnightly
balances of outstanding borrowings and interest income is to be
calculated on average fortnightly balances of outstanding loan portfolio
of qualifying assets.

ii) Interest on individual loans will not exceed 26% per annum and
calculated on a reducing balance basis.

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 iii)Processing charges shall not be more than 1 % of gross loan amount.
Processing charges need not be included in the margin cap or the
interest cap.

iv) NBFC-MFIs shall recover only the actual cost of insurance for group, or
livestock, life, health for borrower and spouse. Administrative charges
if recovered, shall be as per IRDA guidelines.

2) Fair Practices in Lending:

I. Transparency in Interest Rates

a) There shall be only three components in the pricing of the loan viz.,
the interest charge, the processing charge and the insurance
premium (which includes the administrative charges in respect
thereof).
b) There will be no penalty charged on delayed payment.
c) NBFC-MFIs shall not collect any Security Deposit/ Margin from the
borrower.
d) There should be a standard form of loan agreement.
e) Every NBFC-MFI should provide to the borrower a loan card
reflecting
(i) the effective rate of interest charged
(ii) all other terms and conditions attached to the loan
(iii) information which adequately identifies the borrower and
(iv) acknowledgements by the NBFC-MFI of all repayments including
installments received and the final discharge.
(v) All entries in the Loan Card should be in the vernacular language.
vi) The effective rate of interest charged by the NBFC-MFI should
be prominently displayed in all its offices and in the literature
issued by it and on its website.

II. Multiple-lending, Over-borrowing and Ghost-borrowers

a) NBFC-MFIs can lend to individual borrowers who are not member of

Joint Liability Group(JLG)/Self Help Group(SHG) or to borrowers that
are members of JLG/SHG.
b) A borrower cannot be a member of more than one SHG/JLG.
c) Not more than two NBFC-MFIs should lend to the same borrower.
d) There must be a minimum period of moratorium between the grant
of the loan and the due date of the repayment of the first

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 installment. The moratorium shall not be less than the frequency of
repayment. For eg: in the case of weekly repayment, the
moratorium shall not be less than one week.
e) Recovery of loan given in violation of the regulations should be
deferred till all prior existing loans are fully repaid.
f) All sanctioning and disbursement of loans should be done only at a
central location and more than one individual should be involved in
this function. In addition, there should be close supervision of the
disbursement function

III.Non- Coercive Methods of Recovery

a) NBFC-MFIs shall ensure that a Code of Conduct and systems are in

place for recruitment, training and supervision of field staff. The
Code of Conduct should also incorporate the Guidelines on Fair
Practices Code issued for NBFCs by RBI.
b) Recovery should normally be made only at a central designated place.
Field staff shall be allowed to make recovery at the place of
residence or work of the borrower only if borrower fails to appear at
central designated place on 2 or more successive occasions.

d) Corporate Governance:

The RBI guidelines on Corporate Governance for NBFC’s shall be applicable to

NBFC-MFIs also.

f) Improvement of Efficiency:

NBFC-MFIs shall review their back office operations and make the necessary
investments in Information Technology and systems to achieve better control,
simplify procedures and reduce costs.

g) Others

i) In terms of paragraph 15 of the Non-Banking Financial (Non-Deposit

accepting or holding) Companies Prudential Norms (Reserve Bank)
Directions, 2007 all NBFCs are required to submit Statutory Auditors
Certificate with reference to the position of the company as at end of the
financial year ended March 31 every year. For an NBFC-MFI, such
Certificate will also indicate that the company fulfils all conditions
stipulated to be classified as an NBFC-MFI in this circular.

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 ii) Non-compliance of above Directions shall invite penal provisions under the
RBI Act, 1934.

38.8.3 The mFls' can broadly be sub-divided into three categories of organizational forms
as under:

1. Not-for profit NGO/mFls :

Societies registered under Societies Registration Act, 1860 or similar State Acts,
Public Trust registered under the Indian Trust Act 1880, Not for profit Companies
registered under Section 25 of the Companies Act, 1956.

2. Mutual Benefit NGO/mFls :

State Credit Co-operatives, National Credit Co-operatives, Mutually Aided

Co¬operative Societies (MACS)

3. For Profit MFIs :

Non-Banking Financial Companies (NBFCs) registered under the Companies Act

1956.

38.8.4 Guidelines for loan assistance to mFI’s:

38.8.4.1 Eligibility:

In order to sanction the loans to the MFIs for on lending to SHG /Micro Credit
Groups(MCG), the following conditions are to be fulfilled by such MFIs;

i. mFI should be a registered body. The memorandum of association and bye laws of
the mFI should have explicit power to raise loans from banks and financial
institution, to offer security for loans availed from the banks and financial
institutions in such form as may be required by the lender and to carry on micro
finance activities.
ii. The mFI has been in existence for a reasonable time and /or it has a
demonstrated track record of running a successful micro-credit Programme at
least for the last three years.
iii. mFl has achieved minimum outreach of 3000 poor members (through individual
lending / SHGs / partner NGOs or mFls) or demonstrates the capability to reach
this scale within a period of next twelve months or so.

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iv. It should choose clients irrespective of class, creed and religion and its activities
should be secular in nature.
v. mFI should have been rated by an accredited rating agencies - CARE / ICRA /
India Ratings (Fitch India) / CRISIL / Brick Work Ratings India Private Ltd. and
SMERA
vi. mFI should have formulated a realistic business plan for the next 3-5 years
demonstrating the financial sustainability of its operations.
vii. It has a relatively low risk portfolio or has a definite plan to further improve its
recovery performance.
viii. MFI should be well governed and well managed. It should maintain a satisfactory
and transparent accounting system, Management Information System and
appropriate internal and external audit systems. it should be broadly conforming
to the following parameters:
a) MFI should not have on its executive Committee or Board of Directors, any
member who is currently holding a political office
b) MFI should have conducted at least one AGM within a period of six months
from the close of accounting year
c) All elections in the MFI for various posts viz, Chairman, Committee, Secretary
etc must have been held in the manner specified in the bye-laws and the
provisions of law as applicable to them
d) It should have got its accounts audited by qualified Chartered Accountant
during last three years and placed the audited financial statements before its
General Body within a period of six months from the close of relevant
accounting year
e) It should have filed annual returns before the statutory authorities in
accordance with the provisions of relevant laws
f) It should have minimum repayment performance of 90% of loan assets in
performance category as at the end of previous accounting year
g) It should not be charging usurious rate of interest on their loans to
individuals/SHGs. All charges like credit delivery charges, group nurturing
charges, security deposit, margin money, loan monitoring fee etc. should be
mentioned clearly on the loan application of the MFI
h) It should have made adequate provision against NPAs (on loan o/s) on the
following basis:

The aggregate loan provision to be maintained by NBFC-MFIs at any point of time

shall not be less than the higher of-

i. 1% of the outstanding loan portfolio or

ii. 50% of the aggregate loan installments which are overdue for more than 90
days and less than 180 days and 100% of the aggregate loan installments
which are overdue for 180 days or more

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 The above provisions shall vary from time to time as per RBI guidelines, wherever
applicable.

38.8.4.2. Additional norms for selection of Micro Credit Organizations, SHG Federations
and mFI-NBFCs:

(i) MFOs:

Non Government Organizations/Co-operative Societies /Trusts registered

under any relevant State or Central enactment and Not-for Profit Companies
registered under Section-25 of the Companies Act 1956:

1. It should have sufficient professional staff to deal with the issues relating to
Micro Finance
2. It should have approval of duly audited accounts in annual general meeting
3. Board Meetings should have been conducted on regular basis in previous three
years. The discussion at such meetings should have structured agenda and the
minutes of the discussion should have been recorded properly
4. It should not be accepting deposits from public in contravention to the
RBI Act

(ii) SHG Federations

1. Federations should have SHG or its members as its constituents. Only Primary
Federations are eligible.
2. It should have its audited accounts duly approved in annual general meeting
3. Board Meetings should have been conducted on regular basis in previous two
years. The discussion at such meetings should have structured agenda and the
minutes of the discussion should be recorded properly
4. It should have mobilized the share capital in full from the members /SHGs and
there should be no arrears in its collection
5. It should have mobilized member savings at 90 % of the pre-determined amount

(III) MFI-NBFCs

1. Board Meetings should have been conducted on regular basis in previous three
years. The discussion at such meetings should have structured agenda and
the minutes of the discussion should be recorded properly
2. It should not be accepting deposits from public in contravention to the RBI
Act.

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 IMPORTANT:

All the institutions/Organizations mentioned above should have scored at least

50% (37.5) of the highest achievable marks (75 out of 100) as per scoring
matrix given in Annexure -46 of this Manual.

38.8.4.3. Documents/information to be furnished by mFI :

1) Audited Balance Sheet for the last 3 years along with annual report.
2) Published materials on the activities of the mFI, if any.
3) Certified copy of the Memorandum and Articles of Association
4) Documentary proof to ensure that the company has got the powers to borrow and
powers to on- lend to SHGs and individuals.
5) Certified True copy of the Board resolution authorizing particular person to deal
with the Bank / Execution of loan documents
6) List of Authorized signatories with their specimen signatures attested by the
Borrowers' bankers.
7) Certified updated list of Directors.
8) Certified True copy of the resolution of the General body of Share holders under
Section 293 (d) of the Companies Act. 1956.
9) Certificate by the Authorized Signatory stating that the total borrowings are well
within the over borrowing powers of the Borrower.
10) Detailed project proposal covering the following :
a) Project objectives, area implementation, focus group, etc.
b) Year wise physical and financial performance indicators. If the proposal is for
up scaling the operations of any ongoing programmes, the latest details of
such ongoing program may be furnished for the period covering the
repayment period.
11) Details of source wise funding arrangement proposed, including owned funds for
the project.
12) Detailed cash flow statement indicating inflows and outflows on business
activities including repayment of proposed and other borrowings plus the cost of
management. All the assumptions regarding inflow and outflow be spelt clearly.
13) Manpower available and required for implementation.
14) Arrangement for training staff and group members, etc.
15) Monitoring mechanism for the project.
16) The latest mFI Rating report by CRISIL/M CRIL, CARE etc. and the same should be
satisfactory. The rating by above agencies is a must for those MFIs who are
enjoying / applying for loan of Rs.1 crore and above.
17) For loans with exposure of Rs.5 Crores and above, the credit Risk rating by
External Credit Assessment Institutions (ECAI) shall be obtained.

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 18) The details of the loan outstanding as per the format furnished in Annexure 47
disclosing arrears, if any.
19) The details of the Micro finance asset port folio.
20) Total demand collection, overdues and recovery % for all the members duly
certified by the Chartered accountant should be submitted.

38.8.4.4 FINANCING mFI’s FOR ON-LENDING TO SHG’s (NABARD MODEL):

1. Appraisal of credit requirement NABARD SHG MODEL:

i. It is imperative to grade mFI objectively to ascertain their character, capacity

core competency and credit thrift management before considering extension
of credit linkage. It needs to be stressed that the assessment of an mFls should
be taken up independently by perusing the books and records and interacting
with the concerned mFI. The interaction should be comprehensive and open,
which should enable the bank and mFI to understand positive and negative
traits and help mFI to take up corrective measures forthwith. In order to have
a clear understanding of the essential aspects to be considered while
financing mFI an indicative list of parameters to assess maturity levels of mFl
are given in Annexure-46.

ii. SHG's identified for on-lending should be preferably from within the area of
operation of the financing branch. MFI may submit a list of mature SHGs
promoted by them to whom they propose to make onward lending.

iii. mFI has to rate the identified SHGs as per rating chart and furnish the scores.
Branch has to cross check the ratings of few SHGs at random and ensure that
MFI has conducted the rating in a satisfactory manner.

iv. Assessment and Fixation of credit limit :

a) FI has to furnish the savings made group-wise.

v. A credit exposure limit can be fixed equivalent to savings of all the identified
SHG's. Based on reputation, financial standing of MFI and also of the SHGs,
higher exposure limit can be considered in the ratios 1:2 to 1:4 of the savings
made by SHG's. However, sanctioning authority based upon its judgment and
experience with mFI may consider a higher limit also.

Entire limit should not be disbursed at one go. Disbursement of loan is to be made
based on loaning programme furnished by the mFI. Branch should also test check
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 at random with books of accounts maintained by SHG's, that limit released has
been passed on to concerned SHG's.

3. Purpose:

The finance can be granted for starting/improving / expanding any type of

income generating activity, so as to enable the group members to improve their
earning and living standard. The finance could be for personal needs of members
also , to sustain their living

4. Mode Of Disbursement:

The loan is to be disbursed to the credit of Current Account of mFI in case of

on lending to SHGs. The loan shall not be disbursed in one stroke. Disbursements
may be made in installments as per their requirement

5. Margin:

Cash Margin of 10% may be stipulated as a general rule. However this may be
permitted to be relaxed by 5% to the deserving cases by sanctioning authority.
In case Book Debts is taken as security, in such cases, margin of 10% is to be
stipulated for book debts.

6. Rate of interest:

As advised by HO from time to time.

7. Security:

Hypothecation of Book-debts/receivables may be stipulated as security to the

mFIs/NBFC-MFIs, wherever possible. In respect of loans to NGO-mFI/NBFC-mFI
registered as a company, the charges on Book debts and fixed assets(if stipulated
as security) owned by the mFI shall be registered with Registrar of Companies
(ROC), as per statute.

8. Delegation of Powers:

a) For lending to MFIs by way of on lending to SHG’s, the sanctioning powers is as

per the delegation of powers permitted to NGOs/mFIs for on lending to SHGs.

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 b) Circles have no powers for sanctioning loans to NBFC MFIs.

9. Asset Classification:

The accounts are to be classified as Non Performing assets, where the

installment/interest is not recovered for a period of 90 days from the due
date.

10. Documentation:

i. Application to be submitted by mFI/ SHPI while applying for loan assistance

for on-lending to SHGs (Annexure -48).
ii. Articles of Agreement to be obtained while financing mFI/SHPI for on-lending
to SHGs (Society/Charitable Trust registered under the respective Acts)- (To
be stamped as an agreement) (Annexure - 49)
iii. On Demand promissory note for the amount funded by the Bank (NF 481).

11. Application of interest:

The interest application can be monthly/quarterly/half yearly basing on the

income generation from the activity taken up.

12. Processing charges:

The processing charges are as applicable to Priority Sector Advances- the working
capital/term loans as advised from HO from time to time.

14. Repayment period :

Repayment is stipulated based on cash flow projections made. mFIs are required
to repay the loan generally within a period of 3-5 years in monthly/quarterly
installments. Initial moratorium on repayment of, principle can also be
considered based on the need.

15. Follow up:

i) Branch has to verify at random the books of accounts of mFIs on a monthly

basis to:
a) Ensure that loan disbursed is passed on to SHGs.
b) Ensure amount recovered from SHG's is promptly credited back to Loan
A/c. with branch.

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 ii) Branch should draw up a Programme of visits so that the meetings of at least
5% of SHGs selected randomly are attended in a half year period and books are
verified to ascertain the correctness of accounting.

iii) In areas affected by natural calamities and other unforeseen circumstances,

branches may consider rephasement of loan disbursed to MFIs.

16. Credit review and Credit programme:

The accounts which are falling due for renewal should be reported in the PRR-8
which are submitted on half year basis and the same is reviewed by the Risk
Management Wing, Head Office.

38.8.4.5 FINANCING mFI’s FOR ON-LENDING TO MICRO CREDIT GROUPS (MCG’s):

With regard to objectives, Eligibility/salient features, formation of groups, role of

NGO’s /voluntary agencies, constitution of group, coverage, purpose, assessment of
limit etc., in respect of Micro Credit Groups(MCG’s), branches may refer Chapter 37 of
this Manual.

The following are the specific guidelines with regard to financing mFI’s for on-lending
to MCG’s:

1. Mode of disbursement:
0
The loan is to be disbursed to the credit of Current Account/ODs of mFI in case of
on lending to MCGs.

2. Margin:

Cash margin of 10% be stipulated for lending to intermediaries for on lending to

MCGs. However, this may be permitted to be relaxed by 5% to the deserving cases
by sanctioning authority.

3. Security:

The loans sanctioned to NGOs/MFIs/MFI-NBFCs are also to be treated as clean

loans. Personal guarantee of the promoters / Book debts of the Company may be
taken as security wherever possible. Margin of 10% shall be stipulated for book
debts if taken as security.

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4. Repayment:

The loans permitted under the scheme is to be treated as Single Transaction Term
loans and should be repaid in monthly/quarterly/half yearly installments, with
repayment holiday of three months in the beginning. The maximum repayment
period that can be generally permitted is 48 months. The terms of repayment can
be extended up to 60 months depending upon the income generation. The
interest is to be recovered as and when debited. The entire interest debited to
the account during the repayment holiday is to be recovered along with the first
six installments.

Alternatively, the repayments in EMIs can also be permitted wherever the income
generated is sufficient to pay back the installments along with the interest.

5. Rate of interest:

The rate of interest for lending to NGOs/MFIs/MFI-NBFCs for onlending to MCGs

shall be on par with the advances to NGOs/MFI/MFI-NBFCs for on-lending to
SHGs.

6. Application of interest:

The interest application can be monthly in case of Non Agriculture activity based
accounts/half yearly in case of agriculture activity based accounts, basing on the
income generation from the activity taken up.

7. Application and documentation:

The following application and documents shall be obtained;-

a) Application to be submitted by NGO/mFI/NBFC-mFI for applying for loan

Assistance for on lending to MCGs (Annexure 50)
b) Demand promissory note and take delivery letter(NF481).
c) Articles of agreement to be used for on lending through NGO/MFI/NBFC-mFI
(Annexure 51) to MCG’S.

8. Review and Reporting:

The loans granted through NGOs/mFIs/NBFCs are to be classified as indirect

finance to agriculture if the purpose of the loan is for allied activities.

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 9. Delegation of Powers:

For lending through NGOs/MFIs/MFI-NBFCs by way of on lending to MCG’s, the

sanctioning powers is restricted to Head Office only.

10. Asset classification:

The accounts are to be classified as Non Performing assets, where the

installment/interest is not recovered for a period of 90 days from the due date.

38.8.4.6 DUE DILIGENCE APPLICABLE TO BOTH NABARD (SHG) MODEL AND MICRO CREDIT
GROUPS (MCG)- FINANCE TO INTERMEDIARIES

1. In case of NGO/mFI:

i) Examine whether the charter and objectives of the mFI/NGO permit it to

undertake the kind of activities proposed.
ii) The mFI/NGO having adequate presence in the area for a reasonable period
would be preferable.
iii) Examine the composition of the governing body of the entity to assess the
second tier of management so that it can function independent of the
promoter/s.
iv) The quality of the manpower from the perspective of undertaking the new
task needs to be assessed, if not plans of the NGO/MFI to strengthen their
manpower through recruitment or training are to be considered/examined.
v) Social orientation and Profit orientation of the NGO/mFI are to be carefully
assessed as the two are vastly different competencies.
vi) The accounting systems of the NGO/mFI are to be carefully studied.
vii) The NGO/mFI should not have political affiliation.
viii)The NGO/mFI should provide finance irrespective of the religion, caste creed
and gender.
ix) Assessment of Donors partners and peers would be crucial in assessing the
capabilities of the mFI/NGO.

2. SHG Federations:

i) It should be a registered body and have capacity to enter into legal

obligations.
ii) It should have a defined area of operation and have only primary SHGs as
members.
iii) It should have an elected board which should meet at regular intervals.

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 iv) The accounts should have been audited and placed before the General Body
within 6 months of the closing of the accounts period.
v) It should have a system of rating its constituent SHGs at periodic intervals
preferably, once in six months.
vi) It should be in operating profit from the thrift and credit operations.
vii) The thrift collections at the SHG level should be at least 90% of the
determined amount.
viii)The share capital mobilization should not be in arrears.
ix) The federation should demonstrate a repayment performance of 90 % or more
on a continuous basis.
x) At least 95% of the loan assets should be in performing category.
xi) It should have made adequate provisions for loan loss.
xii) It should have defined exposure norms for individuals and groups.
xiii)It should have filed all the statutory returns before the appropriate authority.
xiv)75% of the SHGs should be rated on all the defined parameters.

3. Other details:

i) The details of incorporation and promoters are to be verified.

ii) The qualification, experience, other business activities, and financial status
of the management and other key staff are to be verified.
iii) Particulars of the employee level expertise.
iv) Type of infrastructure available.
v) Financial position (for 3 years)
vi) Present business relationships and their status.
vii) Adherence to the various local rules and regulations.

4. Monitoring and reporting:

Branch has to obtain following statements from mFI/NGOs.

i. Monthly progress report on credit linking of SHG's/MCGs financed as per the
Annexure-52, certified by Chartered Accountant.
ii. Quarterly statement on details of loans availed from financial institutions as
per Annexure -47.
iii. Income and expenditure statement of the MFI as at September and March.
iv. Audited Balance Sheet.
v. The above statements are to be reviewed to ascertain that mFI/NGOs is
implementing the project as per projection. Branch to ascertain the reasons
for non achievement of projections if any & steps taken/proposed to achieve
better progress. Branch to ensure that the amount recovered from SHG's/
MCGs, by mFI are promptly credited to the loan account.

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 vi. The statement indicating the details of amount on lent, total demand,
collection, overdue and recovery percentage on quarterly basis, certified by
Chartered Accountant, as per Annexure-53.
vii. The details of the loan outstanding as per Annexure-47, disclosing the arrears
if any

5. Review of the accounts reported in special watch statement:

The accounts which are reported in the special watch statements are to be
reviewed and followed up for recovery by the Risk Management Section at C.O. /
Credit Monitoring Wing HO Bangalore.

6. Borrower CAP:

The maximum amount of loan that can be sanctioned per mFI borrower can be
decided as follows:

i) MFI with CRR " low risk" and "normal risk" rating: Loans can be sanctioned
as per the delegation of powers permitted by Bank from time to time.

ii) MFI with CRR “Moderate” and “High Risk” rating : The proposals, coming
under Moderate and High risk and beyond the above mentioned limits, will
be placed to Management committee (MC) with proper justification.

7. Exposure CAP:

The maximum financial exposure for the bank through mFI finance under NABARD
and MCG model may be restricted. This exposure ceiling may be reviewed every
year.

8. Margin requirement:

Cash Margin of 10% may be stipulated as a general rule. However this may be
permitted to be relaxed by 5% to the deserving cases by sanctioning authority.

9 Personal Guarantee:

Since the MFIs are promoted by the Social activists, the chances of obtaining
personal guarantee of the promoters are very remote. However, the personal
guarantee of the promoters may be explored wherever possible. Obtention of the
Personal Guarantee of the promoters can be waived by the concerned sanctioning

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 authority in case of genuine difficulties in stipulating the same with proper
justification.

10. Security:

Bank has to obtain 10% of the limit as collateral security by way of Bank deposits,
while considering limit of more than Rs.1 crore to NGO-mFI/ NBFC-MFIs.

Book debts/ receivables may be taken as security for the limits sanctioned
wherever possible. In such cases a margin of 10% shall be stipulated.

11 Scheme for Financial Assistance to banks for rating of Micro Finance

institutions (MFIs):

Micro Finance Institutions are playing a major role in the formation/nurturing and
financing of Self Help Groups. It is necessary to rate the performance of the MFIs
before financing them for on lending to SHGs. In order to identify, classify, rate
MFIs and empower them to intermediate between the lending banks and the
clients, NABARD has decided to extend financial assistance to commercial Banks,
Regional Rural Banks and Co operative Banks by way of grant to avail of the
services of accredited rating agencies for rating MFIs. The revised guidelines are
furnished here below;-

a. Purpose:

The basic purpose of the scheme is to facilitate the banks to identify

appropriate mFIs for providing funds on the one hand and at the same time,
to encourage proper standards, systems and safe guards, efficiency and
transparency in mFIs on the other hand.

b. Rating Agencies:

The Bank has in place a policy on usage of ratings assigned to bank loans /
Securities of Corporates by ECAI ( External Credit Assessment Institutions).
The objective of the policy is to choose and recognize the ECAIs whose ratings
can also be used by the Bank for assigning risk weights for the eligible credit
exposures as per the final guidelines of RBI on standardized approach under
BASEL II.

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 External credit Assessment Institutions accepted by the Bank:

Bank shall accept the ratings of the following external Credit Rating Agencies
(ECAIs) for the purpose of computation of risk weights to eligible exposures
subject to various criteria as listed out in Bank’s Credit policy.

Domestic Credit Rating Agencies:

• CRISIL
• CARE (Credit Analysis & Research Limited).
• ICRA
• India Ratings ( Formerly FITCH India)
• Brickwork Ratings India Private Ltd (Brickwork)
• SME Ratings Agency of India Ltd (SMERA)

International rating agencies: FITCH,MOODYS, Standard & Poor.

The Credit Rating by ECAI is a must for all the proposals for Rs. 5 Cr and
above.

m-CRIL is one of the pioneers of Financial Performance ratings and Social

ratings for MFIs. MFIs may approach m-CRIL or other equivalent agencies for
rating purposes in respect of proposals of above Rs.2 Crores, but less than
Rs.5 Crores.

c. Eligible Grant Assistance:

i) The financial assistance by way of grant would be available up to 100% of

professional fee of the rating agency, with a maximum of Rs.3 lakhs, for
the first rating of the MFI. The remaining cost would be borne by the
concerned MFI.
ii) MFIs with minimum loan outstanding of Rs.50 lakhs and Maximum loan
outstanding Rs.10 Crore would be eligible for rating and support under the
scheme.
iii) The cost of local hospitality (including boarding and lodging) towards field
visits of the team from the credit rating Agency, as a part of the rating
exercise, would also be borne by the mFI.

d. Submission of the Rating Report:

Banks/MFIs would furnish copy of the rating report to NABARD and NABARD
would have the right to publish the information, if it so desires.

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e. Procedure for claiming grant assistance:

Banks may submit a claim to concerned Regional Office of NABARD, in the

enclosed format, for reimbursement of the cost of rating of the MFI within
three months of receipt of the rating report from the rating agency. The claim
may consist of the following:-

• The rating report for the mFI duly signed by the Credit Rating Agency.
• The total cost of rating of mFI and the amount of NABARD’s support
required.
• The details of the bank credit sought by the mFI if any.

The Regional office of NABARD would be sanctioning and releasing grant

assistance under the scheme.

f. Operation of the Scheme:

The scheme of grant assistance to banks for rating of mFIs will be operational,
on an ongoing basis.

Branches may take advantage of the financial assistance extended by NABARD

and get the rating of the MFIs done by accredited rating agencies and claim
the financial assistance from NABARD wherever applicable.

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 CHAPTER- 39

GENERAL CREDIT CARD SCHEME (GCCS)

39.1. Purpose:

Loan can be sanctioned for any general purpose including that of consumption. The
scheme aims at providing hassle free credit to Rural and Semi-urban households
without insistence on security, purpose or end use of the credit.

39.2. Eligibility:

i. All Rural / Semi-urban households are eligible irrespective of their activity, whether
agricultural or non agricultural and income level.

ii. Urban branches also to implement the scheme for providing credit under the
Scheme to rural/ semi urban Households, provided they have allotment of
Service area villages/Financial Inclusion villages.

iii. Loan to be sanctioned in the name of individuals only.

iv. Loan can be extended to only one person from a household (family). In case,
family is having immovable properties such as agricultural lands or house
property, loan can be sanctioned in the name of the person in whose name the
property stands. In case the property is held jointly, loan can be extended to one
of the joint holders.

v. Our existing borrowers, irrespective of their limits / liabilities, are also eligible,
provided the accounts are regular and the applicants do not have any other clean
advances outstanding.

vi. Defaulters of other financial institutions are not eligible.

39.3. Loan Quantum:

Loan quantum shall be 50 % of the net annual income of the entire household subject to
a maximum of Rs. 25000/-. Annual income to be assessed by the Manager / Senior
Manager of the branch.

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39.4. TERMS OF THE LOANS:

39.4.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

39.4.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

39.4.3 Rate of Interest:

Guidelines as advised in Chapter 2 Item 2.5 of this Manual to be adhered to.

39.5 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

The following terms will be as per guidelines specified in Chapters 3 & 4 of the Manual
in addition to the Note/s

39.5.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

39.5.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

39.5.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

39.6. Tenability:

Limit shall be tenable for three years. The limit can be renewed only if the account is
regular on the due date of renewal. Account is to be reviewed every year.

39.7. Disbursement:

The limits would be revolving in nature and borrower will be entitled to withdraw by
cash to the extent of limit sanctioned.

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39.8. Processing and Inspection Charges :

Collection of processing fee, inspection charges ,folio charges & notice charges are waived
under the scheme.

39.9 Classification of GCC loans:

As per extant guidelines on Priority sector. Loans sanctioned/renewed on/after 20.7.2012

will be classified under Priority-‘Others’; GCC loans sanctioned prior to 20.7.2012 would
continue to be classified under Priority-Indirect agriculture till closure/renewal.

39.10. Repayment:

As limit extended is of overdraft nature, no repayment is to be stipulated for principal

portion. However, interest debited should be paid within 6 months of debit.

39.11. Norms for Asset Classification:

The due date for payment of interest falls exactly 6 months from the date of debit. If
the interest is not paid within 90 days from the due date, then the account is to be
treated as Non performing.

39.12. Other conditions:

i) Loan passbook / pass card to be issued for the GCC account.

ii) Cheque book may be issued only for literate borrowers.
iii) No overdrawings to be allowed under any circumstances except for interest
debits.
iv) Expired limits reported in relative PRR

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 CHAPTER – 40

INDIRECT FINANCE TO AGRICULTURE

40.1. SCHEME FOR FINANCING AGAINST BOOK DEBTS TO FERTILIZER DEALERS:

40.1.1. Purpose :

Loans can be granted against book debts/receivables due to the fertilizer dealers.

40.1.2. Quantum of loan :

For fertilizer dealers the maximum limit under priority is Rs.5 crores.

40.1.3. Eligibility :

Normally such facility should be granted to parties who already enjoy OCC facility with
us at least for a minimum period of 3 years.

The borrower should enjoy ASCC S1 status and the advance should have been classified
as Standard Asset.

40.1.4. Assessment of limit :

20% of the credit sales during the year / 50% of the OCC limits enjoyed by the party,
whichever is lower.

40.1.5. Margin :

30-40% margin is to be maintained.

40.1.6. Rate of interest :

As applicable to agricultural advances.

40.1.7. Security :

i) Loans up to Rs.5.00 lakhs:

a) Hypothecation of book debts.

b) Suitable collateral security of land / building should be obtained.

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 ii) Loans beyond Rs.5.00 lakhs:

a) Hypothecation of book debts

b) Collateral Security of land and building whose value shall be at least 150% of
the limit

Our charge is to be registered with Registrar of Companies in case of advances to

limited companies.

40.1.8. Delegation of powers :

As applicable to advances against book debts.

40.1.9. Documentation :

a) One set of current account opening form.

b) Request for overdraft facility (NF 372)
c) Pro-note (NF 480)
d) Stamped agreement for hypothecation of book debts (NF 450)
e) General power of attorney as per Manual on Working Capital Finance.
f) Letter of undertaking not to avail such facilities elsewhere (NF 476)

40.1.10. Other terms and conditions:

i. Parties should confine their dealings with our bank only and a suitable
undertaking letter is to be obtained.

ii. Book debts outstanding beyond 6 months should not be taken into account while
arriving at the drawing limits.

iii. Not more than 10-15% of the book debts assigned should be concentrated in one
customer.

iv. Though debts outstanding beyond 6 months are not considered while arriving
at the drawing limit, all book debts irrespective of the age should be charged
to the bank.

v. Book debts statement should be submitted once in a month along with stock
statements.

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 vi. Book debts arising out of bona fide transaction in the ordinary course of business
should only be included in the statement.

vii. Book debts outstanding beyond 6 months should be shown separately in the
statement.

viii. Other terms and conditions as applicable to advances against book debts as
furnished in the manual on working capital finance updated till 30.06.2005
under Part V are also applicable to this scheme.

40.2. LOANS TO FERTILISER DEALERS / DEALERS IN DRIP & SPRINKLER IRRIGATION

EQUIPMENTS:

i. As these limits are required for the purpose of trading in fertilizers and are
usually inventory limits such as OCC/KCC etc, branches are permitted to exercise
powers for fertilizer dealers as applicable to general advances.

ii. Rate of interest to be charged is as applicable to short term agricultural loans;

however interest should be debited as applicable to general category of
borrowers i.e., on a monthly basis.

iii. Branches to refer manual on working capital finance updated till 30.6.2005 on
all other aspects to be considered while sanctioning loans to fertilizer dealers/
dealers in drip and sprinkler irrigation equipments.

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 CHAPTER – 41

SCHEME FOR FINANCING SETTING UP OF AGRI CLINICS / AGRI BUSINESS CENTRES

41.1. Purpose:

Objectives of the Scheme is to supplement efforts of public extension machinery by

providing extension and other services to farmers on payment basis or free of cost as
per business model of agricultural entrepreneur, local needs and affordability of target
group of farmers.

Agriclinics: Agriclinics are envisaged to provide expert services and advice to farmers
on cropping practices, technology dissemination, crop protection from pests &
diseases, market trends and prices of various crops in the markets and also clinical
services for animal health, etc. which would enhance productivity of
crops/animals.

Agribusiness Centres: Agribusiness Centres are envisaged to provide input supply, farm
equipments on hire and other services.

The scheme is for providing gainful employment to agriculture graduates in new emerging
areas in agricultural sector and to make available supplementary sources of input
supply and services to needy farmers.

41.2. Eligibility:

The borrower should be an Agriculture Graduates / Graduates in subjects allied to

agriculture like horticulture, animal husbandry, and forestry, dairy, veterinary, poultry
farming, pisciculture and other allied activities.

Constitution – individual, joint or partnership firms, Limited companies, etc.

The scheme is open to agriculture graduates / graduates in subjects allied to

agriculture like horticulture, animal husbandry, forestry, dairy, veterinary, poultry farming
and pisciculture. Diploma / Post Graduate Diploma holders, Biological Science
Graduates, Degree holders & Agriculture related courses at intermediate level have
also been made eligible, as per the following:

i. Graduates in agriculture and allied subjects from SAUs / Central Agricultural

Universities / Universities recognized by ICAR / UGC. Degree holders in
Agriculture and allied subjects offered by other agencies are also eligible subject

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 to approval of Department of Agriculture & Cooperation, Government of India on
recommendation of the State Government.
ii. Diploma (with at least 50% marks) / Post Graduate Diploma holders in Agriculture
and allied subjects from State Agricultural Universities, State Agriculture and
Allied Departments and State Department of Technical Education. Diploma
holders in Agriculture and allied subjects offered by other agencies are also
eligible subject to approval of Department of Agriculture & Cooperation,
Government of India on recommendation of the State Government.
iii. Biological Science Graduates with Post Graduation in Agriculture & allied subjects
iv. Degree holders in courses recognized by UGC having more than 60 percent of the
course content in Agriculture and allied subjects.
v. Diploma / Post-graduate Diploma holders in courses with more than 60 percent of
course content in Agriculture and allied subjects, after B.Sc. with Biological
Sciences, from recognized colleges and universities.
vi. Agriculture related courses at intermediate (i.e. plus two) level, with at least 55%
marks.

41.3 Project activities, Project Cost:

i. Branches should note that cost indicated in the project profiles are only
indicative. Branches to ensure that realistic cost are adopted in the project
report submitted by the applicant.

ii. The project may be taken up by Agriculture Graduates either individually or on

joint/group basis.

The outer ceiling for the cost of project by individual Rs.20 lac.
The project by group ( 5 individuals/above) - Rs.100 lac.

iii. The group may normally be of 5, of which one could be a management graduate
with qualification or experience in business development and management. In
case of groups having five persons, of which one is non-agriculture graduate, the
ceiling of such group projects would also be Rs.100.00 lakh.

iv. List of ventures and an illustrative list of project profile are given in Annexure 54
& 55 of this Manual.

41.4. TERMS OF THE LOANS:

The following terms will be as per guidelines specified in Chapter 2 of this Manual
subject to the Notes.

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41.4.1 Margin:

Guidelines as advised in Chapter 2 Item 2.3 of this Manual to be adhered to.

However, concessions would be made in respect of SCs/STs, women and beneficiaries

of North-eastern states, Hill areas. In such cases, a maximum of 50% of the margin
money prescribed by the banks could be given by NABARD to meet the shortfall in
borrower’s contribution, if the bank is satisfied that the borrower is unable to meet the
margin money requirements. Such assistance to banks by NABARD will be without any
interest. The branches to levy a service charge of 2% per annum from the borrowers.

41.4.2 Security:

Guidelines as advised in Chapter 2 Item 2.4 of this Manual to be adhered to.

However for genuine reasons such as non-availability of title deeds, jamma lands,
lease hold lands, etc., if borrower cannot mortgage the landed properties (where
developments are being envisaged) alternate securities as indicated under Chapter 2
under item 2.4.4 (v) of this manual

41.4.3 Rate of Interest:

As applicable to Priority Agricultural loans.

41.5 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

The following terms will be as per guidelines specified in Chapters 3 & 4 of the Manual
in addition to the following Note/s

41.5.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

41.5.2 Application and enclosures:

As applicable to MSME( Loans to professional and self-employed persons)

41.5.3 Documents to be executed by the applicant

As applicable to General advances – MSME advances(Professional & Self Employed

persons).

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41.5.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

41.5.5 Processing Charges:

As advised under Chapter 2 Para 2.8 of this Manual to be adhered to.

41.5.6 Post disbursement/sanction and follow up Inspection/visits:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

41.6 Loan Assistance:

i. The term loan would be composite in nature and the financing branch would
extend bank loan, which would include fixed capital cost,working capital for one
operating cycle, and subsidy amount eligible,(as capital subsidy is back-ended),
but exclusive of margin money as stipulated.

ii. At least 10% value of the Total Financial Outlay (TFO) of the project should be in
capital form.

41.7. Time limit for completion of the project

i. Time limit for completion of the project would be as envisaged under the project
subject to maximum of 6 months period from the date of disbursement of the first
installment of loan, which may be extended by a further period of 6 months, if
reasons for delay are considered justified by the branch concerned.

ii. If the project is not completed within the stipulated period, benefit of subsidy
shall not be available and advance subsidy placed with the branch/es, if any, will
have to be refunded forthwith to NABARD

41.8 Repayment:

i. Loans are to be repaid in 5-10 years in monthly / quarterly / half yearly instalments
depending on activity and generation of income.
ii. The repayment period may include a grace period of maximum of 2 years based
on income generation.
iii. Repayment holiday may be permitted for interest also during the gestation period
if essential. In that case, repayment of interest accrued has to be specifically
indicated.

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41.9 Insurance:

As applicable to agriculture advances.

41.10Subsidy

i. The subsidy would be admissible only in respect of agricultural graduates trained

under the ACABC scheme on or after 1st April 2004.
ii. The agriculture graduates who were trained by Nodal Training Institutions on or
after 1st April, 2004 and had availed of loan earlier for ACABC project, would also
be eligible for subsidy for expansion / addition to existing units or for fresh
investments, only if the earlier loan is not closed prematurely.
iii. The trained graduates could also undertake group projects. If the group consists
of a total of five or more persons, all except one of them would have to be
agriculture graduates trained under the scheme and the remaining person could
be non-agriculture graduate with experience in business development and
management.
iv. Delivery of extension services shall be the main component of ACABC projects for
availing the benefit of subsidy under the scheme. Commercial activities in
agriculture and allied sectors may, on a case by case basis, be considered as
eligible component of ACABC projects with a view to improve their
viability.
v. Subsidy pattern has been revised from ‘Capital and Interest Subsidy’ to
‘Composite Subsidy’ which will be back ended in nature.
vi. Credit linked capital subsidy @ 36% of the Total financial Outlay of the project
funded through bank loan would be eligible. This subsidy would be 44 % in respect
of candidates belonging to SC, ST, Women and all categories of candidates from
North-Eastern and Hill States.
vii. In case subsidy of whatever amount is availed of, under any other scheme of
Central or State Government, Subsidy will not be admissible under this
scheme.
viii. The benefit of subsidy will be extended maximum twice to a candidate under the
scheme.
ix. The capital subsidy will be back-ended with minimum 3-years lock-in period.
x. The capital subsidy would be admissible only if all repayments till date had been
made as per schedule. The capital subsidy will be adjusted against the last few
installments of repayment of bank loan.
xi. The capital subsidy admissible under the scheme will be kept in the “Subsidy
Reserve Fund Account” (Borrower-wise) in the books of the financing branch. No
interest will be charged on this by the Bank. In view of this, for the purposes of
charging interest on the loan component the subsidy amount should be excluded.

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 The balance lying to the credit of the “Subsidy Reserve Fund Account” will not
form part of Demand and Time Liabilities.
xii. The procedure of claiming and release of subsidy as per extant guidelines advised
by NABARD from time to time.

41.11 General:

a) Loan is to be classified as indirect agriculture finance under priority sector

advances.
b) Branch should obtain a project report from applicant, which includes the details
of the project, viability aspect, projections, etc.
c) The projected cash and fund flow statement should be obtained covering the
period of repayment.
d) Average Debt Service Coverage Ratio (DSCR) should be 1.75 and above.
e) Sanctioning of loan is as per powers delegated for sanctioning of agricultural
loans. The continuation of the Scheme shall be as advised from time to time.
f) Scheme is eligible for NABARD refinance. However, availing refinance is subject
to ongoing refinance policy of Bank.

A sign board displaying “Assisted under the scheme of Agri-Clinics and Agri-Business
centres, Ministry of Agriculture, Government of India” by Canara Bank should be
exhibited at the Unit.

All other guidelines stipulated in Chapter 2 & 3 as applicable for agriculture accounts
shall apply.

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 CHAPTER – 42

ESTATE PURCHASE LOAN (EPL)

42.1. PURPOSE

i. To purchase estates growing traditional plantation crops viz. coffee, tea, rubber
and cardamom.
ii. To purchase Areca Garden.
iii. To purchase estates growing other high value crops like Cashew, pepper, coconut
and other perennial orchard crops.
iv. To pay stamp duty and registration expenses involved in purchase of estate.
v. Loans can also be granted for ownership of estates by retirement of partners in
case of partnership firms.

42.2. ELIGIBILITY

i. The purchaser should have good track record and have yielding estates
ii. Non Estate owners may also be financed provided that it is assessed that the
borrowers can ,after purchase, will be able to develop the Estate on the desired
lines(subject to State Law permitting such purchase).
iii. The purchaser should preferably be our customer with satisfactory past dealings.
iv. The purchaser should be experienced in the line, financially sound and should
be in a position to bring in margin and service the debt.
v. Normally the purchaser/s and vendor/s should not be close relatives.
vi. The intending buyer should qualify the State Government norms of being an
agriculturist / satisfy the income criteria stipulated by the State Government in
cases where loan is considered for purchase of areca garden.
vii. Being a non-priority advance, the proposal should preferably shall have spin off
benefits in the form of deposits, other business support, non fund based income,
etc.
viii. The estate should preferably be a neglected one. The estate should have
potential for realizing higher yields.
ix. The total land holding including the land to be acquired should be within the land
ceiling norms of respective State, whenever loan is considered for areca garden.
x. The estate should have the potential to absorb substantial credit for other
developmental activities.

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42.3. SANCTIONING POWERS

The branches do not have powers to sanction estate purchase loans. Loan is to be
sanctioned either at Circle Office/Head Office based on powers delegated for
sanctioning of Estate Purchase Loan, from time to time.

42.4. TERMS OF THE LOANS:

Branches to adhere to guidelines advised in Chapter 2 of this manual in respect of

margin, security and rate of interest apart from notes detailed here under:

42.4.1 Margin:

The margin shall be normally 50% on lowest of (i) purchase consideration (ii)Market
value (iii)Guidance value/Circle rate fixed by the State. However, in deserving cases,
the same may be relaxed up to 25%.

42.4.2 Security:

Mortgage of property to be purchased. Also, collateral security of mortgage of existing

landed properties /including preferably residential property is to be obtained. In any
case, the value of the security should not be less than 200% of the loan amount.

Note: Branches at their discretion, based on the merit of the proposal, may
recommend stipulation of third party co-obligation / guarantee

42.4.3 Rate of Interest :

Rate of interest to be charged on Estate Purchase Loan will be as advised from

Head Office from time to time. Interest to be debited on monthly on compounding
basis.

42.5 PRE-SANCTION/PRE-DISBURSEMENT PROCEDURES

42.5.1 Documents to be produced by the applicant:

Guidelines as advised in Chapter 4 Item 4.3 of this Manual to be adhered to.

42.5.2 Application and enclosures:

Guidelines as advised in Chapter 4 Item 4.1 of this Manual to be adhered to.

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42.5.3 Documents to be executed by the applicant:

Guidelines as advised in Chapter 4 Item 4.2 of this Manual to be adhered to.

42.5.4 Pre sanction visit:

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

Branch Manager / AEO / Officer should conduct pre-sanction visit of the estates
proposed to be purchased and also of the existing estate offered as collateral security.
Pre-sanction inspection report should be submitted along with the proposal indicating
area under different crops, its age wise details and crop history for last four
years. Pre-sanction inspection is also done to confirm that estate to be purchased has
potentiality for taking up developmental activities and level of maintenance in
respect of existing estates which gives an indication about purchaser's
commitment.

42.6 DISBURSEMENT

The loans are disbursed in two stages.

Initially, a DPN loan will be granted on the security of other collaterals to purchase
the estate. The loan is disbursed by way of demand draft after collecting margin
from the party or after ascertaining advance paid, and after approval of draft of the
sale deed, retirement / settlement deed by our panel advocate.

Demand draft should be handed over to the vendor at the time of registration. The
authority letter from the purchaser addressed to registering authority authorizing
them to hand over the deed of sale to the Bank is to be obtained. An undertaking to
create to mortgage also has to be obtained.

On receipt of the original sale deed, mortgage transaction has to be put through and
EPL should be disbursed after collecting up-to date interest on DPN and the DPN
should be got closed by EPL proceeds. The supplementary LSR of the sale deed and
further revenue documents is to be obtained.

42.7 REPAYMENT PERIOD

The loan should normally be repayable within 7 to 9 years. The repayment period
should coincide with the income generation. No repayment holiday will normally be
considered as parties are expected to pay the amount out of their other sources.

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42.8. OTHER ASPECTS TO BE CONSIDERED

i. The constitution of the vendor and purchaser is to be ascertained. If the transfer

is by way of retirement of partners, the same should be clearly mentioned
in the proposal. If the firm is to be reconstituted after purchase, ascertain the
details like name of the partners, capital, etc.
ii. Ensure the purchase consideration. Obtain the copy of sale agreement if already
entered into. The value for which estate is registered should be specified, as
quantum of loan is arrived at on the basis of value at which estate is being
registered.
iii. Obtain LSR on the property to be purchased and other property to be offered as
additional security if any. The LSR should specify the eligibility of the party to
purchase the lands as per the provisions of Land Ceiling Act of the concerned
State.
iv. LSRs are to be approved by the competent authority.
v. Ensure that there are no pending legal proceedings on the property to be
purchased.
vi. Ensure that there are no loans on the property with any of the financial
institutions by obtaining no dues certificate from them. In case the liability exists
the arrangements to clear them before disbursing the loan is to be clearly
indicated.
vii. Availability of infrastructure and linkages like water, labour, ready market and
demand for produce is to be ensured.
viii. Before parting with the demand draft, ensure the receipt of all documents as
listed in the LSR in respect of estate to be purchased.
ix. The cash flow statement for the period of repayment to be submitted and
viability should be ensured.
x. Sources of margin to be specified and repayment capacity of the applicant should
be ensured.
xi. Deposit support from vendors to be informed.
xii. The total land holding including the lands to be purchased should be within the
land ceiling norms of respective States. Also, in some states, there are some
restrictions in alienation of land owned by SC / ST farmers. Therefore, it is
necessary to ensure marketability of the title in case land is being sold by a
farmer belonging to SC / ST community.
xiii. While financing purchase of Areca Garden, it should be ensured that the total
land holding including the land to be acquired should be within the land ceiling
norms of the respective State and the intending buyer should qualify the State
Government norms of being an agriculturist or satisfy the income criteria to
acquire agricultural lands, if any.

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 xiv. Estate Purchase Loans are non-priority loans. However, in case the applicant
conforms to the eligibility norms of Scheme for Financing Farmers for Purchase of
Lands for Agricultural Purpose as elaborated in Chapter 30 of this manual, the
same may be considered under the guidelines of the said scheme and it qualifies
for classification under Priority Sector – Direct Agriculture.
xv. All other guidelines applicable to agricultural loans are applicable to this scheme
also.

42.9 POST SANCTION AND FOLLOW UP VISITS

Guidelines as advised in Chapter 3 Item 3.8 of this Manual to be adhered to.

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 CHAPTER- 43

ASSET CLASSIFICATION, REVIEW, CONFIRMATION OF STATUS, FOLLOW UP AND RECOV-

ERY OF AGRICULTURAL LOANS

43.1 PRUDENTIAL NORMS ON ASSET CLASSIFICATION OF AGRICULTURAL ADVANCES:

Advances are broadly classified into Performing and Non-performing Assets. The Asset
Classification intends to provide basis for Income Recognition and determining the
provisioning requirement for Non-performing Assets.

43.1.1 Performing assets - Standard Assets.

Performing Assets are Standard Assets which do not disclose any problem and which do
not carry more than the normal risk attached to the business. The performing asset is
one which generates income for the Bank.

An account is considered to be a Standard Asset when it is in order or where the

overdue amount is within a period of 90 days and in respect of Direct Agricultural
Advances if the amount overdue is less than two crop seasons in case of short duration
crops and one crop season in case of long duration crops.

43.1.2 Non-performing assets:

An account is to be treated as Non-performing asset (NPA) when it ceases to generate

income for the Bank. Such Non-performing assets shall have well defined credit
weaknesses which jeopardize the liquidation of the debt and are characterized by
distinct possibility, that the Bank would sustain some loss, if the deficiencies are
not corrected.

43.1.2.1 Sub standard assets:

Sub-standard asset would be one, which has remained NPA for a period less than or
equal to 12 months.

43.1.2.2 Doubtful assets:

The following accounts should be classified as DOUBTFUL ASSETS.

1. An account would be classified as doubtful if it had remained in the sub-standard

category continuously for 12 months.

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 2. A Non-Performing Asset where the erosion in the value of securities is more than
50% of value as assessed by the Bank / accepted by Reserve Bank of India
previously at the time of last inspection and where the value of securities
available is more than 10% of the outstanding liability should be straightaway
classified under doubtful category and provisioning should be made as applicable
to Doubtful Assets.

43.1.2.3 Loss assets :

1. A LOSS ASSET is one where the loss has been identified by the Bank or Internal /
External Auditors or the Reserve Bank of India Inspectors, but the amount has not
been written off wholly or partly. In other words, such an asset is considered
uncollectible with little salvage or recovery value.

2. Further, in cases of exposures, where the realizable value of security, while

sanctioning of the facility is more than 10% of the outstanding exposure and has
subsequently eroded to 10% or less of the outstanding then the account should be
straightaway classified as Loss Asset.

3. EROSION IN SECURITIES:

i. The availability of security or net worth of the borrower / guarantor should

not be taken into account for the purpose of treating an account as NPA or
otherwise as income recognition is based on record of recovery. However,
accounts where there is a potential threat of recovery on account of erosion
in the value of security or non-availability of security and existence of other
factors such as fraud, Bills discounted with fake documents etc., should be
classified as DOUBTFUL ASSET (where the realizable value of securities is more
than 10% of the outstanding liability) or LOSS ASSETS (where realizable value
of securities is less than 10% of outstanding liability), irrespective of the
period it has remained as Non-Performing Asset.

ii. Also, a NPA need not go through the various stages of classification in cases of
serious credit impairment and such assets should be straightaway classified as
doubtful (where the realizable value of securities is more than 10% of the
outstanding liability) or loss asset (where realizable value of securities is less
than 10% of outstanding liability) as appropriate.

4. AUTOMATIC CLASSIFICATION OF NPA BY SYSTEM:

i. Automatic classification of NPA by the system is in place wherein the Asset

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 Classification will be done by the system as per IRAC Norms. In CBS, a system
has been built in, which will consider all IRAC Norms to classify an account.
Branches have to generate Auto NPA Report (Report ID 280080) from Business
Objects and verify the report/ review the Asset Classification done by the
system and take necessary remedial steps to ensure correct classification of
advances. This report can be generated on any day. The report consists of
details of accounts becoming NPA on the day and the accounts upgraded.
Classification of a performing asset as NPA on account of technical issues to be
addressed by the branch suitably with necessary supporting documentary
evidences.
ii. Branches shall verify the classifications made by the system are in tune with
the Prudential Guidelines. Wherever guidelines are not complied with or
variance is observed, the branches are required to take up with the Circle
Office with necessary details. The same should be placed before the Auditors
for necessary rectification by way of MOCs.
iii. The Sub Standard accounts on completion of 12 months period in Sub
Standard category from the date of NPA should be downgraded to Doubtful
Assets.

5. UPDATION OF DELIQUENCY PERIOD UNDER CBS OPTION - ALM35 :

For general advances and loans for non-crop based activities, like allied
activities, the delinquency days for movement to NPA is 90 days from the due date
of instalment/interest payment.

Whereas for agriculture loan accounts sanctioned for crop based activities, the
classification of the same will be based on crop seasons, i.e, in case of short
duration crops, the account will become NPA after two short term crop seasons
from the due date of instalment/interest arrears and in case of long duration
crops the account becomes NPA after one crop season from the due date of
arrears.

The duration of crop seasons are not same across the country and vary from
region to region even for same type of crops.

In view of the above, it becomes necessary for the branches to identify each
account whether an account is granted for crop based activity or non-crop based
activity and basing on the type of crop, the delinquency days has to be arrived by
the branches. Hence, in order to assist the branches in classifying the accounts
properly and to have an uniform approach to the extent possible, following plans
have been created for classification of agri loans.

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 Sl.No Classification Plan Name of the Code
1 CROP 12 M 12 months duration
2 CRO2P 18 M 18 months duration
3 CROP 24 M 24 months duration

The duration defined above, can be for two crop seasons in case of short duration
crops or single crop season in case of long duration crops.

Branches are required to review all the agriculture loan accounts and classify the
accounts whether crop or non-crop based loans and if crop-based loans classify
them in any of the above categories. Basing on the selection of the account, the
account will be moved to NPA status, automatically by the system, on the expiry
of the above duration from the due date of instalment/interest arrears.

Irrespective of the Product under which the agricultural loans are granted branches
are required to classify the accounts as follows:

• Opt for ALM35 and under the tab ‘Crop Attributes’ mark the account as Crop
based / non-crop based loans, by checking the relative flag.

If the crop-based flag is checked, the user will be allowed to select any of the
above mentioned classification plan. Select the appropriate plan applicable to
the duration of crops (whether 2 short term crop season or single long term crop
season) the loan is linked to.

For better understanding, a screen shot of ALM35 indicating steps involved is

furnished in Annexure –56

43.2 ASSET SUB-CLASSIFICATION CODES (ASCC)

i. ASCC System is a mechanism to classify borrowers on the basis of compliance to

the parameters indicating the quality of assets and to detect early warning signals
of incipient sickness. The system is also aimed at identifying deficiencies and to
facilitate timely remedial measures in order to prevent slippage in the asset
quality. The ASCC norms are applicable in respect of all borrowal accounts
subjected to MTR. Based on the conduct of the account, adherence to various
financial parameters etc., the accounts are categorized into 9 grades viz,

Standard Assets - ASCC S1 to S4

Substandard Assets - SS
Doubtful Assets - 1st year - D1,

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 2nd year - D2
3rd year - D3
Loss Assets - Loss assets

The ASC code system is in addition to the asset classification as per the RBI
guidelines.

ii. The ASC codes are to be allotted during the renewal of limits / MTR by the
concerned sanctioning authority / reviewing authority. Efforts must be put to
improve the asset classification.
iii. Asset Sub-Classification Code (ASCC) is introduced to ensure quality of our credit
portfolio and also to contain NPAs.
iv. ASCC system has an inbuilt mechanism to identify the quality of Standard Assets
besides the early warning signals of incipient sickness so that, timely remedial
measures can be initiated to prevent slippage in the asset quality. Therefore, the
ASCC system should be properly / effectively deployed to prevent slippage in the
quality of our assets and thus maintain continuous good health of the borrowal
accounts.
v. All our loan assets shall be classified into following categories, only for the
limited purpose of ASCC. It should be clearly noted by branches / offices that
there is no change in the classification of our assets for the purpose of Balance
Sheet which is based on IRAC norms and the same would continue for all our loans
and advances.

43.2.1 Standard Assets are sub classified under the following 4 categories :

1. Standard Asset Sub classification Code – S1 :

These are the Standard Assets which satisfy the following:

i) Conduct of the account satisfactory.

ii) Current Ratio is 1.14 and above

iii) TOL : TNW is not more than 2.50 / the permitted level to the specific industry.

iv) There are no cheque returns and the dishonour of the bills discounted is less
than 5% of the total bills discounted and have been recovered immediately
within 15 days.

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 v) All important terms and conditions of the sanction like obtention of securities
/ collateral security, personal guarantee/s, creation of charge, proper
completion of documentation etc., are complied with.

vi) Overdues (including interest overdues, overdues on account of devolved LCs/

guarantees liability), if any, in the account do not exceed 10% of the liability
and are not outstanding for more than a month for reasons well explained and
convincing and which do not indicate any possible deterioration in the quality
of the asset.

vii) Submission of feedback statements like Stock Statement, QOS, MSOD, ABS
etc., are prompt.

viii)All required renewal papers are submitted by the party promptly.

ix) Achievement of projected turnover is 80% or more.

x) Profit making.

xi) Safety of advance cannot be considered to be in doubt on the basis of

feedback statements, operations in the account, QOS, CMS, ABS, etc.,

2. Standard Asset Sub Classification Code – S2 :

i) Account gets overdrawn beyond the sanctioned limit / DP but such overdrawings
occur only on very few occasions that too only for temporary / short periods,
say not more than 6 times during the review period (i.e., from the date of
availment of sanctioned / renewed limit to MTR or from MTR to the
submission of renewal proposal).

ii) Though there are cheque returns in the account, such returns are very few in
number during the review period. Similarly, the dishonour of the bills
discounted to the party if any, is not in excess of 10% of the total number of
bills discounted to the borrower during the review period and the same have
been recovered promptly within a period not exceeding 15 days.

iii) Overdues (including interest overdues, overdues on account of devolved LCs/

Gtee liability), if any, outstand only for a period of 1 to 2 months but they are
not indicative of any deterioration in the quality of the asset.

iv) Some delay in the submission of feedback statements.

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 v) Current ratio is less than 1.14 but above 1.

vi) TOL : TNW is above 2.50 but below 4.

vii) Though the limit permitted has expired, the first extension for a period of not
exceeding 3 months is permitted and the said period has not expired.

viii) Non compliance of some of the sanction terms and conditions which are other
than relating to obtention of securities / collateral securities, guarantee/s,
creation of charge, proper completion of documentation etc.

ix) Achievement of projected turnover is 70% or more.

x) Profit making.

xi) But for the above, the operations in the account conducted satisfactorily and
the safety of the advance cannot be considered to be in doubt on the basis of
the feedback statements, operation in the account, QOS, CMS, ABS, etc.,

3. Standard Asset Sub Classification Code – S3 :

i) Frequent overdrawings beyond the sanctioned limit/DP.

ii) Frequent cheque returns and dishonour of bills discounted.
iii) Current ratio is below 1.
iv) TOL : TNW is above 4.
v) Undue delays in submission of feedback statements.
vi) Overdues (including overdue interest, overdues on account of devolved LCs/
guarantee/s) outstand beyond 2 months.
vii) Complete set of renewal papers not submitted by the borrower even after
expiry of the first extension permitted.
viii) Account is inoperative or operations have substantially reduced for
unexplained / unconvincing reasons or for reasons which are clear indicators
of potential deterioration in the quality of assets.
ix) Achievement of projected turnover is less than 70%.
x) Loss making.

4. Standard Asset Sub classification code S4 :

All SIC / BIFR / Weak / Sick / Sticky accounts which are under nursing which are
eligible to be classified as Standard Asset as per IRAC norms.

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43.2.2 All Sub Standard Assets shall be classified under the following category:

Sub-Standard Assets (SS):

All sub standard assets are to be classified as SS.

43.2.3 All Doubtful Assets shall be classified under the following three categories.

1. Doubtful Assets : Sub-Classification Code D1 :

All doubtful asset during the first year are to be classified as D1.

2. Doubtful Assets : Sub-Classification Code D2 :

All doubtful assets during the second year are to be classified as D2.

3. Doubtful Assets : Sub-Classification Code D3 :

All doubtful assets during the third year and onwards are to be classified as D3.

43.2.4 Loss Assets:

All loss assets shall be classified under a single category. As all loss assets irrespective
of age attract 100% provision, no sub classification under this category is stipulated.

43.2.5 NOTE:

1. APPLICABILITY OF THE ASCC NORMS :

In order to have an objective ASCC system and to provide focused attention for
effective monitoring of borrowal accounts, the ASCC norms are made applicable
only in respect of borrowal accounts which are subjected to MTR (Mid Term
Review).

2. The revised ASCC should be allotted during the renewal of limits / Mid Term
Review by the concerned Sanctioning Authority / Reviewing Authority. Therefore,
appropriate ASCC viz., S1, S2, S3, S4, SS, D1, D2, D3 etc., as applicable should be
allotted to the respective accounts based on the renewal proposal / Mid Term
Review. This is in addition to classification of the accounts as Standard Asset,
Sub-standard Asset etc., for the purpose of Balance Sheet and income recognition
purposes.

3. Notwithstanding what is stated in S.No.3 above, if a borrowal account is required

to be classified as NPA i.e., Sub-standard and/or downward as per IRAC norms
based on the guidelines issued by Balance Sheet and Central Accounts Section,

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 Financial Management Wing, HO from time to time, then, such accounts shall be
assigned with ASCC SS or downwards as the case may be, by the branches
themselves irrespective of previous ASCC status accorded to such borrowal
accounts at the time of renewal / MTR.

4. In respect of other borrowal accounts which are not subjected to MTR, review
and follow up of such accounts should be done based on periodical review returns
and other related statements etc., though they need not be assigned with
ASCC.

5. The asset classification into performing and non-performing is borrower-wise and

not account/facility-wise. All the facilities granted to a borrower will have to
be treated as NPA and not the particular facility or part thereof which has
become irregular. Accordingly, if one account of the borrower is NPA, the other
accounts which are otherwise performing, should also be classified as NPA. Such
performing assets are called deemed NPAs. While classifying the accounts
borrower-wise, within the classification of NPA, the worst sub-category should
be adopted as a prudential measure.

"If a borrower is having more than one account and if any one of the account is to
be classified as doubtful, all other accounts of the borrower should be
classified as doubtful, though such accounts may qualify for classifying as
standard and / or sub-standard asset."

Since the asset classification is borrower-wise, the total liability of the

borrower and the total securities available thereof should be considered for
asset classification and provisioning.

43.3 Asset classification in General and at the time of Restructuring, Rehabilitation etc.:

Every year the B.S.C.A. Section, Financial Management Wing, HO, Bangalore, comes
out with detailed Circular containing prudential norms on income recognition, asset
classification and provisioning for preparing Balance Sheet in September and March
mainly. As these guidelines are based on instructions from Reserve Bank of India and
are subject to changes, Branches are advised to go through the Balance Sheet Circular
of BSCA Section issued from time to time and act accordingly.

43.4 REVIEW OF AGRICULTURAL LOANS:

The objectives of Loan Review Mechanisms are:

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 1. To monitor the credit portfolio of the Bank on a continuous basis in order to
ensure proper use of credit facility by the borrower.
2. To ensure the quality of credit portfolio of the Bank.
3. To monitor credit risk in loan accounts and detect signs of any sickness promptly
in order to initiate remedial measures and ensure that the account does not
become NPA.
4. To review pricing of the borrowal accounts wherever applicable.

43.4.1 COMPLIANCE TO SANCTION TERMS AND CONDITIONS

(i) In order to ensure that branches obtain appropriate loan papers and comply with
the terms and conditions stipulated in the related sanctions, the controlling
offices shall obtain a certificate (NF 482) from the branches.

(ii) If any modifications are required in any of the stipulated terms and conditions of
the sanctions or waiver of any condition is considered essential based on the
merits of the case, the branches concerned shall immediately take up with the
authority empowered to accord permission to such modification / waiver before
making available the facility.

43.4.2 OTHER CREDIT MONITORING TOOLS

The Bank shall monitor the borrower accounts on an ongoing basis, based on various
monitoring tools as briefed in the following paragraphs.

43.4.2.1. Review of Credit Sanctions made by each authority

1. Loan sanctions made by each sanctioning authority at Branch shall be placed

before the next higher authority, not below Scale IV/ Review committees at Circle,
within the stipulated timeframe and as per the detailed procedural guidelines
stipulated in this regard. Such sanctions include fresh sanctions, renewals and/or
enhancements.

2. The said higher authority shall review these sanctions with particular reference
to the below mentioned aspects:

i. Exercise of credit sanctioning powers within the scheme of delegation of

sanctioning powers and other guidelines.
ii. Adherence to internal loan policies and procedures and applicable laws /
regulations.
iii. Assessment of quality of the loan asset

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 iv. Precaution taken/ advised to safeguard the interest of the Bank
v. Nature and adequacy of loan covenants

3. The reviewing authority shall convey the observations/instructions if any, thereon

to the sanctioning authority for suitable action. In case higher authority has
accorded post sanction clearance to any credit proposal, the same need not be
subjected to review again by the reviewing authority, as the concerned authority
would have examined the proposal in entirety at the time of according such
clearance for the proposal. To facilitate this, full details of the sanctions as well
as justification would be submitted while seeking such clearance.

4. A system of tracking the sanctions by various authorities at Circle shall be in place

as being done in respect of branch sanctions for ensuring review of all those
sanctions made by various authorities in Circles. Confirmation in this regard shall
be furnished to CA&W Wing at HO.

5. Loans/ advances sanctioned to employees of the Bank as per guidelines on 'Staff

Advances' and VSLs / Overdraft against the security of deposits with the Bank /
NSCs / KVP / Life Insurance Policies need not be reported for review by the next
higher authority.

6. Review Process:

i. Sanctions made by the branch head are to be reviewed by Circle Review

Committee I & II.
ii. Sanctions made by the Senior Managers/ Credit managers in VLB / ELB are to
be reviewed by Chief Manager / AGM of the branch.
iii. Sanctions made by DGM/GM-CO-CAC (Circle Head) in a fortnight, including
agriculture and Micro Finance are to be reported in the structured reporting
format to Credit Review & Monitoring Section, CA&M Wing, HO within 7 days
from the closure of the relevant fortnight and shall be reviewed by Review
committee at HO.
iv. Sanctions made by GM-CO-CAC (Circle Head) including Agriculture and Micro
Finance shall be scrutinized by CA Wing, HO and reviewed by HO Review
Committee.
v. Sanctions made by CGM-HO-CAC shall be reviewed by review committee at
HO
vi. Sanctions made by ED-CAC shall be reviewed by MC of the Board
vii. Sanctions made by the Credit Approval Committee shall be laid before the
Board as soon as may be after the end of the meeting.
viii.Sanctions made by Executives and Branch Managers who are due to retire/

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 who have resigned/who have opted for VRS during the period of 3 months
prior to date of their relief shall be subjected to review by the next higher
authority not below Scale IV/ respective Review committees at HO/CO.

6.1 Process flow

i. All the applications shall be inwarded in the web based credit sanction
register package has been developed and structured by DIT Wing(PRR 20C
(NB-117)-Govt. sponsored schemes and PRR 20D (NB-140), Agricultural
Advances. )
ii. Circles and branches may access the package through Single Sign On (SSO).There
is a provision for the review authorities to update the review comments.
iii. Small/Medium/Large branches shall forward the aforesaid documents
relating to sanction in respect of loan amount of over Rs.1 lac in respect of
Agricultural advances/SHG advances.
iv. At VLBs/ELBs/CSBs:In respect of sanctions made by Credit Manager/Senior
Manager, copies of application along with credit report and sanction
memorandum shall be placed before CM/AGM.
v. In respect of sanctions made by CM/AGM/DGM beyond Rs.1 lac ,apart from
recording the applications, copies of application along with the credit report
and sanction memorandum shall be submitted to CO as the case may be within
7 days from the date of sanction of loan.
vi. Wherever the proposals are rejected, the reasons for rejection should also be
recorded in the Web based package.

43.4.2.2. Mid Term Review

This is also a post sanction review process applicable to loans and advances above a
specified cut off limit and for specified categories. The Mid Term Review shall
essentially focus on the following:

i. Verification of adherence to loan policies and procedures of the Bank and

applicable laws/regulations.
ii. Analysis of performance of the borrowal unit
iii. Identifying promptly any signs of weaknesses developing in the account and
suggest appropriate and timely corrective action.
iv. Use of the credit facility and conduct of account by the borrower.
v. Compliance with the terms & conditions stipulated in the sanction.
vi. Overall credit quality changes.
vii. Issue guidelines/instructions wherever necessary to improve the asset quality.
viii. Mid Term Review shall be based on the inputs in the format stipulated in this
regard

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 MTR of Agriculture accounts:

i. On half yearly basis in case of projects under implementation as at February and

August of each year.
ii. In other case, MTR shall fall due exactly 6 months from the date of the sanction/
renewal. The period shall be reckoned from the date of sanction/renewal only
and not from the date of credit report.
iii. The following formats are to be submitted by the branches for conducting MTR as
above.
a. Completed project
-for MTR (half yearly) : Annexure 57
b. Project under implementation : Annexure 58
c. REC-SPA Schemes Formats to provided
d. Co-operative finance by the circles
iv. Even in the case of exclusive term loans/DPG/co-acceptance limits, MTR is to be
done at 6 monthly intervals from the date of sanction.
v. If proposal for extension of the tenability of limits is sought in the MTR format,
such proposals shall be subjected to a review before permitting extension. In
such cases, separate MTR as per the original programme is not required.
vi. The Bank has laid down detailed procedural guidelines for conducting MTR of
borrowal accounts which shall be adhered to.

43.4.2.3 Monitoring of Special Watch List of Accounts:

1. A system of reporting Special Watch Accounts is in vogue as an effective system of

monitoring accounts showing delinquency tendencies. The branches report to circle
office about accounts wherein the overdues and/or irregularities persist/
continue for more than 30 days.

2. Early warning signals & submission of Special Watch List Statement:The

indications showing first sign of weaknesses on health of accounts are treated as
early warning signals. All accounts displaying unsatisfactory dealings/ early
warning signals are put under special watch list for follow up and time bound
actions should be taken to prevent slippage to NPA. The following types of
accounts shall be reported in the Special Watch list:

(i) Running accounts - where the accounts are showing overdues for a period of
more than 30 days. Overdue PCs outstanding beyond 30 days from the due
date., Where any amount which has fallen due for payment and remains
unpaid for a period of more than 30 days.

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(ii) Running accounts - where the regular limits/ adhoc limit /Adhoc Overlimit or
Single transaction limits are not renewed/ reviewed/ regularized beyond 1
month from due date stipulated in the sanction.

(iii)Term loans where interest and/or instalment of principal remain overdue for
a period of more than 30 days.

(iv)Running accounts - where the drawings are allowed in an account based on

the Drawing Power calculated from stock statements older than 1 month from
the due date for submission.

(v) Bills both demand and usance remaining overdue for more than 30 days from
the date of purchase/ due date respectively.

(vi)Devolved NFB facilities outstanding beyond 30 days from the date of

devolvement. Accounts which are otherwise to be classified as NPA as per
IRAC norms need not be included in this statement.

vii) In respect of the accounts, which are reported under SWL, other irregularities
like pending EMT, Documentation etc, if any, shall also be incorporated under
relevant column.

The Special Watch list statement is categorized in to 5 Parts namely,

Part A - All Borrowers with limit including and upto Rs. 1 lac.
Part B - All Borrowers with limit of > Rs.1 lac including upto Rs. 5 lac.
Part C - All Borrowers with limit of > Rs. 5 lac including upto Rs. 25 lac
Part D - All Borrowers with limit of > Rs.25 lac including upto Rs.100 lac.
Part E - All Borrowers with limit of > Rs.100 lac.

a. Parts A & B shall be submitted monthly and Parts C to E shall be submitted

fortnightly in the stipulated format. The due date of the statement is 15th
and last day of every month. Part D & E accounts shall be individually
reported to CA&M Wing, HO with all the required details.

b. While submitting the statements Branches/Offices have to certify that all

accounts which are eligible to be classified under the category of Special
Watch are reported in the statement and the accounts which are showing
overdues/irregularities of more than 90 days are not included in the
subject statement.

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 viii)Monitoring of SWL accounts:

a. Parts A to E shall be primarily reviewed at Branches. In respect of Part B to

E, Branch wise/ account wise review of S W L accounts shall be carried out
at Circles.
b. Part E (> Rs.100 lac accounts) accounts shall also be individually reviewed
at CA&M Wing, H O.
c. All accounts appearing in SWL shall be individually reviewed by the branches/
offices and necessary remedial measures like recovery/ regularization of
the overdues, extension of PC period, extension of usance period of Bills,
rephasement/ restructuring of the account, etc., shall be initiated, to
prevent the accounts slipping to NPA & also to bring the accounts out
of SWL.
d. The accounts which are appearing in the Special Watch List for the first
time have to be monitored closely and if such accounts are repeatedly
appearing in the statement, meticulous scrutiny to examine the need for
revival/ restructuring/ rephasement to be carried out.
e. In respect of accounts requiring rephasement/restructuring, it is to be
ensured that proposals are taken up well in advance so that the decision is
received well before the overdues or irregularities complete 90 days.

ix) Monitoring of taken over accounts

a. A thorough review of taken over accounts is to be carried out. The details

of taken over accounts upto the powers of below the Circle Head be
reviewed by Circle Head and those falling under the powers of Circle Head
be reviewed by HO on half yearly basis. This is in addition to the existing
system of MTR at half yearly rest and shall be carried out at 6 months
intervals for one year after takeover as after that account will fall under
the normal loan review mechanism.

b. All the detailed procedural guidelines issued regarding proper

compilation, prompt submission of SWL,review and monitoring to be
adhered to.

43.4.2.4 Credit Monitoring Format – CMF

i. Bank has put in place a system for monitoring of high value credit through Credit
Monitoring Format, to be submitted not later than 10 days from the due
date.

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ii. All borrowal accounts with total credit (FB+NFB) limits of Rs.1 Cr & above shall be
monitored once in 2 months at branch level. Branches are required to submit a
bimonthly Credit Monitoring Format (CMF) covering an over view on the conduct
of the account. Bank has devised a web-based package for on-line submission and
review CMF. A structured format has been devised to bring out the changes for
better and effective monitoring with focus on performance, behavior and
conduct of the account, compliance of sanction terms, perfection securities and
to ensure that the conduct of the account continues to be satisfactory.

iii. Periodicity of review & the reviewing authority based on the risk rating of the
account shall be as advised in the credit policy of the Bank, which is presently is
as under

Credit Credit Risk Periodicity Reviewing CO/

Exposure Rating of review authority HO
Rs.1 Crore to LR 1, LR 2, LR 3 Bi-monthly DM/ AGM CO
Rs.10 Crore &Normal Risk
Rs.1 Crore to Moderate Risk Bi-monthly AGM/ DGM CO
Rs.10 Crore
Rs.1 Crore to High Risk Monthly Circle Head CO
Rs.10 Crore
Rs.10 Crore to LR 1, LR 2, LR 3 Bi-monthly DM/ AGM HO
Rs. 200 Crore & Normal Risk
Rs.10 Crore to Moderate Risk Bi-monthly DGM/ Wing HO
Rs. 200 Crore Head
Rs.10 Crore to High Risk Monthly Wing Head HO
Rs. 200 Crore
Rs.200 crores & LR 1, LR 2, LR 3 Bi-monthly Wing Head HO
above & Normal Risk
Rs.200 crores & Moderate Risk Monthly Wing Head HO
above & High Risk

Monitoring of borrowal accounts upto a limit of Rs.1 crore shall be done by branches.
Though monitoring of credit exposure of Rs.1 crore and above through on line CMF is
done at other levels, Branches to continue to monitor these accounts from their end
on day to day basis.

Other operative guidelines in this regard shall be issued by CA&M Wing.

A copy of CMF shall also be submitted to the sanctioning authority

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43.4.2.5. Pre-release audit of facilities with credit limit of Rs.5 crores & above:

Bank has put in place systems and procedures for ensuring health of the credit
portfolio right from credit initiation to ultimate recovery of the loan funds. Such
systems are also reviewed from time to time to suit the changing dynamics of the
business.

It is observed that failure in proper post sanction compliance to pre-disbursement

conditions and monitoring of advances has often facilitated the borrowers to divert
the funds for purposes other than for which loans were sanctioned.

In order to strengthen pre-disbursement monitoring of compliance to sanction terms

and conditions, obtention of stipulated collateral securities, ensuring perfection of
securities before disbursement etc, Pre-release Audit System has been
introduced.

Detailed guidelines have been put in place in this regard. Some of the important
features of pre-release audit are as under:

i) All types of credit facilities sanctioned with credit limit of 5 crore & above to new
as well as existing borrowers are eligible.
ii) All renewals with enhancement are eligible.
iii) Pre-release audit shall be conducted within 48 hours from obtention of
documentation.
iv) Pre-release audit shall be conducted by Scale-III or Scale-IV authorities.
v) No authority is empowered to permit waiver of pre-release audit.
vi) Compliance of pre-release audit observations shall be verified during the credit
audit

The pre-release audit is expected to bring out any deficiencies prior to disbursement
of a loan as against such observations being made at the time of post-disbursement
monitoring or Credit Audit which is carried out at a later stage. Further, such a system
facilitates rectification prior to disbursement thereby safeguarding the interest of the
Bank.

43.4.2.6.Credit Audit of facilities with credit limit of Rs.1 crores & above:

All fresh sanctions, renewals with enhancements/additional exposures with aggregate

liability of Rs.1 crore and above (FB+NFB) shall be subjected to credit audit within a
period of 3-6 months from the date of disbursement.

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 The objectives of post sanction credit audit are to carry out independent review of
risk factors in the borrowal account, reviewing the compliance status by the borrower,
reviewing compliance of post sanction terms & conditions by the branch, detection of
early warning signals and suggest remedial measures.

In respect of Credit Audit reports of borrowal accounts of the Bank with exposure of
5.00 crore & above, a review will be carried out at HO. In respect of exposure of
Rs.1 crore and above and unto Rs.5 crore, review shall be done by the respective
Circles with Circle Head as reviewing authority.

43.4.2.7. Monitoring of High Value Credit (Rs.10 crore and above)

i. Considering the thrust to maintain the quality of the assets, particularly in

respect of high value credit, monitoring of high value exposure accounts of Rs.10.00
crores and above and all PCB accounts (including MSME Sector & excluding
agriculture) shall be undertaken by CA&M Wing, HO. Non LPD, Non BIFR NPA
accounts are also to be covered.

ii. The monitoring of Sick, BIFR accounts shall be undertaken at Recovery Wing HO,
whereas the borrowal accounts under Agriculture credit shall be monitored by
Priority Credit & Financial Inclusion Wing, HO based on various monitoring tools
available in the Bank for this purpose.

43.4.2.8 Monitoring of Borrowal accounts with total exposure of Rs.200 crore and above:

Borrowal accounts with exposure of Rs.200 crore and above shall be subjected to
review and monitoring by CA&M Wing, HO

43.4.2.9. Stock Audit Report by External Agencies

Borrowal accounts that are to be subjected to stock audit, periodicity, etc., are
prescribed in the CRM policy. This audit of inventory stock and book debts securities
will be got done through our bank panel valuers at the prescribed periodicity.

43.4.2.10. Quick Mortality Accounts

Slippage in the quality of a credit asset particularly in new accounts with aggregate
liability of Rs. 5 lacs and above and becoming Non Performing Asset within a period of
12 months from the date of first disbursement, shall be identified and suitable
remedial measures including determining accountability, if any, for the same shall be
initiated by Circle offices. The Circle shall monitor such accounts closely (including

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 accounts taken over which suffered quick mortality) and implement measures to
upgrade the asset classification/early recovery. The Bank shall have a well-defined
reporting system in this respect.

43.4.2.11 Quarterly/Half-yearly Operating System (QOS/HOS)

The data under QOS / HOS gives information on the operational results of the borrower
enterprise, utilization of funds, liquidity position and can be used as an important
monitoring tool.

i. A quarterly / Half yearly Operating System (QOS / HOS) shall be in place in the
Bank in respect of industrial borrowers, merchant exporters, traders, borrowers
under SME (both manufacturing and service sector), agricultural borrowal
accounts etc. enjoying fund based and non-fund based working capital limits of
Rs.5 crore and above whether the limits are assessed either on the basis of
Turnover method or MPBF system.
ii. Submission of QOS/HOS is applicable in respect of agricultural borrowal accounts
enjoying fund based and non fund based working capital limits of Rs.1 crore &
above.
iii. QOS / HOS shall be applicable to all borrowers enjoying working capital facilities
as above under consortium, multiple banking system or sole banking.
iv. In the case of consortium where we are the leaders or under multiple banking/
sole banking, the borrower shall be required to submit the QOS and HOS. Where
we are members in a consortium, the system prevailing with the leader bank may
be followed.
v. Detailed analysis of QOS and HOS has to be conducted to ascertain the movement
of current assets, current liabilities, its impact on NWC and also the trends in
funds flow and profitability.
vi. In this regard, the Bank has evolved detailed procedural guidelines to monitor the
accounts, which shall be promptly followed.

43.4.2.12 Stock statement cum Monthly Select Operational Data (MSOD) Statement

Stock statement cum Monthly Select Operational Data (MSOD) statement shall be
obtained from the applicable borrowers periodically and monitor the position as also
conduct godown inspection at the prescribed intervals of time.

43.4.2.13 Periodical Review Return

i) The Bank has a system to conduct periodical monitoring of borrowal accounts

through various Periodical Review Returns (PRRs) at prescribed intervals of time.

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 Such PRRs are required to be submitted by branches to their respective
Controlling Offices in respect of the individual loan accounts under the different
categories of the credit portfolio.
ii) The Bank has a calendar programme for submission of these periodical review
returns (PRRs). Branches shall adhere to the same and the Controlling Offices
shall ensure compliance to the same by their branches.
iii) Reporting in these returns shall be by way of exception – i.e. only the full details
of loan accounts where there are overdues, irregularities, non-compliance of
important terms of sanction, etc., exist only such cases shall be reported.
iv) Before submitting these individual PRRs to the concerned Controlling Offices, the
respective branches shall immediately initiate remedial steps as may be
necessary to recover the overdues, set right the irregularity, etc., and
incorporate the details of the same in such returns.
v) On receipt of the PRRs, the Controlling Offices shall review the same promptly to
ensure all steps necessary to safe guard the interest of the Bank have been
initiated by the branches in a timely manner and if not give suitable instructions/
guidance to them. The Controlling Offices shall also have a suitable follow up in
this regard with their branches.

43.5 FOLLOW UP & RECOVERY OF AGRICULTURAL LOANS:

Recovery of agricultural loans being very important in view of limited lendable

resources of banks, and recycling of funds holds the key to further expansion of
agricultural credit. Agricultural advances require more attention and supervision.
Constant personal contact will help in improving recovery performance.

The following are some of the important steps for improving the recovery position of
agricultural advances:

1. Regular periodical follow-up, inspection of securities in all loan accounts as per

guidelines given in Chapter 3 of this manual should be conducted. Branch
Manager / AEO / Officer are permitted to collect payments from the borrower
whenever they visit the place of the borrower for inspection or otherwise when
the borrower visits the Bank. The following procedure has to be followed in such
cases:

a) The borrower should be advised to call on the Branch as far as possible to pay
the instalment / interest. They can also make the part payments to the
Manager / AEO / Officer during the latter’s visit to the borrower.
b) The borrowers must be advised at the time of granting the loan that every
payment made should be got entered in the loan pass book.

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 c) The Manager / AEO / Officer on receipt of any part payment, should make an
entry in the loan pass book then and there and full signature must be affixed
against the entry.
d) In addition to making the entry in the pass book, a challan with the counterfoil
must also be prepared for the amount received and the counterfoil duly signed
has to be given to the borrower.
e) The amount so received by the Manager / AEO / Officer should be paid into
the Bank as early as possible but not later than the next working day. As for as
possible, it may be credited as late cash on the same day.
f) No amount should be received by the Manager / AEO / Officer without
entering in the loan pass book and giving counterfoil of the challan duly signed
by the person who received the amount. Insurance cover for loss of cash in
above circumstances is available under cash in transit policy cover.

2. Due dates of instalments are to be diarised and due notice in NF 575 is to be sent
about 15 days in advance advising the party to clear the liability / pay the
instalment within the stipulated period.
3. Recovery campaigns during harvesting / marketing season are to be conducted.
4. A reminder in NF 576 is to be sent if no response is forthcoming from the borrower
for the earlier notice.
5. Borrowers are to be contacted personally and reasons for default ascertained. If
the default is due to genuine reasons such as natural calamities etc., eligible
concession like conversion / rephasement is to be extended as outlined in
Chapter 44 of this manual.
6. If the default is intentional and borrower does not co-operate, a notice by Regd.
AD in NF 577 is to be sent to both the borrower and co-obligant advising them to
liquidate the liability within a week and also indicating initiation of legal action in
case of no response.
7. The details of assets / net worth of the borrower/s are to be ascertained. If the
borrower is trying to dispose off the security, immediate steps are to be taken for
seizure / possession of hypothecated / pledged security as per guidelines before
filling suit.

8. (a) Initiating recovery measures:

The guidelines issued by Recovery Wing, HO, in the matter of recovery and
follow up shall be adhered to for agricultural loans also.

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(b) Compromise / One Time Settlement:

The guidelines issued by Recovery Wing, HO, in the matter of compromise /

OTS, shall be followed in the matter of Agricultural loans also.

(c) In case the borrower / co-obligant/s do not have sufficient income and assets
in the form of movable / immovable properties and if the branch feels that
the chances of recovery in normal course or through legal action is remote,
matter may be referred to CO for further course of action like waiver of legal
action before expiry of limitation period.

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 CHAPTER – 44

GUIDELINES FOR RELIEF MEASURES BY BANKS IN AREAS

AFFECTED BY NATURAL CALAMITIES

44.1 GENERAL

44.1.1. Periodical but frequent occurrence of droughts, floods, cyclones, tidal waves and
other natural calamities take a heavy toll of human life and causes wide spread
damage to economic pursuits of human beings in one area or the other of the country.
The devastation caused by such natural calamities calls for massive rehabilitation
efforts by all agencies. The State and local authorities draw programmes for
economic rehabilitation of the affected people. The developmental role assigned to
the commercial Banks and co-operative Banks, warrants their active support in revival
of the economic activities.

44.1.2 Since the area and the time of occurrence and intensity of natural calamities cannot
be anticipated, it is imperative that the bank has a blue print/plan of action in such
eventualities so that the required relief and assistance is provided with the utmost
speed and without any loss of time. This pre-supposes that all the branches/offices
should have a set of appropriate area based standing instructions spelling out the
action that the branches will have to initiate in the calamity affected areas
immediately after the requisite declaration by district/state authorities. It is
necessary that these instructions should also be available with the state government
authorities and all the District Collectors so that all concerned are clear as to the
action that would be taken by the branches in the affected areas.

44.1.3 The precise details in regard to the provision of credit assistance by the branches
will depend on the requirement of the situation, their own operational capabilities
and the actual needs of the borrowers. This can be decided by them in consultation
with the district authorities.

44.1.4 Nevertheless, to enable branches to take uniform and concerted action

expeditiously, particularly, to provide the financial assistance to agriculturists,
small scale industrial units, artisans, small business and trading establishments
affected by natural calamities, the following guidelines are stipulated:

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I. Institutional arrangements:

a. District Consultative Committee Meeting

To facilitate co-ordination and expeditious action by the financing

institutions, the conveners of the concerned districts consultative committees
of the affected districts should convene a meeting immediately after the
occurrence of natural calamities. In the event of the calamity covering a larger
part of the state, the conveners of state level bankers committee will also
convene a meeting immediately to evolve a coordinated action plan for
implementation of the programme in collaboration with the State/District
authorities.

b. While determining the quantum of fresh loans to be granted to the

affected borrowers, the branches may take into consideration the assistance/
subsidy received by the affected persons from the State govt. and/or other
agencies.

c. Special SLBC Meeting

Immediately upon occurrence of a natural calamity, special SLBC meeting may be

convened to review the position in the affected areas and ensure speedy
formulation and implementation of suitable relief measures by Banks.

The Banks may also give adequate publicity to their disaster management
arrangements, including the helpline numbers. The relief measures initiated and
undertaken may be reviewed periodically in the weekly/fortnightly meetings of
specially constituted Task Forces or Sub Committees of the SLBC till such time as
conditions are normalized.

44.2 DISCRETIONARY POWERS:

44.2.1 Branch managers are empowered to grant loans upto their normal powers delegated
to them excluding the present liabilities, if any, of the victim for the purpose of
cut off point for deciding sanctioning authority.

44.2.2. DMs / AGMs of CO are also vested with discretionary powers to act on the line of
action agreed by the District/State level bankers committee without waiting for
approval from HO in matters like adoption of scale of finance etc. However, DMs
/ AGMs shall report promptly to Priority Credit Wing, Head Office the action taken
by them.

44.2.3. The rephasement of loan accounts are to be considered by the concerned sanctioning
authority.

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47.3. IDENTIFICATION OF THE BENEFICIARIES:

The branches should obtain from the concerned Government authorities lists of
affected villages within their area of operation. From among the identified
persons, assessment of loss sustained by the existing constituents of the branches
would be easier. In the case of fresh borrowers, discreet enquiries should be made in
this regard and assistance of the govt. authorities should be sought wherever
available for ascertaining genuineness of their requirements. For providing
conversion facilities in respect of crop loans, procedure for identification of areas
where such facilities have to be provided has been indicated under crop loans given
below.

44.4 COVERAGE :

44.4.1 Each branch shall provide credit assistance not only to its existing borrowers but also
to other eligible persons within its command area provided they are not covered by
any other financial agency. Fresh financial assistance has to be provided not only to
the existing borrowers but also to other eligible borrowers, to resume productive
activities. Notwithstanding the status of the existing account, fresh loans granted to
the borrowers will be treated as current dues.

44.4.2 Credit requirements of the borrowing members of the co-operatives will be met by
the Primary Agricultural Co-operative Societies (PACs)/LAMPS/FSS, etc. Branches
may however finance the non-borrowing members of the Co-operative Societies for
which the latter will have to issue the usual 'No Objection Certificate speedily'.

44.5 PRIORITIES :

Immediate assistance including finance would be provided for protecting and

rejuvenating standing crops/orchards, plantations, etc. equally important will be
repair and protection of livestock sheds, grains and fodder storage/structures,
drainage, pumping and other measures and operations to repair pumpsets, motors,
engines and other necessary implements. Subject to seasonal requirements, next
crop financing should be taken up.

44.6 AGRICULTURAL LOANS :

44.6.1 The bank assistance in relation to agriculture would be needed in the form of short
term loans for the purpose of raising crops (crop loans) and term loans for
purchase of milch/draught animals, repairs of existing tube wells and pumpsets,
digging of new tubewells and installation of new pumpsets, land reclamation, silt/

360
 sand removal, protection and rejuvenation of standing crops/ orchards/ plantation,
etc., repairs and protection of livestock sheds, grain and fodder storage structures,
etc. Banks may, of their own, decide the quantum of fresh loans to be granted to the
affected borrowers taking into consideration, amongst others, the extent of the crop
loss/scale of finance and their repaying capacity.

44.6.2 Crop loans

a) Identification of loss

In case of the natural calamities such as droughts, floods etc., the Government
authorities would have declared Annewari to indicate the extent to which crops
are damaged. However, where such declarations has not been made, Banks should
not delay in providing conversion facilities, and the District Collector's Certificate
that crop yield is below 50% of the normal yield, supported by the views of the
DCC in the matter (for which a special meeting may have to be convened), should
be sufficient for invoking quick relief arrangements. The certificate of the
Collector should be issued crop-wise covering all crops, including food-grains.
Issuing of such certificates in respect of cash crops, may, however, be left to the
discretion of the Collector. Alternatively, the District Collector, on occurrence of
the natural calamity such as drought, flood etc., may ask the Lead Bank Officer to
convene a meeting of the DCC, and submit a report to the DCC on the extent of
crop loss in the area affected by the natural calamity. If the DCC is satisfied that
there has been extensive crop loss on account of the natural calamity, the relief
including conversion / restructuring facilities of agricultural loans as per the
standing guidelines may be extended to the farmers affected by the natural
calamity, without declaring Annewari.

b) While considering loan applications for ensuing crop season, the current dues of
the applicants to the State Govt. may be ignored, provided the state Govt.
declare a moratorium for a sufficiently long period on all amounts due to the
govt. as on the date of occurrence of the natural calamity.

c) Scale of finance:

Scale of finance in respect of different crops will be uniform in a district. The

scales will be fixed taking into account the prevailing conditions and norms
presently adopted by different lending agencies. In fixing the scales, minimum
consumption needs of borrowers will be taken into account. The concerned
District Magistrate and Managers of branches operating in the districts would
be advised to adopt the scales so laid down.

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d) Issuance of fresh loans and restructuring of existing loans

The financial assistance required by borrowers in the event of natural calamity

would include:

i. consumption loans
ii. fresh loans for resumption of normal business
iii. restructuring of the existing loans

e) Consumption Loans

In view of the damage to crops and property, existing borrowers need

consumption loans for sustenance till the flow of income is resumed. For this
purpose, a maximum of Rs. 10000/- to be sanctioned and released in suitable
installments over the period upto harvesting of the current or next crop
depending on extent of damage and by proper assessment in individual cases.

f) Fresh Loans

Timely fresh financial assistance to resume productive activities may be provided

not only to the existing borrowers, but also to other eligible borrowers.
Notwithstanding the status of the existing account, fresh loans granted to the
borrowers will be treated as current dues.

g) Restructuring of existing loans

As the repaying capacity of the people affected by natural calamities gets

severely impaired due to the damage to the economic pursuits and loss of
economic assets, relief in repayment of loans becomes necessary in areas
affected by natural calamity and hence, restructuring of the existing loans will be
required. The principal amount of the short-term loan as well as interest due for
repayment in the year of occurrence of natural calamity may be converted into
term loan. In case of term loans the instalment of principal and interest
due in the year of occurrence of natural calamity may also be converted into
term loan.

The repayment period of restructured term loan may vary depending on the
severity of calamity and its recurrence, the extent of loss of economic assets and
distress caused. Generally, the restructured period for repayment may be 3 to 5
years. However, where the damage arising out of the calamity is very severe,
Banks may, at their discretion, extend the period of repayment ranging up

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to 7 years and in extreme cases of hardship, the repayment period may be
prolonged up to a maximum period of 10 years in consultation with the Task Force
/ SLBC.

In all cases of restructuring, moratorium period of at least one year should be

considered. Further, the Banks should not insist for additional collateral security
for such restructured loans. Asset classification for restructured loans will
remain the same as prevalent at the time of restructuring for a period of one year
as per extant guidelines for restructured loans. The asset classification status of
the loans will be as under:

a. The restructured portion of the short term loans and term loans which have
been converted into fresh loans may be treated as current dues and need not
be classified as NPA. The asset classification of these fresh term loans would
thereafter be governed by the revised terms and conditions and would be
treated as NPA if interest and / or instalment of principal remains overdue for
two crop seasons for short duration crops and for one crop season for long
duration crops.

b. The asset classification of the remaining amount due, which have not been
restructured, will continue to be governed by the original terms and
conditions. Consequently, the dues from the borrower may be classified by
the lending Bank under different asset classification categories viz.,
Standard, Sub-Standard, Doubtful, Loss.

c. Additional finance, if any, may be treated as "Standard Asset" and its future
asset classification will be governed by the terms and conditions of its
sanction.

Lending and other norms may be relaxed by Banks, at their discretion, for the
Self Help Groups affected in a natural calamity. Similarly, in retail or
consumer loans segment, the Banks may restructure the loans in a manner
suitable to the borrowers on a case-to-case basis.

Asset classification of the restructured accounts as on the date of natural

calamity will continue if the restructuring is completed within a period of
three months from the date of natural calamity. The restructured accounts
will be governed by the guidelines applicable to such accounts as per circular
on Balance Sheet issued by BSCA Section, Financial Management Wing, HO,
Circular issued from time to time.

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 The accounts that are restructured for the second time or more on account of
natural calamities, would retain the same asset classification category on
restructuring necessitated on account of natural calamity would not be treated
as second restructuring i.e, the standard asset classification will be allowed
to be maintained. All other restructuring norms, however, will apply.

h. Other guidelines for providing conversion facilities

i. As far as possible, it would be preferable to prescribe common due dates

for payment of instalments of the converted loan and extended term loans.
ii. ALL short-term loans, except those, which are overdue at the time of
occurrence of natural calamity, should be eligible for conversion facilities.
iii. Pending conversion of short-term loans, banks may grant fresh crop loans
to the affected farmers.
iv. Conversion of short-term production loans may be taken up by Banks at the
time of sanction of fresh crop loans to the affected farmers without
waiting for the due dates, which are taken into account in normal course of
sanction of such loans.
v. Similarly, instalments of principal / interest in respect of term loans may
be rescheduled for a period of 3 years, which could be extended for longer
period in the event of natural calamity.
vi. The rates of interest on the converted loans should be the same as that
charged on short-term loans.
vii.Where relief in the form of conversion / reschedulement of loans is
extended to the farmers, such converted/rescheduled dues should be
treated as current dues and Banks should not compound interest in respect
of the loans so converted / rescheduled.

44.7 APPROACH FOR SPEEDY ASSISTANCE:

44.7.1 To be effective, the assistance to farmers will have to be disbursed with utmost
speed. For this purpose, the lead bank and the district authorities concerned
should evolve a procedure whereby identification of borrowers, issuance of
certificates regarding Govt./Co-operative/Bank dues, title of the applicant to land
etc., is secured simultaneously.

44.7.2 Possibilities of organizing credit camps where Block Development and Revenue
Officials, Co-operative Inspectors, Panchayat Pradhans, etc., could help to finalise
the applications on the spot could be explored in consultation with the district
authorities where such credit camps are being organized. The State Govt. will also
arrange with the collectors to issue an executive order for the following officers

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 or their authorized representatives to assume respective duties and responsibilities
as envisaged under implementation of credit camps programme:

a) Block Development Officer

b) Co-operative Inspector
c) Revenue authority/village revenue assistant
d) Bank official operating in the area
e) PACS/LAMPS/FSS
f) Gram Panchayat Pradhan

44.7.3 In order to avoid delay, the forms in which the State Govt. Officers have to give
certificates at the credit camps may be got printed in sufficient numbers by the
respective District Magistrates.

44.8 DEVELOPMENT LOANS - INVESTMENT COSTS :

44.8.1 The existing term loan instalments will have to be rescheduled/ postponed keeping
in view the repaying capacity of the borrowers and the nature of natural calamity,
viz.,

i) Droughts, floods or cyclones, etc., where only crop for that year is damaged
and productive assets are not damaged.

ii) Floods or cyclones where the productive assets are partially or totally
damaged and borrowers are in need of a new loan.

In regard to natural calamity under category (i) the branches shall postpone
the payment of instalment during the year of natural calamity and extend the
loan period by one year, except to those (subject to the following exceptions) :

a) Those cultivators who had not effected the development or investment

for which the loan was obtained or had disposed of the equipments or
machinery purchased out of the loan.
b) Those who are income tax payers.
c) In the case of drought those who are having perennial sources of irrigation
except where water supply was not released from canals or irrigation
facility was not available from other perennial sources.
d) Tractor owners, except in genuine cases where there is loss of income and
consequential impairment of their repaying capacity.

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 Under this arrangement, the instalments defaulted wilfully in earlier years will not
be eligible for rescheduling. The branches have to postpone payment of interest by
borrowers. While fixing extension of period, the commitment towards interest shall
also be taken into account.

In regard to category (ii) i.e., where the borrower's assets are totally damaged,
the rescheduling by way of extension of loan period may be determined on the
basis of overall repaying capacity of the borrower including his repayment
commitment on the old term loans and towards the conversion loan (medium term
loan) on account of postponing of repayment of short term loans and the fresh crop
loan. In such cases, the repayment period of total loan (including interest liability)
less the subsidies received from the Govt. agencies, compensation available
under the insurance schemes, etc., shall be fixed having regard to the repaying
capacity of the borrowers subject to a maximum of 15 years, depending upon the
type of investment as well as the economic (useful) life of the new asset financed,
except in cases where loan relate to land shaping, silt removal, soil
conservation, etc. Thus, in case of loans for agricultural machineries, viz.,
pumpsets and tractors, it should be ensured that the total loan period does not
generally exceed 9 years from the date of advance.

44.8.2 Apart from rescheduling existing term loans, branches may provide to affected
farmers diverse type of term loans for developmental purposes, such as :

a. Minor Irrigation : Term loan for repairs to wells, pumpsets, etc., which are to be
quantified after assessing the extent of damage and estimated cost of repairs.

b. Bullocks : Where the draught animals have been washed away, requests for
fresh loans for a new pair of bullocks/he-buffaloes may be considered. Where
loans are given for purchase of new cattle or where farmers have brought
milch cattle, reasonable credit may be given for purchase of fodder or feed.

c. Milch cattle : Term loan for milch cattle will be considered depending upon
breed, milk yield, etc., the loan amount will include repairs to shelters,
purchase of equipment and feed.

d. Insurance : Considering the proneness of areas to cyclones and other natural

calamities, the cattle should be insured. Milch animals, draught cattle should be
branded for identification as also to serve as safeguard against their re-sale by
the beneficiaries.

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 e. Poultry and Piggery : Poultry, Piggery and Goat loans will be considered as per
our general norms.

f. Fisheries : In the case of borrowers who have lost their boats, nets and other
equipments, rephasing of payment of existing dues may be allowed on merits.
Fresh loans may be granted to them with loan maturity of 3-4 years. Loans for
repairs to boats of the existing borrowers may also be considered. In cases
where subsidy is available, the quantum of loan should be reduced to that
extent. In States where substantial subsidy towards the cost of boats, nets, etc.
is likely to be available, proper co-ordination with the concerned State Govt.
Dept. in this regard must be ensured. Apart from complying with other norms
and conditions for grant of advances, assistance may be sought from the Dept.
of Fisheries, which may be expected to take measures which would enable
banks to proceed with financing for this purpose. The boats should be
comprehensively insured against all risks including natural calamities as far as
possible.

44.8.3 Land reclamation :

It is likely that financial assistance will be required for reclamation of lands covered
by sand casting. Normally, sand/silt deposits upto 3 inches will either be ploughed
back into the soil or removed by the farmer without any need for financial
assistance. Loan applications will, however, be considered in cases where
immediate cultivation is possible and reclamation (removal of sand) is necessary.
Wherever reclamation finance for saline lands is warranted, the cost of reclamation
not exceeding 25% of the scale allowed for crop loan may be advanced along with
the crop loan.

For other activities like Agriculture, Horticulture, Floriculture, Betelvine growing etc.,
branches will advance loans for investment and working capital under their existing
schemes and follow usual procedures laid down by them. The working capital finance
shall be provided until such period the income from the plantation is adequate to take
care of such expenditure.

However, additional need based crop loans if necessary would be given for
revitalization/rejuvenation of standing crops/orchards based on individual
assessment.

44.9 OTHER DETAILS :

44.9.1 The question relating to procurement and proper arrangement for supply of
adequate quantity of seeds and various types of fertilizers will have to be

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 discussed with the State Govt. and District Administration in each district. Similarly,
for the purpose of ensuring adequate irrigation facilities, the state govt. will
undertake repairs to Govt. owned shallow and deep tube well and river lift
irrigation system damaged by floods and other natural calamities. As for fisheries,
the Fisheries Dept. of the State govt. will make arrangement to obtain
fingerlings and supply them to those who wish to revive tank fishing with bank
finance.

44.9.2 The State Govt. will have to consider preparation of schemes which would enable
commercial banks to obtain refinance at NABARD rates for amounts advanced by
branches for the said purpose.

44.10 CONSUMPTION LOANS:

In view of the damage to crops and property, existing borrowers need consumption
loans for sustenance till the flow of income is resumed. The maximum limit for
consumption loans is Rs.10000/- without any collateral security and such loans may be
provided even if no risk fund has been constituted by the respective state
government.

44.11 ARTISANS AND SELF-EMPLOYED :

For all categories of rural artisans and self-employed persons including handloom
weavers, loans will be needed for repairs of sheds, replacement of implements and
purchase of raw materials and stores. In sanctioning the loan, due allowance will be
made for subsidy/assistance available from the concerned state govt.

There are many artisans, traders and self-employed, who may not have any banking
arrangement or facility with bank, but will now need financial assistance for
rehabilitation. Such categories will be eligible for assistance from bank branches in
whose command areas they reside or carry on their profession/business. Where
such a person/party falls under the command area of more than one bank, the banks
concerned will meet together and sort out this problem.

44.12 SMALL AND MICRO ENTERPRISES :

Rehabilitation of units under village and cottage industry sector, small scale
industrial units as also smaller of the medium industrial sector damaged, will also
need attention. Term loans for repairs to and renovation of factory buildings,
sheds and machinery as also for replacement of damaged parts and working capital
for purchase of raw materials and stores will need to be provided urgently.

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 Where raw materials or finished goods have been washed away or ruined or
damaged, banks security for working capital will naturally be eroded and the
working capital account (cash credit or loan) will be out of order. In such cases,
branches will convert drawings in excess of the value of security into a term loan
and also provide further working capital to the borrower.

Depending on the damage suffered and time needed for rehabilitation and
restarting production and sales, term loan instalments will have to be suitably
rescheduled keeping in view of the income generating capacity of the unit.
Shortfall in margins will have to be condoned or even waived and borrower should
be allowed time to build up margin gradually from his future cash generation.
Wherever State Govt. or any agency has formulated special scheme for providing
grants/subsidy/seed money, suitable margin may be stipulated to the extent of
such grants/subsidy/seed money.

The primary consideration before the branches in extending credit to a small/tiny

unit for its rehabilitation should be the viability of the venture after the
rehabilitation programme is implemented.

44.13 TERMS AND CONDITIONS :

The terms and conditions governing relief loans will be flexible as to security,
margin, etc. In any case credit should not be denied for want of personal
guarantees.

44.14 Security:

Where the existing security has been eroded because of damage or destruction by
flood, assistance should not be denied merely for want of additional fresh security.
The fresh loans shall be granted even if the value of security (existing as well the
asset to be acquired from the new loan) is less than the loan amount. For fresh
loans, Branches may examine the security angle in a sympathetic way.

a. Where the crop loan (which has been converted into term loan) was earlier
given against personal security/hypothecation of crop and the borrower is not
able to offer charge/mortgage of land as security for the converted loan, he
should not be denied conversion facility merely on the ground of his inability
to furnish land as security.

If the borrower has already taken a term loan against mortgage/ charge on
lands secured, II charge for the converted term loan would be sufficient.

369
 Branches should not insist on third party guarantee for providing conversion
facilities.

b. In the case of term loans for replacement of equipments, repairs, etc., and
for working capital finance to artisans and self-employed persons or for crop
loans, usual security may be obtained. Where land is to be taken as security, in
the absence of original title records a certificate issued by the revenue
department officials may be accepted for financing farmers who have lost
proof of their titles i.e. in the form of deeds as also the registration certificate
issued to registered share croppers.

c. As per the recommendations of the RBI report on customer service, Branches can
finance the borrowers who require loans up to Rs.500 without insisting either on
collateral security or guarantee for any type of economic activity.

44.15 Margin:

Margin requirements be waived or the grants/subsidy given by the concerned State

Govt. Shall be considered as margin.

44.16 Interest:

The rates of interest will be in accordance with the directives of Bank communicated
to branches from time to time.

Those meeting the eligibility criteria under the scheme, Differential Rate of
Interest (DRI) should be provided in accordance with the provision of the scheme.

In respect of current dues in default, no penal interest will be charged. The Banks
should also suitably defer the compounding of interest charges.

Circle heads are empowered to extend 2% concession in rate of interest depending

upon the merits of each case. In deserving cases branches should take up the matter
with GM / DGM's of Circles.

Branches need not levy any penal interest and consider waiving penal interest if any,
already charged in regard to the loans converted/rescheduled.

44.17 APPLICABILITY OF THE GUIDELINES IN THE CASE OF RIOTS AND DISTURBANCES:

Whenever RBI advises to extend rehabilitation assistance to the riot/ disturbance

affected persons, the aforesaid guidelines may broadly be followed by branches for
the purpose. It should however be ensured that only genuine persons duly identified

370
 by the State Government agencies as having been affected by the riot etc. are
extended rehabilitation assistance.

The issuance of advice to the Banks by Reserve Bank of India on receipt of request/
information from State Government and thereafter issue of instructions by Banks to
their Branches generally results in delay in extending the assistance to riot-affected
people. With a view to ensuring quick relief to the affected persons, it has been
decided that the District Collector, on occurrence of the riots/disturbances, may ask
the Lead Bank Officer to convene a meeting of the DCC, if necessary and submit a
report to the DCC on the extent of damage caused to life and property in the area
affected by riots/disturbances. If the DCC is satisfied that there has been extensive
loss to life and property on account of the riots/disturbances, the relief as per the
above guidelines may be extended to the people affected by the riots/disturbances.
In certain cases, where there are no District Consultative Committees, the District
Collector may request the convener of the State Level Bankers' Committee of the
State to convene a meeting of the Bankers to consider extension of relief to the
affected persons. The report submitted by the Collector and the decision thereon of
DCC/SLBC may be recorded and should form a part of the minutes of the meeting. A
copy of the proceedings of the meeting may be forwarded to the concerned Regional
Office of the Reserve Bank of India.

44.18 AGRICULTURAL ADVANCES OVERDUES-GUIDELINES FOR REVIEW - CASE BY CASE

ANALYSIS:

44.18.1 Various studies conducted on the supply side of agricultural credit has attributed
the causes for high overdues under agriculture to:

1. Allowing shorter loan maturities repayment period than permitted under the
procedure.
2. Allowing shorter grace period than warranted.
3. Failure to provide supplementary finance in the case of incomplete
investments.
4. Failure to postpone current instalment of loans to cultivators in years of natural
calamities.
5. Failure to provide relief in the case of anfractuous investments etc.,

Branches have to review the individual loan accounts case by case on an ongoing basis
and effect rephasement of loans wherever required.

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44.18.2 ACTION PLAN SUGGESTED:

1. All the existing loan accounts are to be reviewed and ensured that repayment
period is stipulated in respect of all small farmers and as far as possible in case
of other farmers also. This period could be exclusive of the extension period
granted earlier if any at the time of rephasement on account of natural
calamities.

2. Grace period as applicable for various loans as given in Chapter 2 of this

manual should be extended to all loan accounts if not done so far. In case of
borrowers who have been sanctioned composite loans for well and pumpset,
if the repayment of instalments have been fixed even prior to installation/
energisation of pumpsets and have not repaid instalments, they should not
be considered as defaulters. In such cases the period of repayment of loan may
be reckoned from the date of energisation of pumpset unless the borrower is
having some alternate arrangement for lifting water such as persian wheel, oil
engine etc.

3. Branches can extend the facility of rephasement as outlined in this Chapter to

other borrowers also who are not covered under Annewari and have been
affected by any genuine reason beyond their control.

4. In a command area where loans are extended for land development purposes,
branches may reckon the loan period from the year in which irrigation was
provided.

5. In respect of well loans which have been certified as failed as per the schemes
introduced by any State Govt., the loans due from the borrowers there under
may be transferred to a separate account styled as 'FAILED WELLS BLOCKED
ACCOUNT' and the amount due may not be included in the DCB register. The
compensation as and when received in individual cases from the State
Government may be credited to the respective loan account. Branches may take
up the matter with CO in such cases for further guidance.

6. In respect of incomplete investments, branches should study each case and if

it is found that such investments could be completed and prove fruitful,
supplementary finance should be provided taking into consideration the
technical requirements. If borrowers are not in a position to offer security as
stipulated in the scheme, such proposals should be referred to CO. In all such
cases, branches should fix up the loan period from the date of advancement of
supplementary new loans including the outstanding amount in earlier loan

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 account. In respect of Minor Irrigation loans, where there is delay in energisation
for not more than 2 years, branches should calculate the loan period from the
date of energisation.

44.18.3. Documentation for Restructuring / Rephasing:

44.18.3.1 In case of loan accounts backed by co-obligation / guarantee :

Wherever short term loans are converted into term loans or repayment of term
loans are rescheduled, the branches should obtain an undertaking letter from
borrower/s as per annexure 59 and 60 as the case may be and the same should be
kept with loan papers. Besides, the branches should note the following:

a. Co-obligant also has to sign alongwith borrower/s as his liability is joint and
several. In the draft, provision is also made for obtaining the signature of the
guarantor, if any.

b. Letter of undertaking is to be stamped as an agreement as per the stamp act of

respective states.

44.18.3.2 In case of loan accounts not backed by co-obligation / Guarantee:

a. Branches shall send a letter as per annexure No. 61 to all the borrowers to loan
transaction by ‘Registered Post-Acknowledgement Due’, wherever conversion /
rephasement is effected to. The duplicate copy of the letter and postal
acknowledgement due card received from the borrower shall be kept with the
loan papers.

b. In case there is no objection from the borrower within 15 days of his receiving the
letter, it will be deemed that borrower/s have given consent for restructuring of
the loan for which a suitable clause is included in the letter itself.

c. In case of borrower having more than one loan account, letters shall be made
account-wise and all the letters to borrower shall be sent in a single cover.

44.18.3.3 Branches shall note to obtain acknowledgement of debt / security in terms of extant
guidelines.

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 LIST OF ANNEXURES

Annexure Particulars
No.
1 RBI guidelines to be followed for agricultural advances.
2 Relaxations for loans under tie up arrangements with rated sugar mills.
3 Agriculture Working Capital loans – Scoring norms above Rs.1 crore upto
Rs.2 crores.
4 Agriculture Term loans – Scoring norms above Rs.1 crore upto Rs.2 crores.
5 Draft copy of letter to be addressed to borrowers wherever penal interest is
charged to existing accounts in view of the sanction of additional limits.
6 Link letter to be obtained when disbursement is done on a subsequent day.
7 Declaration to be obtained whenever obtention of bills/vouchers are waived.
8 Declaration to be obtained for permitting reimbursement of development loans
under agriculture.
9 Format of Project implementation progress report (PIPR).
10 Procedure for valuation of land.
11 Crop Insurance – RKBY/MNAIS/WBCIS.
12 Supplemental hypothecation agreement (to be stamped as an agreement) to
be obtained in case of substitution / exchange of securities under agricultural
loan.
13 Undertaking letter from borrowers for term loans covered under NABARD
refinance.
14 No objection certificate for loanees of Land Development Banks.
15 Annexure to application under KCCS Rupay Debit Card.
16 Annexure to Renewal application for KCCS Rupay Debit Card.
17 Application cum link letter for release of term loan facilities under Kisan Suvidha
Account.
18 Application for Bee keeping.
19 Request cum undertaking for issuing ATM/Debit (Rupay) card.
20 Declaration to be given by the Applicant under the Krishi Mitra Card Scheme.
21 Undertaking letter to be obtained from joint borrowers for issuing Kisan Rupay
Debit Card to one among them.
22 Undertaking letter to be obtained for Sugarcane crop loan under tie up
arrangement.
23 Application cum link letter for term loan under KCCS Rupay Debit Card.
24 Personal Accident Insurance Scheme for KCCS holders.
25 Interest Subvention for loans given for crop production purposes.
26 Annual Review report for Kisan Suvidha.
27 Annual review format for Canara Kisan OD
28 Comparative features of various models of Produce Loan scheme.

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Annexure Particulars
No.
29 Agreement between the warehouse /cold storage unit and Bank.
30 Undertaking letter of warehouse/cold storage owner/s.
31 Format of certificate to be furnished by dealer of pumpset equipment to the
financing bank.
32 Approved list of Tractors and other guidelines on tractor financing.
33 Scoring model for assessing eligibility of applicants for financing both new and
second hand tractors.
34 Tripartite agreement to be obtained in respect of Dairy loans.
35 Application for financing cross bred Calf Rearing.
36 Assessment of working capital requirements for layer and Broiler Poultry Farm.
37 Scoring Sheet for waiver of Insurance of Birds(Poultry)
38 Monthly Statement to be obtained from the borrower in respect of loans granted
to Deep Sea Fishing.
39 Application/Assessment of tenant farmers JLGs.
40 Hypothecation deed to be executed by SHG’s whenever assets are created out
Bank loan.
41 Assessing of Self Help Groups under SHG Bank linkage programme-Scoring
Matrix.
42 Application cum appraisal to be submitted by Micro Credit Groups cum Loan
Request Letter from MCG Group.
43 Inter-se agreement to be executed by the members of MCG.
44 Articles of Agreement For Financing Micro Credit Groups.
45 MCG resolution.
46 Rating Model for MFI/NGO/SHPI for Financial Intermediation.
47 Quarterly statement on details of loan availed by NGO/mFI from financial
institutions.
48 Application to be submitted by NGO/MFI/SHPI to branch while applying for
loan assistance for on-lending to SHG’s.
49 Articles of agreement for use while financing SHG’s through NGO/MFI/SHPI.
50 Application to be submitted by NGO/MFI/NBFC-MFI to branch while applying
for loan assistance for on-lending to MCG’s.
51 Articles of agreement for use while financing MCG’s through NGO/MFI/
NBFC-MFI.
52 Monthly statement indicating the details of the groups linked for each
sanction.
53 Quarterly statement indicating the details of amount on lent, total demand,
collection, overdues and recovery % for each sanction.
54 List of ventures for setting up of Agri-clinics & Agri-Business centres.

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Annexure Particulars
No.
55 List of project profiles for Agri-Clinics & Agri-Business centers & Project
profile- soil, water quality and input testing laboratory services centre.
56 Screen shot of ALM35 indicating steps involved.
57 Format for review of completed agricultural projects other than REC SPA
schemes.
58 Format for review of agricultural accounts projects under implementation.
59 Draft letter of undertaking from the borrower/co-obligant for conversion
of crops loan into term loan.
60 Draft letter of undertaking from the borrower/co-obligant for
rescheduling of term loan.
61 Letter to be addressed to borrowers for rephasement of overdue loans.
62 List of Head Office Circulars issued from 1.6.2007 till 31.12.2013 wherein
policy changes/modifications are advised.
63 List of applications/appraisal/documentation.
64 List of abbreviations.
65 BAM 83 Fields for agricultural loans.

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 ANNEXURE-1

REGULATORY AUTHORITIES GUIDELINES TO BE FOLLOWED FOR AGRICULTURAL

ADVANCES.

Banks should comply with the following common guidelines for all categories of advances
under the priority sector.

1. Rate of interest:

The rates of interest on various categories of priority sector loans will be as per DBOD
directives issued from time to time.

2. Service charges

No loan related and adhoc service charges/inspection charges should be levied on

priority sector loans up to 25,000.

3. Receipt, Sanction/Rejection/Disbursement Register:

A register/ electronic record should be maintained by the bank, wherein the date of
receipt, sanction/rejection/disbursement with reasons thereof, etc., should be
recorded. The register/electronic record should be made available to all inspecting
agencies.

4. Issue of Acknowledgement of Loan Applications:

Banks should provide acknowledgement for loan applications received under priority
sector loans. Bank Boards should prescribe a time limit within which the bank
communicates its decision in writing to the applicants.

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 ANNEXURE-2

RELAXATIONS FOR LOANS UNDER TIE UP ARRANGEMENTS WITH RATED SUGAR MILLS

Financing Sugarcane farmers for their production and investment needs under tie-up with
Sugarmills is a good avenue for augmenting Agriculture credit. The experience of the Bank in
financing this sector has been quite encouraging because of the higher loan per acre, tie-up
with marketing, assured returns to growers and the good recovery rate.

Certain relaxations have been provided for financing farmers under tieup with reputed
sugarmills, covering the working capital and term loan requirements of the farmers.

The permitted norms are detailed in Table 1 below.

Branches / Offices are advised to market the Scheme and capture sizable business under
Agriculture advances.

Table 1

Present position and permitted relaxations

Particulars Permitted Norms

1.Selection of Sugar Mill for tie up. Rating of the Mill as per Matrix developed.
2.Permission for tie-up arrangement Permission for tie-up arrangement with sugar mills
to be permitted by Circle Office.
3.Security Loans upto Rs.3,00,000/- can be extended without
insisting on mortgage of landed property under KCCS
/ Investment Loans / Development Loans, either
individually or all put together.
4. Obtention of No Due Certificate Obtention of No Due Certificate may be waived by
obtaining a declaration from the farmer.
5. Photograph Obtention of the photograph may be waived if it was
obtained at the time of opening of SB account.
6. Rate of Interest As per Interest Rate stipulated from time to time for
agricultural loans under Tie-up arrangements with
rated sugar mills.
7. Pre / Post sanction The certificate in terms of Annexure 22 of this Manual
inspection visits. is to be obtained from the Mill authorities on date of
planting / ratooning, survey number, revenue village,
due date of harvesting. In such cases, pre sanction
inspection visits may be waived. However

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 pre sanction visits are to be conducted atleast in
respect of 10% of the cases.

Post sanction inspection should be conducted for all

8. Obtention of land records
the cases financed.
The Cane Manager of the Sugarmill shall furnish and
certify the details of entire land holdings of the
applicant with details such as Survey No. and
extent.

In such cases, the obtention of copies of land records

regarding lands owned / leased as certified by
revenue authorities may be waived.

All other terms and conditions for financing crop loans /Investments loans / Development
loans in terms of this Manual and subsequent Circulars issued in this regard are to be
followed.

The above relaxations are subject to the following conditions:

i) The sugarmill should be a reputed one and not having any major problems in payment
of cane dues. The mill should be rated in terms of the Rating Matrix provided in
Table 2. Further, the Company’s account should not be NPA in the books of any Bank
and there should not be erosion in Net-worth of the Company by more than 50%
because of accumulated losses as per latest financial statements.

ii) The COs should identify the branches or a group of branches for tie-up loans and fix a
limit to each branch under crop loan, term loans and communicate to the branches.
The arrangement has to be reviewed once in a year based on the position of loans
sanctioned under tie up.

iii) The Sugarmills should forward the application forms to Bank giving their Ryot No.
(Registration No.), Total land holdings of farmers and details of area under cane
registered to mill.

iv) Corporate guarantee of Sugarmill may be obtained. However, sanctioning authority

permitting tie-up may waive the condition on a case to case basis. However, in cases
where waiver of corporate guarantee is permitted, an undertaking would be obtained
from Sugarmills to make direct payment to the Bank.

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 Table 2

Rating Matrix for Sugar Mills for extending loans under tie-up.

Parameters Score
1. History - Number of years in More than 10 years -5
existence.
5 to 10 years -4
3 to 5 years -3
1 to3 years -2
Below 1 year -1
Proposed Unit (New Unit) -0
2. Profitability (Net Profit) Profit making for the last 2 years -5
Profit making – last year only -4
Loss making last year only -3
Loss making – last 2 to 3 years -2
Loss making – last 3 to 5 years -1
Loss making > 5 years -0
3. Promptness of cane Prompt - average time
payment to growers. - within 60 days of harvest - 5
Delay 60 days to 3 month - 4
Delay 3 months to 6 month - 3
Delay 6 months to 1 year - 2
Delay - 1 year to 2 year - 1
Delay > 2 years - 0
4. Expected exposure in one More than Rs. 5 crores - 5
year under tie-up loans.
Rs. 3 crores to Rs.5 crores -4
Rs. 1 crore to Rs.3 crores -3
< Rs. 1 crore -2
NIL exposure in next one year -0
5. The Mills dealings with We are sole bankers / Consortium -5
us : Leaders
Our share 25 % to 50 % of the total -4
borrowings
Our share < 25 % -3
We are not the Bankers to the Mill -0

Maximum scoring marks - 25

Marks scored out of 25 are to be converted into percentage.

Based on scores, Circle Office can permit tie up arrangement with Sugarmills.

380
Note:
Notwithstanding a company getting a qualifying marks under the above matrix, no tie up
shall be permitted if:
i) The Company’s account is NPA in the books of any Bank.
ii) There is erosion in Net-worth of the Company by more than 50% because of
accumulated losses as per latest financial statements.

381
 ANNEXURE-3

Agriculture Working Capital Loans - Scoring norms for loans above

Rs. 1 crore upto Rs. 2 crores

i) Current Ratio :

Norm Marks
1.33 and above 15
1.28 to 1.32 13
1.23 to 1.27 11
1.18 to 1.22 09
1.14 to 1.17 05
below 1.14 00

ii) TOL/TNW :

Norm Marks
2.50 and below 15
2.51 to 3.00 13
3.01 to 3.50 10
3.51 to 4.00 06
4.01 to 4.50 04
4.51 to 5.00 00

iii) Timely Renewals :

Norm Marks
a) No delay, renewal within the validity period 10
b) Renewed within 3 months of validity (extension 08
permitted once).
c) Renewal within 4 months from validity (extension 05
permitted two times).
d) Renewed with delay beyond 4 months from validity 00

iv) Achievement of projected sales :

Norm Marks
Above 90% 10
81% to 90% 08
71% to 80% 06
50% to 70% 04

382
v) Timely Repayments (TL/DPG)

Norm Marks
Timely repayment 05
Upto 1 month delay 04
Upto 3 months delay 02
Beyond 3 months 00

vi) Perfection of Securities & Compliance :

Norm Marks
(a) Compliance of all terms, complete documentation, 10
including joint documentation, creation of second
charge, pari passu charge, EMT, personal guarantee
of directors etc.
(b) Compliance of all sanction terms including individual 07
documentatiom, no deficit in security, account continues
to be classified as standard asset, but only joint
documentation is incomplete/creation of pari passu/
second charge is pending etc., for a period of less than
6 months which is beyond the control of the borrower.
(c) Compliance of all sanction terms, including individual 04
documentation but joint documentation is incomplete/
creation of pari passsu/second charge etc. is pending
for more than 6 months, but less than 9 months.
Account is classified under ASCC S-3.
(d) Non compliance of sanction terms, joint 00
documentation is incomplete/creation of pari passu/
second charge etc. is pending for more than 9 months.

vii) Absence of Irregularities :

Norm Marks
(a) Consistently regular 05
(b) Irregular upto 4 occasions not exceeding 15 days each 03
(c) Irregular on more than 4 occasions in a year 00

383
viii) Bills dishonoured/cheques returned :

Norm Marks
(a) No bills/cheques returned 05
(b) 5% of total number of bills returned or bills representing 03
5% of the annual sales returned and no cheques
dishonoured/returned.
(c) Cheques dishonoured/returned 00

ix) Length of saisfatory dealings :

Norm Marks
More than 5 years 10
More than 3 years less than 5 years 07
More than 2 years but less than 3 years 05
More than 1 year but less than 2 years 03

x) Profit/Loss :

Norm Marks
Profit making 10
Loss for 1 year 07
Loss for 2 years 04
Loss for 3 years & above 00

Slabs :

Equal to/More than 80 Lower

Equal to/> 72 but <80 Middle
Equal to/> 69 but <72 Higher
<69 Highest

Other Provisions :
Wherever particular scoring parameter is/are not applicable, prorata score has to be
computed.
In respect of Agriculture loans where financials are not available/scoring norms not ap-
plied, highest rate of Interest can be applied.

384
 ANNEXURE –4

Agriculture Term Loans - Scoring norms for loans above Rs.1 crore upto
Rs.2 crores

i) Debt Equity Ratio (Long Term Debt / Tangible Net Worh):

Norm Marks
Less than & equal to 1.50 10
Above 1.50 but< 1.80 08
Above 1.80 but< 2.20 06
Above 2.20 but< 2.70 04
Above 2.70 but< 3.00 02
Above 3.00 00

ii) Length of moratorium period :

Norm Marks
Less than 3 years 10
More than 3 years less than 5 years 08
More than 5 years but less than 7 years 05
More than 7 years but less than 8 years 03

iii) Fixed Assets Coverage Ratio :

Norm Marks
Equal to and above 1.75 10
Equal to and above 1.65 but < 1.75 08
Equal to and above 1.50 but < 1.65 06
Equal to and above 1.40 but < 1.50 04
Equal to and above 1.30 but < 1.40 02
Less than 1.30 00

385
iv) Overall Debt Service Coverage Ratio :

Sum of (Profit after tax + depreciation + Interest on term loan)

Sum of (Instalment on term loan + Interst on term loan)

Norm Marks
Equal to and above 2.20 10
Equal to and above 1.80 but < 2.20 08
Equal to and above 1.80 but < 1.80 06
Equal to and above 1.40but < 1.60 04
Equal to and above 1.25 but < 1.40 02
Less than 1.25 00

v) Track Record in servicing debt:

(Covering actual period the borrowal account has been with the Bank or 2 years which-
ever is less)

Norm Marks
Prompt and regular repayment 10
Delay in payment of interest and/ 8
or instalments upto 15 days
Above 15 days & upto 1 month 6
Above 1 month upto 2 months 4
Above 2 months and upto 3 months 2
Above 3 months 0

vi) Length of satisfactory dealings :

Norm Marks
More than 5 years 10
More than 3 years less than 5 years 07
More than 2 years but less than 3 years 05
More than 1 year but less than 2 years 03

386
vii) Value of account

Norm Marks
Desirable group/potentially valuable 1 to 10
connection/existing client rated
High/existing client with substantial
value
Others 0

Note :

In the case of existing clients, the value of account shall be assessed based on the extent of
exisitng/ proposed fee based income, deposit support, good track record, amenable to
financial discipline, achieving sales projections, non-existence of irregularities, performing
industry etc. In the case of new clients, the assesment shall be based on the group
connections, competence of mangement, commitment of the management to their existing
activities, integrity of promoters, expected ancillary/foreign exchange business, possibility
of roping in flagship companies of the group into our fold, the potential/scope of industrial
sector to which the group belongs to etc. Marks have to be awarded on a graded basis.

Wherever particular scoring parameter/s is/are not applicable, pro rata score has to be
computed.

Slabs:

Equal to/More than 94% Lower

Equal to/> 88 but < 94% Middle
Equal to/> 80 but <88% Higher
<80% Highest

Other Provisions
Wherever particular scoring parameter/s is/are not applicable, pro rata score has to be
computed.
In respect of Agriculture loans where financials are not available/scoring norms not ap-
plied, highest rate of interest can be applied.

387
 ANNEXURE-5

DRAFT COPY OF LETTER TO BE ADDRESSED TO BORROWERS WHEREVER PENAL INTEREST IS

CHARGED TO EXISTING ACCOUNTS IN VIEW OF THE SANCTION OF ADDITIONAL LIMITS

NO......................................... BRANCH :
DATE :

TO BY REGISTERED POST A/D

………………………………................
………………………………................
………………………………................

SUB: Your Loan/OD .......................................................................................

.....................with CANARA BANK …………………………………………………….................... branch.

Whereas the borrower has been sanctioned a limit of Rs. ___________ and there was no
provision for charging penal interest for such advances.

And whereas a fresh limit of Rs............................................. has been sanctioned

to the borrower bringing the aggregate limit to
Rs.............................................................. in which case penal interest rate
provisions are applicable and consequent to the same the applicable penal rate of interest
is ............%.

In view of what is stated above, the penal rate is applicable and you are called upon to return
the duplicate copy of this intimation duly signed by you for having noted, agreed and
consented for the same. In case the duplicate copy is not returned within a week's time
from the date of receipt of this notice, it is deemed that you are in receipt of this
intimation and have agreed and commented to the above change.

Assuring you of our best services at all times.

MANAGER/SENIOR MANAGER
__________________________________________________________________________________
I/WE agree, confirm and consent to the Bank charging penal interest as stated in the above
notice no ……………………............ dated ………………….........

DATE : Signature of the borrower

388
 ANNEXURE-6

LINK LETTER TO BE OBTAINED WHEN DISBURSEMENT IS DONE ON A SUBSEQUENT DAY

From : __________________________ __________________________

__________________________ __________________________
(Borrower/s) (Co-obligant/s)

To : The Manager/Senior Manager

Canara Bank
___________________________

Dear Sir,

SUB :My/Our loan account _________________________ with you. With reference to the
subject loan availed by me/us, I/we confirm having executed the following documents
on *_______________________
1.
2.
3.
4.
The proceeds of the loan were disbursed by you on **_______________________ by
cash/crediting my/our account/remitting to M/s. ___________________________ . This is to
confirm having received consideration on **________________________ in the manner stated
above in respect of documents executed by me/us on *_____________________

Yours faithfully,

BORROWER/S CO-OBLIGANT/S

Date :
Place :
* Here, mention actual date of execution of documents
** Here, mention the actual date of disbursements.

389
 ANNEXURE - 7

DECLARATION TO BE OBTAINED WHENEVER

OBTENTION OF BILLS / VOUCHERS ARE WAIVED

From
……………………………………..
……………………………………..
To
The Manager / Sr. Manager
Canara Bank
……………………………………..
Dear Sir,

Sub: ____________________ Loan A/c. No._________________ for Rs._______________

availed from your branch on ______________.

I/we hereby declare that the following expenses have been incurred by me/us for con-
struction of _____________________ at my/our farm on Survey No. _______________
village ___________________.

Sl. Description of work done/ Value/cost

No. materials purchased in Rupees
1. Labour charges for construction work
2. Cost of materials such as bricks, cement,
steel, etc, for construction work.
3. Purchase of livestock/chicks
4. Purchase of equipments.
5. Other costs.
Total

___________________________________________________________________I/we am/are not

able to produce the receipts for the above expenses. I/we further declare that the details
furnished above are correct.

Signature of the borrower/s

Place:
Date:

390
 ANNEXURE - 8

Declaration to be obtained for permitting reimbursement of

development loans under Agriculture

From : To :

……….........……………. The Senior Manager/Manager

Canara Bank
…………...........…………. …………………………………

Dear Sir,

SUB:- Agriculture loan for Rs…...................…….. sanctioned to me / us for the purpose of

………………….........................................

I / We have completed the following activities with respect to the project undertaken for
which subject loan has been sanctioned to me / us. I / We confirm that these works were
completed within the last six months.

Sl Nature of activities Physical Work

No parameters like Total cost undertaken
Area / Size / length through
1.

2.

3.

I / We request you to reimburse the above expenses out of the loan sanctioned to me. I / We
confirm that what has been stated above are true.

PLACE : BORROWER /S
DATE :

391
 For Office use only
I have visited the farm on ………………………… The activities stated to have been completed
have been verified and the work in respect of the items has been completed. The work
has been completed within the last six months. The reimbursement may be permitted.

PLACE : SIGNATURE :
DATE : NAME :
DESIGNATION :

392
 ANNEXURE -9

PROJECT IMPLEMENTATION PROGRESS REPORT (PIPR) - PROJECTS UNDER IMPLEMEN-

TATION INVOLVING ACQUISITION OF CAPITAL ASSETS/PROJECT COST OF Rs.50 LACS
AND ABOVE - REPORT FOR THE QUARTER ENDED …………………………20……………

GENERAL INFORMATION

a) Name of the concern

b) Names of Directors/promoters

c) Address of the Registered/Head Office (with phone, fax No.etc)

d) Address of the factory/unit (with phone, fax etc)

e) Name of the Branch

f) (i) Loan A/c. NO.

(ii) Sanction reference and date

(iii) Sanctioned limit

(iv) Date of first disbursement

(v) Trial production to be commenced by

- Original

- Revised

(vi) Commercial production to be commenced by

- Original

- Revised

393
 PART - A : STATUS OF THE PROJECT

(Rs. in lacs)
__________________________________________________________________________________________________________
Sl. Particulars Cost estimates Incurred When proposed Reasons for variation
No. Balance Stage to be completed in cost in comparison
During the Cumul to be upto with the cost estimates
As at the end quarter -ative till incurred which Original Revised as per previous
of the quarter the end comp- esti- esti- PIPR and the
of the leted mates mates reasons for delay
Original Revised quarter (Date) (Date) in completion, if any
_________________________________________________________________________________________________________
1 2 3 4 5 6 7 8 9
_________________________________________________________________________________________________________
1. Land
development
2. Production Buildings
Other Buildings
3. Plant & machinery
a) Imported
(Foreign
Currency
expenditure
in dollars
to be
mentioned
in brackets)
b) Indigenous
4. Planting
material/
capitalised
working
capital
5. Misc. fixed assets
a) Imported
(Foreign
Currency
expenditure
in dollars
to be
mentioned
in brackets)
b) Indigenous

394
__________________________________________________________________________________________________________
Sl. Particulars Cost estimates Incurred When proposed Reasons for variation
No. Balance Stage to be completed in cost in comparison
During the Cumul to be upto with the cost estimates
As at the end quarter -ative till incurred which Original Revised as per previous
of the quarter the end comp- esti- esti- PIPR and the
of the leted mates mates reasons for delay
Original Revised quarter (Date) (Date) in completion, if any
_________________________________________________________________________________________________________
1 2 3 4 5 6 7 8 9
_________________________________________________________________________________________________________
6. Clearing
forwarding
and local freight
7. Technical know-
how fee/tech-
nology transfer
fee
8. Preliminary &
pre-operative
expenses
a) Interest
- On FC loan
(in dollars
in brackets)
- Rupee loan

b) Preliminary &
Other pre-operative
expenses.
9. Margin money for working capital
10. Contingency (full details)
11. Others if any:
a) Cash balance
b) Others (furnish full details)
______________________________________________________________________________________________
Total
______________________________________________________________________________________________

395
Date:

Authorised signatory Signature of Chartered Accountant

(Borrower) Approved Engineer
(Wherever applicable)

Name :

Address:

Note: Break up of major items of plant and machinery has to be given as an enclosure.
Significant changes affecting the provision for contingencies must be brought out by as
separate note.

Land development may include items like cost on land, land levelling, bunding,
fencing, irrigation investments like openwell, borewell, etc. Details of split up items
have to be furnished, as an annexure.

Likewise, wherever planting is involved details such as crop, variety, area planted
should be given as an annexure. In case of allied activities purchase of animal/birds
to be included.

396
 PART - B : STATUS OF MOBILISATION OF FUNDS

_________________________________________________________________________________________________________
Sl. Particulars Estimates Amount raised Reasons for any delay
No. Bal- Budgeted When proposed in resource mobilization/
During the Cumula- ance resources to be raised shortfall/delay in sanc-
Original Revised quarter tive till to be mobilisation completely tioning the proposed
the end raised during additional loans etc., to
of the Original Revised be narrated in detail
_________________________________________________________________________________________________________
1 2 3 4 5 6 7 8 9
_________________________________________________________________________________________________________
I. Share capital
a) Equity
1. Promoter's
contribution
2. Financial
institutions.
3. Public
SUB TOTAL
b) Borrowings
if any, from
others
II. Term loans
a) From financial
institutions
- FC loan
- Rupee loan
b) From Canara Bank
- FC loan
- Rupee loan
c) From other banks
- FC loan
- Rupee loan
III. Interest deferment
a) From financial
institutions
- FC loan
- Rupee loan
b) From Canara Bank
- FC loan
- Rupee loan

397
Sl. Particulars Estimates Amount raised Reasons for any delay
No. Bal- Budgeted When proposed in resource mobilization/
During the Cumula- ance resources to be raised shortfall/delay in sanc-
Original Revised quarter tive till to be mobilisation completely tioning the proposed
the end raised during additional loans etc., to
of the Original Revised be narrated in detail
_________________________________________________________________________________________________________
1 2 3 4 5 6 7 8 9

c) From other banks

- FC loan
- Rupee loan
IV. Sundry creditors
for capital expenditure
V Unsecured creditors
including public
deposits.
VI Deferred payment
arrangements
(imported/indigenous)
VII Internal generation
(in the case of
existing units)
VIII Others
______________________________________________________________________________________
Total (I+II+III+IV+V+VI+VII+VIII)
______________________________________________________________________________________
Date:

Authorized signatory Signature of Chartered Accountant

(Borrower) Approved Engineer
(Wherever applicable)

Name :

Address:

398
 CERTIFICATE TO BE GIVEN BY BRANCH

We hereby certify that we have carried out inspection of the project site. Bank's lien have
been duly noted on the items financed by us as per our norms.

Interest debited for __________ quarter/half year on _________ has been recovered on
____________ and there is no overdues except interest arrears of Rs.____________________
as on _____________.

We confirm having complied with all terms and conditions of your sanction ____________
dtd. ______________

We further note to insist on the quarterly report in the above format, before permitting any
disbursement.

Date: Senior Manager

399
 PART - C: OTHER ESSENTIAL DETAILS

I. POSITION OF LIABILITIES:
(Rs. in lacs)
_________________________________________________________________________________
Items Outstanding as at end of the quarter
Principal Interest
________________________________________________________________________________
FIs - FC Loan
- Rupee Loan
Canara Bank - FC Loan
- Rupee Loan
Other Banks - FC Loan
- Rupee Loan
_________________________________________________________________________________

Note: In respect of FC loan information regarding outstanding under principal and interest
in dollar terms should be given in brackets.

II. Physical Progress:

a) A brief note on the extent of completion of erection of machinery. In cases

where planting is involved, details such as crop, variety, area planted, etc to be
informed.

A) i) Whether power sanction has been obtained.

ii) If so, whether the power supply is in tune with the connected load of the unit? If
not, arrangements made for securing requisite power supply to be furnished.

iii) Likely date of securing power connection.

B) i) Whether ‘Shed' has been taken possession (in the case of allotment of sheds to
entrepreneurs by Industrial Development Corporation etc). Yes/No/NA

ii) If so, whether rent paid till _____________ date _________________

iii) Whether Title Deeds relating to land/buildings released by the Vendors/State

Govt. Agencies etc. Yes / No / NA

iv) If not, steps taken for obtaining the title deeds and putting through the EMT.

400
C) i) Whether effluent disposal has been planned and implemented as per local
administration State / Central Govt./Pollution Control Board's norms.

ii) If not, steps taken.

D) Whether all the required statutory formalities like S.T., Central Excise Registration/
Approval etc, complied with? In case of imports, arrangements made for securing
licence in case needed.

E) Trial production as per original schedule/revised schedule (full reasons for delay to
be furnished):

F) Reasons for delay in implementation of project in:

i) Acquisition/development of land shed.

ii) Construction of building.

iii) Acquisition of machinery.

a) Indigenous
b) Imported

iv) Planting of crops as per project or purchase of animals/birds.

v) Acquisition of other infrastructure (not covered above).

a) Dates of placement of orders and expected deliveries in respect of item No.3

(plant & Machinery) of PART - A.
b) Manpower:
_________________________________________________________________________________
Planned Recruited during Recruited upto
the month the month
_______________________________________________________________________________
i) Managerial
ii) Supervisory
iii) Skilled workers
iv) Unskilled workers
________________________________________________________________________________
Brief experience profile of the key managerial/technical staff recruited.

401
 Brief note on the training already provided or proposed to be provided for
adapting the manpower suitably.

c) Arrangements made for water supply and its adequacy.

d) Brief note on working capital margin money already spent, details of

margin money spent during the month. Arrangements made for procuring raw
material.

e) Marketing plan and progress on selling arrangements.

f) Expected time schedule for trial runs and commencement of commercial

production vis-a-vis programmed earlier.

Date: Authorised Signatory

(Borrower)

402
 Annexure- 10

PROCEDURE FOR VALUATION OF LAND

The valuation of land offered as security may be calculated at eight times the net post
development income from the land benefitting from the development.

Illustration :

A farmer having dry land of 10 acres valued at Rs.25,000/- approaches the Bank for a loan
of Rs.35,000/- for sinking of a well and installation of a pumpset. Presume that the
present income of the farm is only Rs.4,000/-by raising rainfed crops in 10 acres of
cultivable lands. The crops grown are Ragi, Jowar, etc. After sinking a well the farmer can
raise the following crops:

Expenditure Yield Gross income

Kharif :
1. Paddy - 2 ac 3000 30 qt. 7500
2. Ragi - 8 ac 6400 60 qt. 12000
Rabi :
1. Ragi - 3 ac 2400 20 qt. 4000
2. Jowar - 3 ac 3000 45 qt. 6800
Summer :
1. Maize - 2 ac 2000 20 qt. 4000
2. Vegetables -1 a 2000 60 qt. 5000
_________________________________________________________________________
18800 - 39300
_________________________________________________________________________

Gross income - 39300

Total expenditure - 18800
______
Net income 20500
______
Therefore, we estimate the value of the land (8 times the net income of Rs. 20,500/-)
Rs.1,64,000/-

403
 Annexure 11

CROP INSURANCE SCHEMES

1 Rashtriya Krishi Bima Yojana (National Agricultural Insurance Scheme)

2 Modified National Agricultural Insurance scheme (MNAIS)
3 Weather based crop insurance Scheme (WBCIS)

1. RASHTRIYA KRISHI BIMA YOJANA (CROP INSURANCE)

(NATIONAL AGRICULTURAL INSURANCE SCHEME)

PART I – SCHEME GUIDEINES

The Scheme guidelines as issued by Agriculture Insurance Company (AIC)of India ltd are given
in this part. Branches/Offices are requested to follow the latest rates in respect of Premium,
Premium subsidy etc.

OBJECTIVES :

The objectives of the RKBY are as under :-

1. To provide insurance coverage and financial support to the farmers in the event of
failure of any of the notified crop as a result of natural calamities, pests &
diseases.
2. To encourage the farmers to adopt progressive farming practices, high value inputs and
higher technology in Agriculture.
3. To help stabilize farm incomes, particularly in disaster years.

SALIENT FEATURES OF THE SCHEME :

1. CROPS COVERED :

The Crops in the following broad groups in respect of which i) the past yield data based
on Crop Cutting Experiments (CCEs) is available for adequate number of years and
ii) requisite number of CCEs are conducted for estimating the yield during the proposed
season.
a. Food crops (Cereals, Millets & Pulses)
b. Oilseeds
c. Sugarcane, Cotton & Potato (Annual Commercial / Annual Horticultural crops)

404
 Other annual Commercial / annual Horticultural crops subject to availability of past
yield data will be covered in a period of three years. However, the crops which will be
covered next year will have to be spelt before the close of preceding year.

2. STATES AND AREAS TO BE COVERED:

The Scheme extends to all States and Union Territories. The States/UTs opting for the
Scheme would be required to take up all the crops identified for coverage in a given
year.

Exit clause : The States / Union Territories once opting for the Scheme will have to
continue for a minimum period of three years.

3. FARMERS TO BE COVERED :

All farmers including sharecroppers tenant farmers growing the notified crops in the
notified areas are eligible for coverage.

The Scheme covers following groups of farmers:

a) On a compulsory basis : All farmers growing notified crops and availing

Seasonal Agricultural Operations (SAO) loans from Financial Institutions i.e.
Loanee Farmers.

b) On a voluntary basis : All other farmers growing notified crops (i.e. Non Loanee
farmers) who opt for the Scheme.

4. RISKS COVERED & EXCLUSIONS :

Comprehensive risk insurance will be provided to cover yield losses due to

non-preventable risks viz :

i) Natural Fire and Lightning

ii) Storm, Hailstorm, Cyclone, Typhoon, Tempset, Hurricane, Tornado, etc.
iii) Flood Inundation and landslide
iv) Drought, Dry spells
v) Pests / Diseases etc.

Losses arising out of war & nuclear risks, malicious damage & other preventable risks
shall be excluded.

405
5. SUM INSURED / LIMIT OF COVERAGE /PREMIUM-SUBSIDY:

i. The Sum Insured (SI) may extend to the value of the threshold yield of the
insured crop at the option of insured farmers. However, a farmer may also insure
his crop beyond value of threshold yield level upto 150% of average yield of
notified area on payment of premium at commercial rates.

ii. In case of Loanee farmers the Sum Insured would be at least equal to the amount
of crop loan advanced.

iii. Further, in case of Loanee farmers, the Insurance Charges shall be an additionally
to the Scale of Finance for the purpose of obtaining loan.

iv. In matter of Crop Loan disbursement procedures guidelines of RBI/NABARD shall

be binding.

v. The rates of premium/subsidy will be as decided by State/M/s AIC and advised by

them

vi. The definition of Small and Marginal farmer would be as follows :

a. SMALL FARMER : A Cultivator with a land holding of 2 hectares (5 acres) or less,

as defined in the land ceiling legislation of the concerned State / UT.

b. MARGINAL FARMER:A Cultivator with a holding of 1 hectare or less (2.5 acres).

6. AREA APPROACH AND UNIT OF INSURANCE :

The Scheme would operate on the basis of ‘Area Approach’ i.e. Defined Areas for each
notified crop for widespread calamities and on an individual basis for localized
calamities such as hailstorm, landslide, cyclone and flood. The Defined Area (i.e. unit
area of insurance) may be a Gram Panchayat, Mandal, Hobli, Circle, Phirka, Block,
Taluka, etc. to be decided by the State/UT Govt. However, each participating State/UT
Govt. will be required to reach the level of Gram Panchayat as the Unit in a maximum
period of three years.

Individual based assessment in case of localized calamities, to begin with, would be

implemented in limited areas on experimental basis initially and shall be extended in
the light of operational experience gained. The District Revenue administration will
assist Implementing Agency in assessing the extent of loss.

406
7. SEASONALITY DISCIPLINE :

a) The broad seasonality discipline followed for Loanee farmers will be as under :
__________________________________________________________________________
Activity Kharif Rabi
__________________________________________________________________________
Loaning period April to September October to Next March
__________________________________________________________________________
Cut-off date for receipt of November May
Declarations
__________________________________________________________________________
Cut-off date for receipt of yield January/March July/September
Data
__________________________________________________________________________

b) The broad cut-off dates for receipt of proposals in respect of Non-loanee farmers
will be as under :

a) Kharif season : 31st July

b) Rabi season : 31st December

However, seasonality discipline may be modified, if and where necessary in

consultation with State/UT and the Govt. of India.

8. ESTIMATION OF CROP YIELD :

The State/UT Govt. will plan and conduct the requisite number of Crop Cutting
Experiments (CCEs) for all notified crops in the notified insurance units in order to
assess the crop yield.

The State/UT Govt. will maintain single series of Crop Cutting Experiments (CCEs) and
relevant yield estimates, both for Crop Production estimates and Crop Insurance.

Crop Cutting Experiments (CCE) shall be undertaken per unit area/per crop on a sliding
scale, as indicated below :
__________________________________________________________________________
Sl.No. UNIT AREA Minimum number of
CCEs required to be done
__________________________________________________________________________
1. Taluka / Tehsil / Block 16
2. Mandal/Phirka/any other smaller unit area 10
comprising 8-10 villages
3. Gram Panchayat comprising 4-5 villages 08
__________________________________________________________________________

407
 A Technical Advisory Committee (TAC) comprising representatives from N.S.S.O.,
Ministry of Agriculture (G.O.I.) and IA shall be constituted to decide the sample size of
CCEs and all other technical matters.

9. LEVELS OF INDEMNITY & THRESHOLD YIELD :

Three levels of Indemnity, viz., 90%, 80% & 60% corresponding to Low Risk, Medium Risk
& High Risk areas shall be available for all crops (cereals, millets, pulses & oilseeds and
annual commercial / annual horticultural crops) based on Coefficient of Variation (C V)
in yield of past 10 years data. However, the insured farmers of unit area may opt for
higher level of indemnity on payment of additional premium based on actuarial
rates.

The Threshold Yield (TY) or Guaranteed yield for a crop in a Insurance Unit shall be the
moving average based on past three years average yield in case of Rice & Wheat and
five years average yield in case of other crops, multiplied by the level of indemnity.

10. NATURE OF COVERAGE AND INDEMNITY :

If the ‘Actual Yield’ (AY) per hectare of the insured crop for the defined area [on the
basis of requisite number of Crop Cutting Experiments (CCEs)] in the insured season,
falls short of the specified “Threshold Yield” (TY), all the insured farmers growing that
crop in the defined area are deemed to have suffered shortfall in their yield. The
Scheme seeks to provide coverage against such contingency.

‘Indemnity’ shall be calculated as per the following formula :

Shortfall in Yield
------------------------ X Sum Insured for the farmer
Threshold Yield

(Shortfall = ‘Threshold Yield – Actual Yield ‘ for the Defined Area)

11. INDEMNITY IN CASE OF LOCALISED RISKS :

Loss assessment and modified indemnity procedures in case of occurrence of localized

perils, such as hailstorm, landslide, cyclone and flood where settlement of claims will
be on individual basis, shall be formulated by IA in coordination with State/UT Govt.

The loss assessment of localized risks on individual basis will be experimented in

limited areas initially and shall be extended in the light of operational experience
gained. The District Revenue administration will assist IA in assessing the extent of loss.

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12. PROCEDURE FOR APPROVAL & SETTLEMENT OF CLAIMS :

Once the Yield Data is received from the State/UT Govt. as per the prescribed cut-off
dates, claims will be worked out and settled by Implementing Agency.

The claim cheques along with claim particulars will be released to the individual Nodal
Point. The Banks at the grassroot level, in turn, shall credit the accounts of the
individual farmers and display the particulars of beneficiaries on their notice board.

In the context of localized phenomenon, viz. Hailstorm, landslide, cyclone and flood,
the IA shall evolve a procedure to estimate such losses at individual farmer level in
consultation with DAC/State/UT. Settlement of such claims will be on individual basis
between IA and insured.

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 PART – II

OPERATIONAL MODALITIES

The State/UT Govt. intending to participate in the Yojana has to intimate their consent
thereto. The State/UT Govt has to accept and abide by the provisions of the Yojana in
toto as spelt out in the Yojana text and Operational Modalities.

The Scheme will be implemented in accordance with the operational modalities as

worked out by IA in consultation with Department of Agriculture & Cooperation.

A. “STATE LEVEL COORDIATION COMMITTEE ON CROP INSURANCE” (SLCCCI) shall be

formed in all the implementing States/UTs for the purpose of overseeing
implementation of the Scheme. The committee will be headed by the Agricultural
Production Commissioner (APC) or by an Official of equal rank of the State and
will include senior Officers of the State, viz Secretary (Agriculture), Secretary
(Co-operation), Secretary (Finance), Director, Bureau of Statistics & Economics,
Registrar of Co-operative Societies, representative of Ministry of Agriculture,
Financial Institutions including NABARD, RBI, State Apex Coop. Bank, Convenor,
State Level, Bankers Committee (SLBC) and Implementing Agency (IA).

1) NOTIFICATION :

At the beginning of each crop season, the State Government/UT administration shall
notify the Crops and Defined Areas which will be covered during the season in
accordance with the decision taken at the SLCCCI meeting.

In case it is proposed to notify irrigated & un-irrigated areas separately under a crop,
the State Government / UT shall ensure that minimum CCEs are planned & conducted
for irrigated & un-irrigated crops, separately in such areas. In addition, past data for
productivity at Unit Area level for immediate 10 years would have to be separately
furnished to enable IA to work out premium rates.

The State Government / UT should notify the smallest possible units as defined areas
(i.e., insurance units), which is preferably, the Village or the Gram Panchayat. In any
case the States/UTs shall reach the level of Gram panchayat within three years.

2) COLLECTION OF PROPOSALS AND INSURANCE CHARGES :

The IA is not required to deal with all loan disbursing points and instead, deals only
with designated Nodal points, mostly at district level.

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a. Loanee farmers (Compulsory coverage) :

i. Whenever a bank disburses loan for an insurable crop, additional loan towards
insurance charges shall also be granted. The disbursing branch shall prepare a
Statement or monthly crop-wise and defined area-wise details of crop
insurance with insurance charges, and remit the same to its Nodal point within
15th day of the next month.
ii. The Nodal Office, in turn, shall consolidate these Statements from the Branches
under it, and forward the same to the IA along with a Draft for the insurance
charges in accordance with monthly cut-off dates fixed.
iii. For the loans disbursed through Kisan Credit Cards (KCCs) which are also
eligible for coverage, Banks will have to maintain all back up records,
registers relating to compliance with RKBY and its seasonality, discipline,
cut-off date for submitting the Declarations and end use etc. as in the case of
normal crop loans. The crop loans disbursed through KCCs, but, outside the
purview of the provisions of the RKBY, shall not be eligible for coverage.
iv. A farmer opting for Sum Insured higher than the amount of loan availed by him
shall be treated at par with Non-loanee farmer and relevant cut-off dates for
submitting Declarations will apply. For coverage of higher SI/higher Indemnity
Limit (IL), the farmer has to bear the difference of premium.
v. Declarations formats to be submitted by Nodal banks will be different for
Loanee farmers availing sum insured upto the limit of amount of loan availed
and those Loanee farmers availing higher limit of sum insured. The sum
insured may extend to the value of the threshold yield of the insured crop at
the option of the insured farmers. Further, a farmer may also insure his crop
beyond value of the threshold yield upto 150% of average yield of notified
area on payment of premium for balance sum insured at commercial rates.
vi. For the purpose of sum insured, average yield is reckoned as average of past
three years yield for Rice & Wheat and five years for ‘Other crops’ in the
notified area.
vii. In respect of Loanee farmers availing sum insured beyond amount of loan
availed, the details of those farmers, availing sum insured beyond value of
threshold yield shall be furnished separately in a schedule in the Declaration.

b. Non-loanee farmers (Optional coverage) :

Those farmers desirous of joining the Scheme will fill up Proposal Form of the
Scheme and submit the same to the village branch of a Commercial Bank (CB) or
Regional Rural Bank (RRB), or PACS (DCCB) located with in service area with the
requisite insurance charge/ premium amount after opening an Account in their
name or in an existing Account in their name. The functionaries in Branch/PACS

411
 shall assist farmers in completing the Proposal form and provide necessary
guidance. While accepting the Proposal and the insurance charges, it shall be the
responsibility of such Branch/PACS to verify the particulars of sum insured and its
limit, the applicable insurance charges etc. The Branch/PACS shall thereafter
consolidate these particulars and send them to the respective Nodal points.

The Nodal points will in turn submit to the IA the Crop-wise and Notified
Area-wise Crop Insurance Declarations in the prescribed format (separately for
Non-loanee farmers) along with the Insurance Charges/Premium, within the
stipulated time.

In respect of optional coverage (non-loanee farmers) the entire amount of

insurance charges/premium on the basis of the proposal of the farmer shall be
deposited with the Branches/PACS within the stipulated dates and in turn, Banks
would consolidate, prepare a Declaration and forward the same to IA with
premium.

c. Receipt of proposals directly from Non-Loanee farmers :

On an experimental basis (subject to infrastructure of IA), the Non-Loanee

farmers may submit the proposals personally to IA with requisite insurance charges/
premium. The IA shall then consolidate these proposals and convert them into
Declarations. However, it’s mandatory that the Non-Loanee farmers personally
submitting proposals to IA should hold a Bank account in the Service Area branch/
designated bank branch to receive compensation, if any.

Initially, personal submission of proposals to IA shall be limited to districts

designated for experimentation of individual loss assessment on occurrence
of localized perils. The IA shall open an Office in these designated district
HQs.

2. OPTION FOR HIGHER SUM INSURED :

a) Food crops & Oilseeds : Sum Insured is worked out by multiplying the threshold
yield of the crop with Minimum Support Price (MSP) or the market price (where
MSP is not available) in respect of previous year. A farmer is eligible to cover upto
the value of threshold yield of the crop at a given premium rate. Additionally, a
farmer may extend the sum, insured upto 150% of the value of the average yield
of the crop on payment of premium at commercial (actuarial) rate for the part of
the sum insured exceeding value of threshold yield.

412
 b) Annual Commerical / Horticultural crops : Sum insured may extend upto 150% of
the value of average yield of the crop at commercial (actuarial) rate for the
entire sum insured.
In case of Loanee farmers, the minimum sum insured is the amount of loan availed.

4. SEASONALITY DISCIPLINE (SUBMISSION OF DECLARATIONS BY BANKS):

a) Loanee farmers :

Banks will send to IA every month consolidated Crop Insurance Declarations in

respect of loan disbursed to the loanee farmers for each crop and each Defined
Area. The details of SAO loans disbursed for insurable crops during a month will
be declared to IA in the form of consolidated Declarations before the end of
succeeding month. The detailed monthly cut-off dates for in respect of such
declarations will be :
_________________________________________________________________________________
KHARIF SEASON RABI SEASON
________________________________________________________________________________
MONTH OF CUT-OFF DATE FOR MONTH OF CUT-OFF DATE FOR
LOANING RECEIPT OF LOANING RECEIPT OF
DECLARATIONS BY IA DECLARATIONS B IA
_______________________________________________________________________________
APRIL 31st MAY OCTOBER 30th NOVEMBER
MAY 30th JUNE NOVEMBER 31st DECEMBER
JUNE 31st JULY DECEMBER 31st JANUARY
JULY 31st AUGUST JANUARY 28th/ 29th FEBRUARY
AUGUST 30th SEPTEMBER FEBRUARY 31st MARCH
SEPTEMBER 31st OCTOBER MARCH 30th APRIL
FINAL 30th NOVEMBER FINAL 31st MAY
_______________________________________________________________________________
Those loanee farmers who would like to avail a sum insured of more than the
amount of loan availed shall indicate their choice to the Financial Institutions at
the beginning of the season and for these farmers, the cut-off dates shall be those
applicable for Non-loanee farmers.

b) Non-Loanee farmers :

The broad Cut-Off dates for receipt of Proposals by the Banks/IA, in respect of
these farmers will be as under :
a. Kharif season : 31st July
b. Rabi season : 31st December

413
 In respect of these farmers, the last date of receipt of the consolidated Proposals
at IA, shall be one month after the last date for receipt of Proposals at the Nodal
point.

However, within these broad parameters suggested above for all categories of
farmers the seasonality discipline may be modified in consultation with State/UT
Govt. and Govt. of India, depending on local conditions and crop seasons.

5) IMPORTANT CONDITIONS APPLICABLE FOR COVERAGE RISK :

1) Loans given for unsown areas will not be covered by the Scheme, because,
indemnity claims will arise under the Scheme, only after the crop has been sown
and in the event of crop failure. Mere disbursement of loans by the financial
institutions/ submission of Proposal by a Non-loanee farmer will not entitle him
for compensation under the Scheme.
2) In the areas where crop is sown but, withered and away/damaged on account of
adverse the crop, no further loaning should be made by the financing institutions.
Any further loaning in such cases shall not be covered by the Scheme.
3) The Scheme covers notified crops until harvesting stage only. Losses caused to
crops which are spread in the field for drying after cutting/harvesting are
excluded from the scope of the Scheme.

7) LOSS ASSESSMENT IN CASE OF LOCALISED CALAMITIES :

Loss assessment of localized risks, viz., hailstorm, landslide, cyclone and floods on
individual basis shall be experimented in two districts and shall be extended to other
areas in the light of operational experience gained. The insured farmers who
experience crop losses due to occurrence of these localized perils shall give immediate
notice to the financial institution/notified office of IA and in any case within 48 hours
along with particulars of crop insured and extent and cause of damage. On receipt of
loss intimation, IA shall depute Loss assessors to the area for assessment of crop loss.
The district Revenue administration will assist IA in assessing the extent of crop loss.

IA shall also develop Loss adjusters cadre and for the this purpose few Officers will be
trained in Loss assessment procedures. The service of unemployed Agri. Graduates and
refused Agri. Department Officials may also be utilized for loss assessment after initial
training.

8) PROCEDURE OF SETTLEMENT OF CLAIMS :

Once the yield data is received from the State Government as per the cut-off dates

414
 decided, the claims will be worked out as per Declarations received from FIs for each
notified area and approval is obtained. The funds needed for payment of claims
beyond the risk sharing limits of IA shall be provided by the Government to effect
payment. T

The claim cheques along with claim particulars will be released to individual Nodal
points. The FI at the grass root level in turn shall credit the accounts of the individual
farmers and display the particulars of beneficiaries in the notice board.

Loss assessment and modified indemnity procedures in case of occurrence of localized

perils, such as hailstorm, landslide, cyclone and Flood where settlement of claims will
be on individual basis, shall be formulated by IA in consultation with State/
UT Govt.

8) CLAIMS/APPROVAL:

Claims shall be approved by IA. However, the Government may at their option,
scrutinize / examine a claim falling with their risk liability.

Disputed claims / sub standard claims, if any will be referred to a Committee consisting
of representatives of Ministry of Agriculture (GOI), concerned State Government
and IA.

Settlement/release of claims in the States/UTs which exceed set risk sharing limits of
IA shall be subject to receipt of funds from the Government.

9) PUBLICITY / AWARENESS AND REVIEW :

This Scheme requires adequate publicity in all the villages of the notified district.
Besides audio-visual media, the services of Agricultural Extension Officers of the State/
UT should be utilized. It is equally important to train people going to be involved in
collection of premium, processing of Declarations, Proposal forms, etc. in banks to
avoid any confusion and misunderstanding. Training programmes and Workshops, visit
of IA Officers to the banks will help in clarifying the doubts, redressal of grievances and
clearing bottlenecks in smooth implementation of the Scheme. Pamphlets shall be
distributed to all villages in participating States/UTs. A short film covering the salient
features of the Scheme will be made by the IA for this purpose.

A separate action plan shall be prepared to bring in awareness and educate farmers.

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10) ROLE PLAY OF VARIOUS AGENCIES :

A) ROLE & RESPONSIBILITIES OF FINANCIAL INSTITUTIONS (FIs) :

1. For the purpose of the Scheme, the Scheduled Institutions engaged in disbursing
SAO loans as per the relevant guidelines of NABARD / RBI will be reckoned as
Financial Institutions.

2. Each scheduled Commercial bank shall, with concurrence of IA fix Nodal points
which would deal with IA on behalf of branches in the division/district/State. The
Nodal points for Commercial banks will be minimum one level above the Branch
office. The Nodal points for Cooperative banks will be DCC Banks and those for
RRBs, their Head Office.

3. Nodal points would be designated for implementation and these banks would
attend to the following functions:

i. On receipt of the communication on notification of crops and areas from the

State govt./UT, the Nodal points will communicate the same to the branch
offices under their control.

ii. The FIs would advance additional loan to Loanee farmers to meet
requirement of Insurance charges/premium as applicable up to the extent of
crop loan.

iii. Each such Nodal point would submit crop-wise, defined area-wise, monthly
Crop insurance Declarations to the Office of IA, in the prescribed format,
along with Insurance charges payable on all crop loans coming under the
purview of the Scheme in case of Loanee farmers and based on Proposals
received in case of other farmers.

iv. The Apex FIs shall issue appropriate instructions to Nodal points as well as
crop loan disbursing branches to ensure smooth functioning of the
Scheme.

v. For insurable crop loans disbursed under Kissan Credit Cards (KCCs), the FIs
shall maintain all controls and records as required under the Scheme.

vi. Other Responsibilities of FIs will be :

To educate the farmers on the Schedule features.

416
 To guide the farmers in filling the proposal forms and collecting the
required documents.
Following the guidelines while disbursing crop loans and ensuring proper
end-use of loan disbursed.
To prepare the consolidated statements for loanee and non-loanee
members, forwarding the same to the branch along with the premium
amount.
Maintaining the records of proposal forms, other relevant documents,
statements for the purpose of verification by the district committee or
representative of the insurer.

4. SPECIAL CONDITIONS FOR FIS/NODAL BANKS/LOAN DISBURSING POINTS:

i. FIs will submit Crop Insurance Declarations to IA on monthly basis, where sum
insured is on the basis of amount of loan disbursed and within one month time
from cut-off date for receipt of proposals, where sum insured is on any other
basis.

ii. Claims received by the Nodal points, will be remitted to individual branches/
PACS with all particulars within seven days and these branches/PACS will in
turn credit the Accounts of beneficiary farmers within seven days. The list of
beneficiary farmers with claim amount will be displayed by the branches /
PACS.

iii. The IA will have access to all relevant records / ledgers at the Nodal point/
Branch / PACS at all times.

iv. The IA will be provided with all the norms / guidelines relating to SAO crop
loan disbursements are formulated by RBI/NABARD. Any amendments /
simplification of procedures / norms from time to time will be duly made
available to IA by the concerned institutions. In the absence of such
communication, IA shall be free to not to take cognizance of such
modifications.

v. In case a farmer is deprived of any benefit under the Scheme due to errors /
omissions / commissions of the Nodal points / Branch / PACS, the concerned
institutions only shall make good all such losses.

vi. If the farmer is adopting mixed cropping, the sum insured of a crop should be
on the basis of its proportionate area in the mixed cropping.

417
5. Common Omissions and other Errors made by Nodal Offices / Branches :

The following guidelines on Compulsory Coverage of eligible crops not complied:

i. It is mandatory to take up coverage for all insurable crops for which loan is
disbursed either through Kisan Credit Card Scheme or Kisan Suvidha or Krishi
Mitra Card Scheme or as any crop production loan . It is to be ensured by the
Branches / Offices that the coverage is taken without exception for all the
crop loans, disbursed for insurable crops (i.e. Notified crops in notified
areas).

ii. In case the total loan amount for a particular crop withdrawn through Kisan
Credit Card / Kisan Suvidha / Krishi Mitra Card Scheme / Other limits having
finance for crop production component during the season exceeds the
sub-limit fixed for the crop (during the season), the sum insured shall be
limited to the extent of the sub-limit fixed for such crop (and season) in the
KCC / Kisan Suvidha / Krishi Mitra Card Scheme / Other limits having finance
for crop production component. The sub-limits for consumption, allied
activities / farm machinery maintenance and uninsurable crop loans are not
eligible for coverage.

Many instances of errors, omissions and commissions on the part of branches

and nodal offices have been come across such as:

a. In-correct compilation of data (eg. data of two notified crops in the same
declaration instead of separate declarations),

b. In-accurate particulars in the declaration (eg. Unirrigated crop mentioned

as irrigated crop in the declaration),

c. Delayed submission of declaration by Nodal Offices

The above errors / omissions / commissions of the Branches / Nodal

Offices have resulted in some cases of rejection of claims by M/s AIC. In
such cases, the losses suffered by the farmers were to be made good by
the Bank. This has resulted in fixing of financial accountability and taking
disciplinary action against the concerned staff responsible for the lapse.

6. Observations of M/s AIC :

Based on some of common errors pointed out by M/s AIC, it is advised that the
following aspects are taken due care while handling the Scheme:

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 a) Preparation of statements:

i. Month of Loaning / Month of Proposal should be mentioned correctly.

ii. Authorized Signatory at the Nodal Office should compulsorily sign the
declarations.
iii. A Serial number should be allotted for all declarations sent.
iv. Classification of crop, Irrigated / Rainfed, should be mentioned correctly.
v. Notified area should be mentioned correctly. The area means where the
crops are grown and it differs from the residential area
vi. Two or more notified area should not be mentioned in a declaration.
Declarations should not be sent for non-notified area.
vii.Correct Sum Insured should be mentioned in appropriate place.
viii.Premium should be calculated correctly, and subsidy to all Small and
Marginal farmers should be extended as per applicable rate.

b) Submission of Statements/Payment of premium to AIC:

1. Crop/area/month specific statements:

a. Declarations should be sent crop-wise and notified area wise and month
wise.
b. Declarations should be sent for individual crops only.
c. Two or more crops / months should not be mentioned in a declaration.

2. Office submitting the declaration/premium to AIC:

a. Only the NODAL POINTS of bank should send declarations to AIC.

b. Declarations received from Branches will not be accepted.
c. Premium by way of DDs should be made payable to concerned Regional
Offices of M/s AIC of India Ltd or otherwise as specifically instructed by
them.
d. Declarations should be submitted before the applicable cut-off dates.

7. Circle Offices as Nodal Offices:

i. Circle Offices alone will be “Nodal Offices”.

ii. The Nodal Offices have to send the premium / declarations crop wise /
notified area wise to the concerned Regional Office of M/s. AIC.
iii. The Circles to inform concerned Regional Offices of M/s AIC with regard to
geographical coverage of the Nodal Offices.

419
 iv. The Nodal Offices have to issue operational guidelines to all the Branches
under their jurisdiction based on details to be obtained periodically from the
concerned Regional Office of M/s AIC.
v. The Nodal Offices should obtain and provide the details of notified crops /
areas to such Branches located close to the State boundary and whose
financing of crop loans extend to neighboring State also.

8. Roles & Responsibilities of Circle Offices( Nodal Office):

i. Shall be the Nodal Office under the Scheme for all the branches under their
jurisdiction and have regular liaison with AIC.
ii. Circulate the details of the Scheme every season to all the branches under
their jurisdiction and instruct the branches suitably.
iii. To guide branches in correct compilation of the statements/declarations
iv. To ensure that all the branches send the necessary declarations/Nil reports,
as the case may be as per the Time Schedule.
v. Ensure follow up with branches for submission of either the Declaration/Nil
statement from the branches.
vi. Submit the consolidated declaration along with the premium to the
implementing Agency, presently concerned Regional Office of M/s AIC depending
upon the jurisdiction.
vii. Pass on the claim amount to the concerned branches based on the settlement
made by M/s AIC.
viii.Coordinate with the SLBC whenever necessary at all stages of
implementation.
ix. Educate the branches periodically on matter connected to crop insurance.
x. M/s AIC will be paying the Bank a service charges @ 2.5% of the premium
collected in respect of both loanee and non-loanee farmers, at the end of the
season. Nodal Offices shall follow up for receipt of the same and credit the
service charges to Commission A/c as soon as the same is received. For this
purpose, Nodal Offices shall maintain a register wherein details of date of
sending the premium and premium amount, date and amount of service charges
received and date of credit to Commission a/c . The register shall be
submitted to inspecting officials during their regular inspection for
verification.
xi. Whenever, M/s AIC seeks any clarification in respect of declarations
submitted, the same must be submitted within two weeks. This is important
as thereafter M/s AIC is not under obligation to accept the clarifications,
including reopening of claims.
xii. To obtain from other Nodal Offices, the details of Notified crops/areas and
send to such branches located close to state boundary and whose financing of

420
 crop loans extend to neighboring State also /which may fall under the
jurisdiction of a different Regional Office of M/s AIC.

9. Roles & Responsibilities of Branches

Watch for receipt of details of the Scheme applicable to each season from the
Circle Office (Nodal Office).

i. Diarise the cut off dates.

ii.For Loanee farmers insurance under the Scheme is compulsory.
iii.
Obtain proposals from Loanees opting for higher coverage & Non loanees.
iv.Collect premium and send declaration-Crop wise, Notified area wise
(Separately for Loanees and Non Loanees) to Nodal Office within 5th of
succeeding month along with a covering letter.
v. Such of those branches having no declarations to submit, shall submit a NIL
statement within 5th of succeeding month.

B) ROLE & RESPONSIBILITIES OF STATE GOVERNMENT / UNION TERRITORY

1. The State Government / U.T. will notify cropwise notified areas and premium
rates as applicable (in case of commercial / horticultural crops) well in
advance of each crop season.

2. The State government/UT administration would, in advance provide to the IA,

Unit Area-wise yield data of immediate past 10 years for all crops notified
under the Scheme.

3. To the extent possible, the State Government/UT administration would notify

smaller defined areas for various crops, keeping in mind that smaller areas
will be more homogeneous and would be more reflective of all crop losses,
including localized perils like hailstorm, landslide, etc.

4. The State Government shall issue the requisite Notification and communicate
to all participating FIs during every crop season. The Notification of the State
Government may essentially contain the following information :

a) Crops and Defined areas notified in various districts.

b) Premium rates and subsidy, if and as applicable for various groups of
farmers and crops.
c) The cut-off dates for collection of proposals and remittance of premium
with Crop Insurance Declarations to IA.

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5. The State/UT administration will release its contribution to Corpus Fund as
per the scale and dates fixed by MOA, the Government of India.

6. The State/Union Territory administration would ensure that Crop Estimation

Surveys (CES) in general, and estimation procedure in case of multiple picking
crops in particular be strengthened in order to furnish accurate estimates of
yield. Further, the State/UT administration will assist IA in assessing the
extent of crop loss of individual insured farmers due to operation of localized
perils.

7. To set up various monitoring Committees as required.

8. The final Yield data in the standard format for all Unit Areas for notified crops
for the crop season will be furnished to IA within the stipulated date.

9. In case, the State/UT administration fail to furnish yield data based on

requisite number of CCEs or fail to furnish yield data within the stipulated
date, responsibility of such claims, if any arising out of such data will totally
rest with State/UT administration.

10. The IA will be allowed unrestricted access to records of CCEs at grass root/
District/State level.

11. State Government / UT admn. Shall set up District Level Monitoring

Committee (DLMC), headed by the District Magistrate. The members will be
District Agriculture Officer, DCCB, Lead Bank representative and iA. The
Committee will monitor implementation of Scheme by providing fortnightly
crop condition reports and periodical reports on seasonal weather conditions,
loans, disbursed, extent of area cultivated, etc. The DLMC shall also monitor
conduct of CCEs in the district.

12. As the Scheme is optional to Non-loanee farmers, adequate publicity will be

provided to ensure maximum coverage of farmers through all means available
at the disposal of State/UT administration.

C) ROLE AND RESPONSIBILITIES OF THE IMPLEMENTING AGENCY :

i. Implementing Agency of the Scheme.

ii. The IA shall open separate Accounts to deal with Corpus Fund and also
premiums received under the Scheme.
iii. Building up crop yield database and preparation of Actuarial premium rates
through a Professional agency.Underwriting and Claims finalization.

422
 iv. Responsibility for claims to the extent mentioned in the Scheme.
v. Negotiating Re-insurance arrangement in the international market.
Co-ordination in organizing training, awareness, publicity programmes.Providing
returns / statistics to the Government of India.

D) DUTIES OF FARMERS

i. As the Scheme is compulsory for all Loanee farmers availing SAO loans for
notified crops, it is mandatory for all loanee farmers to insist on coverage of
all eligible loans (as per the Scheme provisions) under the Scheme.

ii. If the farmer is adopting mixed cropping, the proportion of different crops in
a mixed cropping will have to be compulsorily declared.

iii. In respect of Non-loanee farmers, the Proposals will be accepted only upto
stipulated cut-off date, which will be decided in consultation with State
Government / UT admn.

iv. The important duties in case of Non-loanee farmers are as follows :

a. The farmer desiring coverage should have an Account in the branch of the
designated bank.

b. The farmer must approach the designated branch / PACS and submit the
proposal form in the prescribed format.

c. The farmer must provide documentary evidence in regard to the

possession of cultivable land (copy of the passbook, 7/12/land extract or
land revenue receipt should be enclosed)

d. The farmer must furnish area sown confirmation certificate, if required.

WORKING EXAMPLE OF SUM INSURED AND PREMIUM UNDER RKBY

Sum insured limits and premium for Paddy:

State Threshold Yield: State Average Yield: Min. Support price of Paddy:
1930 kgs/ ha 2412 kgs/ha Rs.7.35/kg

Value of Threshold Yield – Rs.14200 /ha Value of Actual Yield – Rs.26600/ha

Normal(Flat) Premium Rate – 2.5% Actuarial Premium Rate – 3.55%

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Sum Insured and Premium Table:

Farmer “ A” Farmer “B”

(Loanee) (Non-Loanee)
a. Compulsory
Coverage Loan Amount Rs.12000 Nil
Full Premium @ 2.5% Rs.300.00 Nil
Subsidy 50% of full premium Rs.150.00 Nil
Net Premium Rs.150.00 Nil
b. Optional Full premium from 12000 Rs.55.00
Coverage to 14200 = 2200 @2.5%
– upto (for loanee farmer
value of Normal coverage for Rs.355.00
Threshold Non-loanee farmer
yeild Subsidy 50%^ of full
premium Rs.27.50 Rs.177.50
Net Premium Rs.27.50 Rs.177.50
c. Optional Full Premium from 14200
Coverage to 26600 = 12400 @3.55% Rs.440.20 Rs.440.20
- upto
150% of Subsidy 50% of full premium Rs.220.10 Rs.220.10
value of Net Premium Rs.220.10 Rs.220.10
Average Total Net premium(a+b+c) Rs.397.60 Rs.397.60
Yeild

Example: Farmer “A” a loanee farmer and farmer “B” a non-loanee farmer each own1 hect-
are under “Paddy” cultivation (being small and marginal farmers they are eligible for 50%
subsidy in premium)
Farmer”A” Farmer “B”
(Loanee) (Non-loanee)
Amount of loan Rs.15000/- Nil
Amount of Rs.20000/- Rs.16000/-
Coverage
Applicable 2.5%(normal rate) 2.5% (normal rate) upto
premium rate upto Rs.15000/- Rs. 14200/-
3.55% (actuarial rate ) 3.55 %(actuarial rate) for
for balance Rs.5000/- balance Rs.1800/-
Full Premium Rs.375.00 at normal Rs.355.00 at normal rate +
Amount rate+ Rs.177.50 at Rs.64 at actuarial rate ie.,
actuarial rate ie., Rs.419 in all
Rs.552.50 in all

424
 Farmer”A” Farmer “B”
(Loanee) (Non-loanee)
Subsidy 50% of full premium 50% of full premium ie.,
ie., Rs.276.25 Rs.209.50
Net Premium Payable Rs.276.25 Rs.209.50

The above details are given as examples. Branches/offices are requested to collect the
details of latest premium and premium and premium subsidy for implementing the
Scheme.

2. MODIFIED NATIONAL AGRICULTURAL INSURANCE SCHEME (MNAIS)

A new Scheme namely, Modified National Agricultural Insurance Scheme (MNAIS) is

implemented as a Central sector Scheme on a pilot basis from Rabi 2010-11,
implemented in 50 selected district of India on a pilot basis and expanded
thereupon.

In addition to Agriculture Insurance Company of India Ltd., Private Sector Insurance

Companies with adequate infrastructure and experience will be allowed on selective
basis to implement the scheme by the implementing States from out of the companies
short listed by the Department of Agriculture and Co-operation.

Salient features of MNAIS:

Unit area for insurance coverage : Village/Village Panchayat level

Cut-off date for submission of : Advanced cut off dates restricted to early
the proposal part of crop lending season
Coverage of risks : Cover also includes prevented/failed
sowing on account of failure/delayed
monsoon
Settlement of claims : Appraisal of mid season adversity and
payment to the extent of 25% of likely claims
is permitted
Scope :Coverage of Post harvest losses due to
cyclone in certain conditions
is also available for a maximum period of
14 days from harvesting

425
Detailed Scheme guidelines are as under:

i. Crops covered:

• Food Crops (Cereals, Millets and Pulses)

• Oil Seeds
• Annual Commercial/Horticultural Crops

ii. Farmers to be covered:

All farmers* including sharecroppers, tenant farmers growing the notified crops in
the notified areas are eligible for coverage.
* includes
• Individual owner-cultivator/tenant farmers/share croppers.
• Farmers enrolled under contract farming, directly or through promoters/
organizers.
• Groups of farmers/societies serviced by Fertiliser Companies, Pesticide Firms,
Crop Growers Associations, Self Help Groups (SHGs), Non-Governmental
Organisations (NGOs), and Others.

iii. Compulsory Coverage of Loanee farmers:

All farmers availing Seasonal Agricultural Operations (SAO) loans from Financial
Institutions (i.e. loanee farmers) would be covered compulsorily.

The Scheme would be optional for all non-loanee farmers.

iv. Risks covered and Exclusions:

a) Standing Crop (Sowing to Harvesting)

Comprehensive risk insurance is provided to cover yield losses due to
nonpreventable risks, viz.,

i. Natural Fire and Lightening

ii. Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado etc.
iii. Flood, Inundation and Landslide
iv. Drought, Dry Spells
v. Pests/Diseases, etc.

426
 b) Prevented from Sowing/Planting Risk:

In case farmer of an area is prevented from sowing/planting due to deficit

rainfall or adverse seasonal conditions, such insured farmer who failed to
sow/plant (but otherwise has every intention to sow/plant and incurred
expenditure for the purpose), shall be eligible for indemnity. The indemnity
payable would be a maximum of 25% or the sum-insured. The scale of
payment for different crops will be worked out by implementing agency in
consultation with the experts.

c) Post harvest losses:

Coverage is available only for those crops, which are allowed to dry in the
field after harvesting against specified perils of cyclone in coastal areas,
resulting in damage to harvested crop. Further, the coverage is available only
upto a maximum period of two weeks from harvesting. Assessment of damage
will be on individual basis.

v. General Exclusions:

Losses arising out of war and nuclear risks, malicious damage and other
preventable risks shall be excluded.

vi. Sum Insured/Limit of Coverage:

In case of loanee farmers under Compulsory Component, the sum insured would
be at least equal to the amount of crop loan sanctioned/advanced, which may
extend up to the value of the threshold yield of the insured crop at the option of
insured farmer.

Where value of the threshold yield is lower than the loan amount per unit area,
the higher of the two is the Sum Insured.

For farmers covered on voluntary basis, the sum-insured is upto the value of
Threshold yield of the insured crop. If the farmer so desires, he may be provided
with higher level of risk coverage. Sum insured up to 100% of the threshold/
average yield of notified area with normal premium subsidy but sum insured
above 100% and up to 150% of the value of average yield without premium
subsidy.

427
vii. Premium rates and Subsidy:

Premium rates are to be worked out on actuarial basis. However, the premium
paid by the farmer is subsidized on the following lines.

Sl.No. Premium slab Subsidy to farmers

1 Updto 2% Nil
2 >2 – 5% 40% subject to minimum net premium of 2%
3 >5-10% 50% subject to minimum net premium of 3%
4 >10 -15% 60% subject to minimum net premium of 5%
5 >15% 75% subject to minimum net premium of 6%

The above is as per revision effected /advised by the Implementing Agency/

Government.

viii. Scheme approach and Unit of Insurance:

a) Widespread calamities:

The Scheme would operate on the basis of ‘Area Approach’ i.e., Defined Areas
for each notified crop for widespread calamities. The Defined Area (i.e., unit
area of insurance) is village/Village Panchayat level by whatsoever name these
areas may be called for major crops and for other crops it may be a unit of
size in between Village Panchayat to Taluka to be decided by the State/UT
Government.

The scheme on a pilot basis at reduced insurance unit area would be

implemented in those villages/village panchayats where appropriate yield data
are available at least for last five years at village panchayat or higher level or
in neighbouring village in different States.

b) Localised risks:

In case of localized risks, viz., hailstorm and landslide, the claims will be
assessed on individual basis. For other calamities, the assessment will be on
the basis of ‘area approach’.

ix. Seasonality Discipline:

a) The broad seasonality discipline for Loanee and Non-Loanee farmers can be as
under:

428
 Activity Kharif Rabi
Loaning period (loan sanctioned April to June / July October to December
for Loanee farmers covered on
compulsory basis
Cut off date for receipt of 15th June / 15th July 31st December
proposals of farmers covered
on voluntary basis
Cut off date for receipt of 31st July 31st January
declarations of loanee farmers
covered on compulsory basis
from Banks
Cut off date for receipt of 31st July 31st January
declarations of farmers covered
on voluntary basis from Banks
Cut off date for receipt of Within a month from Within a month of
yield data final harvest final harvest

In case of Kharif crops, the cut off dates are fixed in such a way that these dates
correspond to historical onset/coverage by the South-West Monsoon. The tentative
schedule is as follows:

Historical onset and coverage by South West (SW) Monsoon and proposed cut off dates
for Kharif:

Sl. States SW Monsoon coverage Proposed cut off

No. by dates
1 Kerala and Tamil Nadu 1st Week of June 15th June
2 Andhra Pradesh, 15th June 30th June
Karnataka, Orissa,
West Bengal,
North-Eastern States
3 Maharashtra, 3rd Week of June 30th June
Chhattishgarh,
Jharkhand, Bihar
4 Gujarat, Madhya 4th Week of June 30th June
Pradesh, Uttar Pradesh,
Uttarakhand,
Himachal Pradesh
5 Rajasthan, Punjab, 1st week of July 15th July
Haryana, Jammu &
Kashmir

429
 The revised/additional details will be as advised by the Implementing Agency in
coordination with the State Govt. from time to time.

Further, in case of three crop/season pattern, a modified discipline keeping in mind the
overall seasonality discipline prescribed above, will be adopted by the State Level
Co-Ordination Committee on Crop Insurance (SLCCCI).

Farmers covered under Voluntary basis can buy insurance before actual sowing/
planting based on advance crop planning for the season.

x. Nature of coverage and indemnity:

If the ‘Actual Yield’ (AY) per hectare of the insured crop for the defined area (on the
basis of requisite number of Crop Cutting Experiments (CCEs)) in the insured season,
falls short of the specified ‘Threshold Yield’ (TY), all the insured farmers growing that
crop in the defined area are deemed to have suffered shortfall in their yield. The
Scheme seeks to provide coverage against such contingency.

Indemnity shall be calculated as per the following formula.

Shortfall in Yield
--------------------- X Sum Insured for the farmer
Threshold Yield
(Shortfall = ‘Threshold Yield – Actual Yield’ for the Defined Area)

b) On account payment of claims:

In case of adverse seasonal conditions during crop season, claim amount upto 25
percent of likely claims would be released in advance subject to adjustment against
the claims assessed on yield basis. The on account payment will be considered only if
the expected yield during the season is less than 50 percent of normal yield. The
criteria for deciding on-account payment of claims shall be based on proxy indicators
such as weather, agro-meteorological data/satellite imagery/acreage damaged or such
other indicators to be decided by the Government, and will be implemented in States
and for crops for which such proxy indicators can be established.

c) Prevented sowing/planting claims:

The extent of claims payable will be decided in respect of the insurance unit area on
the basis of rainfall position issued by the concerned Indian Meteorological Department
(IMD) for the area during the sowing season and acreage-sown particulars issued by the

430
 State Government. Other authentic rain guage stations which the Government shall
install for the purpose/insurer/ insurer nominated agencies can also be considered for
the purpose of measuring rainfall. The maximum claims payable will be 25 percent of
the sum insured. Having received indemnity based on prevented sowing/planting, the
insurance cover is automatically terminated.

d) Post harvest losses:

Coverage is available only for those crops, which are allowed to dry in the field after
harvesting against specified perils of cyclone in coastal areas, resulting in damage to
harvested crop lying in the field in ‘cut & spread’ condition. In other words, the crop,
which after harvest is left in the field for drying, is only covered against the peril
specified above. The State/UT concerned will bring out the list of such crops in
consultation with Implementing Agency. The harvested crop bundled and heaped at a
place before threshing is beyond coverage under post harvest losses. Further, the
coverage is available only upto a maximum period of two weeks (14 days) from
harvesting. Assessment of damage will be on individual basis.

e) Localized risks:

The losses would be assessed on individual basis in case of loss/damage resulting from
occurrence of identified localized risks viz., hailstorm and landslide. The cost of inputs
incurred until the time of occurrence of peril, and the expected loss in final yield due
to the peril, would form the basis for loss assessment.

In case of localized risks, implementing agency may utilize the services of concerned
departments of the State Government, such as Agriculture, Revenue, etc.

xi. Commissions and bank service charges:

Rural agents and others who are engaged for procuring and servicing business of
farmers may be paid appropriate commission as decided by implementing agency. The
servicing banks are allowed at present, 2.5% of gross premium under NAIS as service
charges.

xii. Important conditions/clauses applicable for coverage of risk:

The Banks will display the list of all insured farmers at the village panchayat office.
Further, the Banks will also display the list of benefited farmers together with claim
amount soon after the claims are received from implementing agency.

431
 3. WEATHER BASED CROP INSURANCE SCHEME (WBCIS)

1. Pilot Weather Based Crop Insurance Scheme(WBCIS)

The Scheme envisages to mitigate hardships of insured farmers against likelihood of

financial loss on account of anticipated crop loss resulting from incidence of adverse
conditions of weather parameters like deficit or excess rainfall.

The pilot Weather based crop Insurance Scheme to be implemented in twenty States
namely, Andhra Pradesh, Assam, Bihar, Chhatisgarh, Gujarat, Haryana, Himachal Pradesh,
Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Meghalaya, Orissa, Punjab,
Rajasthan, Tamil Nadu, Uttar Pradesh, Uttarkhand and West Bengal.

Any addition / deletion of states in due course may be considered by Government of

India based on willingness and level of preparedness of concerned State
Government.

The pilot Scheme will be implemented by M/s Agriculture Insurance Company Ltd.(AIC)
and select private Insurance Companies will implementing the Scheme.

The salient features of the Scheme are furnished hereunder:

Pilot WBCIS aims to mitigate hardships of insured farmers against likelihood of financial
loss on account of anticipated crop loss resulting from incidence of adverse conditions
of weather parameters like deficit or excess rainfall. Main features of WBCIS are as
under:

i. Among various weather parameters like rain, temperature, wind, sunshine, etc.,
rainfall is the most important parameter in context of Indian agriculture
particularly for Kharif season. Therefore, the scheme shall compensate
anticipated loss in crop yield resulting from adverse rainfall incidence such as
deficit rainfall or excess rainfall. On the other hand, weather parameters like
un-seasonal rains, temperature, frost, humidity, etc., are some of the important
parameters which affect adversely the crops.

ii. The pilot WBCIS is continued to be applicable to major cereals, millets, pulses,
oil seeds and commercial/horticultural crops grown during Kharif and Rabi
seasons.

iii. The pilot WBCIS will be implemented by Agriculture Insurance Company of India
Ltd. (AIC) and Private Insurance Companies, i.e., ICICI-Lombard General

432
 Insurance Company, IFFCO-TOKIO General Insurance Company, Cholamandalam
MS General Insurance Company and HDFC-ERGO General Insurance
Company.

iv. Areas, where WBCIS will be implemented, will be notified by the State
Governments concerned.

v. Pilot Scheme will be compulsory for loanee farmers for the crop(s) notified by the
State Government in select area(s). However, both NAIS and Pilot WBCIS will
continue for implementation for non-loanee farmers and non-loanee farmers
can choose between NAIS and WBCIS, and also insurance company for Pilot
WBCIS.

vi. Concerned States will earmark areas of implementation of the pilot to each
implementing agency, for loanee farmers, keeping in view farmers’ choice/
preference.

vii. Maintaining maximum limit of sum insured broadly equivalent to cost

of cultivation, non-loanee farmers will have flexibility to insure smaller
amounts within maximum limit, but not less than 50% of maximum limit of sum
insured.

viii. Actuarial rates of premium would be worked out by insurance companies

including AIC using Standard Premium Rating Methodology and rates are capped
at 10% during Kharif 2011 season and 8% during Rabi 2011-12 for food crops and
oilseeds. Farmers will actually pay premium for food and oilseeds crops at par
with existing rates of NAIS. Difference between actuarial rates and flat rates in
respect of food and oil seed crops shall be shared by Central and State
Government on 50:50 basis.

ix. However, in case of annual commercial/horticultural crops, cap of 12% on

actuarial rates of premium will be applicable.

x. In case of annual commercial/horticultural crops, maximum cap of

6% on premium payable by farmers has been provided as given below(
subject to revision advised from time to time by Implementing Agency/
State):

433
 Sl.No. Premium slab Subsidy by Central and State Government on 50:50
basis and premium payable by farmer
1 Upto 2% No subsidy
2 >2 – 5% 25% subsidy subject to minimum net premium of 2%
payable by farmer.
3 >5-8% 40% subsidy subject to minimum net premium of 3.75%
payable by farmer.
4 >8% 50% subsidy subject to minimum net premium of 4.8%
and maximum net premium of 6% payable by
farmers.

xi. All payable claims shall be the responsibility of insurance company concerned.
private Insurance Companies will be entitled for same level of subsidy as
applicable to AIC which would be routed through AIC

xii. Area Approach

The Scheme shall operate on the principle of “Area Approach” in selected

notified Reference Unit Areas. All insured-cultivators of a Notified Crop in the
notified Reference Unit Area shall be deemed to be on par so far as their terms of
insurance coverage and assessment of compensation are concerned.

xiii. Geographical Coverage:

a) “Reference Unit Areas” are linked to specific Reference Weather Stations.

b) “Reference Weather Stations” are those which are commissioned for
providing “Weather Data” for the purpose of assessment of compensation.
c) “Reference Unit-Area” is a geographical area around a Reference Weather
Station, pre-notified by the State Level Coordination Committee on Crop
Insurance i.e., SLCCCI, which is deemed to be reflective of the Reference
Weather Station’s Weather Data. To the extent practicable, such Reference
Unit Area shall be restricted to 25 Km. radius around the Reference Weather
Station in case of Rainfall, and 100 Km. radius in case of other weather
parameters like Frost, Heart (Temperature), Relative humidity, etc.

xiv. Perils Covered

Following are the weather perils, which are deemed to cause “Adverse Weather
Incidence” leading to crop loss, would be covered under the Scheme: Deficit
Rains, Un-seasonal/Excess Rains, Frost, Heat (Temperature), Relative
humidity, etc.

434
 The specific “Adverse Weather Incidence” with its timing/duration applicable to
a particular Notified Crop shall be notified by the SLCCCI (State Level
Coordination Committee on Crop Insurance).

xv. Risk Period (insurance Period)

Risk period would be from “Sowing Period” to “Maturity” of the crop. Risk period,
depending on the duration of the crop and the weather parameters chosen, could
vary with individual crop and Reference Unit Area, and would be notified by the
SLCCCI before the commencement of risk period.

xvi. Seasonility Discipline:

Risk (insurance coverage) would be accepted till commencement of the risk

period. No insurance coverage is allowed once the risk period begins.

xvii. Coverage Procedure:

a) Insurance coverage of Loanee Applicant Cultivators shall be through the

existing network of Financial Institutions (FI) at the grass root level, using
Nodal Bank system as in National Agricultural Insurance Scheme (NAIS).
b) Insurance coverage of Non-Loanee Cultivators shall be through the existing
network of FIs at the grass root level; the Insurance Intermediaries and
Authorized Representatives of AIC.
c) Nodal Bank Branches shall be paid by AIC, a Service Charge of 5% on the actual
Premium amount remitted by them.

xviii. Sum Insured:

Sum Insured is broadly equivalent to the ‘cost of cultivation’ and is predeclared

by AIC and notified in the Notification. The Sum Insured for an individual
cultivator shall be the product of the cultivator’s declared ‘area under
cultivation’ (in hectare) for that Notified Crop and the Sum Insured per hectare as
mentioned in the Notification.

Loanee Applicant Cultivators: ‘Area under cultivation’ for the Notified Crop as
already declared by him in the Loan Application Form for the purpose of fixing his
“Maximum Borrowing Limit (MBL)” by the Lending FI.

Non Loanee cultivators : Based on declaration in the insurance proposal form

435
xix. Premium Rates:

Actuarial Premium Rates for each season for each Notified Crop and each notified
Reference Unit Area shall be calculated by AIC using standard Premium Rating
methodology and the same shall be declared in the Notification before
commencement of the season which shall bebinding on all.

xx. Compenastion (Pay outs)

• AIC shall be responsible for all Payouts arising out “Adverse Weather
Incidence” strictly in terms of the Scheme terms and conditions read with the
relevant Premium and Payout tables. However, this responsibility of AIC shall
attach only when the ‘Risk has incepted’; that is, AIC has duly received the
FULL PREMIUM, directly from the Insured his own part, AND ALSO the
corresponding Premium Subsidy part from the Governments.

• Pay-out shall arise ONLY in case of Adverse Weather Incidence. Adverse Weather
Incidence is equivalent to the deviation between “Trigger Weather” and
“Actual Weather”. Data recorded at a “Reference Weather Station” during the
specified time period. Trigger Weather is a pre-defined Weather Parameter
applicable to a Notified Crop in a modified Reference Unit Area.

436
 ANNEXURE-12

SUPPLEMENTAL HYPOTHECATION AGREEMENT (TO BE STAMPED AS AN AGREEMENT)

TO BE OBTAINED IN CASE OF SUBSTITUTION / EXCHANGE OF SECURITIES UNDER
AGRICULTURAL LOAN

THIS AGREEMENT executed on the ............................................................. day of

……………............……. month of year 20 by Shri ……...................................................
S/o …….................................................... aged ……..…………… years, residing at
…………………………………………........................................ hereinafter called the 'BORROWER',
which expression wherever the context so requires or admits, shall be deemed to include
his heirs, executors, administrators, successors in title, assigns and attorneys (to be
suitably modified in the case of Firms and Companies). In the case of Firms it should be
'deemed to include the partners of the said firm from time to time and their successors in
interest. In the case of Companies, it should be: 'deemed to include its successors and
assigns' in favour of CANARA BANK, a body corporate, constituted under the Banking
Companies (Acquisition & Transfer of Undertakings) Act, 1970, with their Head Office at
112, J C Road, Bangalore 560 002 and having among others, a branch office at
….................................. hereinafter called the 'Bank', which term wherever the
context so requires or admits shall be deemed to include their assigns, attorneys and succes-
sors in title;

WHEREAS at the request of the Borrower, the Bank has granted credit facilities to the
Borrower inter-alia on the terms and conditions and on the security of moveable assets
belonging to the borrower, hypothecated to and charged in favour of the Bank as set out in
the Memorandum of Agreement dated ............. executed by the Borrower in favour of the
Bank (herein after referred to as 'Principal Agreement').

AND WHEREAS the Borrower has requested the Bank to permit replacement of the assets
hypothecated under the Principal Agreement by the assets described hereinafter, for the
purpose of carrying out the Borrower's activity more beneficially, at same time
continuing the credit facility.

AND WHEREAS, the Bank has agreed to release the security described in the Principal
Agreement on the Borrower hypothecating to and charging in favour of the Bank, moveable
assets belonging to Borrower as security for repayment of the credit facilities together
with interest, charges, etc., set out in the Principal Agreement.

NOW this Deed witnesseth that in consideration of the Bank agreeing to continue the
existing credit facility and releasing the security created in terms of Principal
Agreement the Borrower doth hereby hypothecates in favour of the Bank, the moveable

437
assets described in the schedule hereunder now kept or hereafter kept from time to time
at yards/godowns/premises in _______________________or kept in any other premises
whether in transit or in the possession of the Borrower or control or power of the
Borrower or of the Bank and all other assets goods/articles/livestock as may come
into existence by natural increase, accretion or purchase or otherwise (hereinafter
referred to as 'hypothecated assets') as security for the due payment by the Borrower
to Bank the amount due to the Bank from time to time ultimately under and by virtue of
Principal Agreement.

THAT all terms, conditions, convenants and undertakings contained in Principal

Agreement shall continue to apply and bind the Borrower for the intents and purposes
mentioned and shall also apply for the purpose of security created by this Agreement as
if the 'hypothecated assets' hypothecated and charged under these presents has been
already incorporated in the Principal Agreement and the Borrower confirms in all respects
the aforesaid Principal Agreement as modified by these presents.

IN WITNESS WHEREOF, the Borrower has executed these presents at ........... on the day,
month and year above mentioned in the presence of Shri ...........................................
Senior Manager/Manager and Shri ................................Accountant / Special Assistant/
Clerk.

SCHEDULE
(Description of Hypothecated Assets)

Place :

Date : BORROWER/S

CONVENANTS OF THE CO-OBLIGANT

I ………………………..................... S/o ………………...................... aged …….…..... years

residing at ………………….......................................................... co-obligant to the
loan has no objection for substitution of security by the Borrower.

Place :

Date : Signature of the Co-obligant

438
 ANNEXURE - 13

UNDERTAKING LETTER FROM BORROWERS FOR TERM LOANS COVERED

UNDER NABARD REFINANCE

FROM
........................................................
........................................................
........................................................

TO
THE MANAGER
CANARA BANK
........................................................

Dear Sir,

SUB : Financial assistance provided/to be provided by the bank under _________________

payment of commitment charges.

At my/our request you have been pleased to sanction me/us financial assistance for
the purpose of ____________________ and in this regard I/We have already executed
/am/yet to execute loan papers/agreements and other records. As the loan granted to me/
us are eligible for refinance from NABARD/ from any other agency and in terms of
sanction of loan. I/We request you to pay the amount in the manner indicated in
the loan agreement/documents/records etc.

In the event of failure on my/our part in honouring the terms and conditions relating
to the repayment of loan in terms of the loan agreement/records etc. by me/us.
I/We hereby agree that you shall be empowered to levy commitment charges at the rate
prescribed by you from time to time. I/We further agree that in the event of not availing
the finance or partly availing the finance is applied for by me/us for considerably long
time, and in the opinion of the Bank it is not necessary to wait for me/us to avail the loan,
bank shall be entitled to levy the commitment charges and I/We am/are liable to pay the
same on demand by your Bank.

I/We here by authorise the Bank to debit my SB/loan account with you the commitment
charges levied from time to time.

Yours faithfully,

BORROWER

439
 ANNEXURE-14

NO OBJECTION CERTIFICATE FOR LOANEES OF LAND DEVELOPMENT BANKS

This is to certify that …….......................................................... has availed a loan

of Rs.............................................. from the Primary Land Development Bank
……….......................................... whereunder the amount due is
Rs…………………………….................. against the secuity of his lands, bearing survey numbers
…………………………........... to the extent of …………………………............... acres situated at
………………………….............. village ………………...…………...... taluk ………………….......... district.
He has paid all instalments due and is not a defaulter. The Primary Land Development Bank
does not have any objection in ………………....……........... Bank for entertaining the above
person's application for advance of crop loan on exclusive charge of crops proposed to be
raised during **………………………….......... season only, in the year …….………………… on the
said lands.

Place :

Date : ____________________
Secretary

(** Here enter kharif, rabi or summer as the case may be)

440
 ANNEXURE- 15

Annexure to application under KCCS Rupay Debit Card (NF ………)

From
………………….

(Name & Address of the Borrower/s)

To
The Manager
Canara Bank
……………….
……………..

Dear Sir,

Sub: Request for limit under revised Kisan Credit Card Scheme (KCCS)

I/We had submitted an application (NF….......) dated ................………for credit limit of

Rs ….........................……for the current year. The details of assessment of the limit are
available in the application.

I /We have also assessed my requirement for credit limit to do agricultural activities for
another five years so as to have continuity as under:

I year (Current Year assessment as per Rs.

NF ……)
II year 10% increase over previous year Rs.
III year 10% increase over previous year Rs.
IV year 10% increase over previous year Rs.
V year 10% increase over previous year Rs.

I /We request you to sanction the above said credit limit as per the Bank's guidelines
considering the data furnished in the above said application. The projected increase and
disbursement of / in credit facility shall be subject to annual review and discretion of the
Bank.

I / We will be executing the loan documents for overall credit limit, but I/We undertake that
I/We shall not withdraw / claim the amount more than the amount assessed by the Bank in
a particular year .

441
I/We shall abide by all the terms and conditions stipulated by the Bank in connection with the
above said credit limit, failing which Bank shall have every right to withdraw credit limit
sanctioned by the bank and proceed against me/us to recover the outstanding amount includ-
ing interest and expenses .

This document shall be treated as part and parcel of the agreement (NF ….........) executed
by me /us on ............….

Signature of the Borrower

Place:
Date:

Memorandum of Sanction for limits under revised Kisan Credit Card Scheme

As per the assessment /appraisal of the credit limit sought/recommended worked out in
detail for various purposes under the revised Kisan Credit Card limit for the current year
(as per NF…..),the year wise sub limits has been recommended /sanctioned, subject to
annual review process:

I year (Current year assessment as

per NF…)
II year
III year
IV year
V year

• Kisan Credit Card(working capital/operative limit) recommended/sanctioned

(5th year limit):Rs……..
• The borrower/s has/have been explained about the overall limit but withdrawal
restricted to the concerned year’s limit
• Documentation is being obtained for the overall limit(5th year limit)

Place:

Date: Signature of Appraising Officer Signature of Branch Manager

442
 ANNEXURE - 16

Annexure to Renewal application for KCCS Rupay Debit Card (NF ………)

From
……………........…….

(Name & Address of the Borrower/s)

To
The Manager
Canara Bank
…………...........…….
……….............……..

Dear Sir,

Sub: Request for renewal of limit under revised Kisan Credit Card Scheme (KCCS)

I/We submitted an application (NF….....) dated ..........……… for renewal of credit limit of
Rs ……..................

The details of assessment of the renewed limit are available in the application.

I /We have also assessed my requirement for credit limit to do agricultural activities for
another five years so as to have continuity as under:

I year (Current Year assessment as per NF .....……) Rs.

II year 10% increase over previous year Rs.
III year 10% increase over previous year Rs.
IV year 10% increase over previous year Rs.
V year 10% increase over previous year Rs.

I /We request you to renew my /our existing limit and my /our further requirement of credit
limit as stated above as per the Bank's guidelines considering the data furnished in the above
said application. The projected increase in / disbursement of credit facility and renewal
thereof shall be subject to annual review and discretion of the Bank.

I / We will be executing the loan documents for renewed credit limit, but I/We undertake
that I/We shall not withdraw / claim the amount more than the amount assessed by the Bank
in a particular year.

443
I/We shall abide by all the terms and conditions stipulated by the Bank in connection with the
above said credit limit, failing which Bank shall have every right to withdraw credit limit
sanctioned by the bank and proceed against me/us to recover the outstanding amount includ-
ing interest and expenses.

This document shall be treated as part and parcel of the agreement (NF …..) executed by me
/us on ….

Signature of the Borrower

Place:
Date:

Memorandum of Sanction for limits under revised Kisan Credit Card Scheme

As per the assessment /appraisal of the credit limit sought/recommended worked out in
detail for various purposes under the revised Kisan Credit Card limit for the current year (as
per NF…..),the year wise sub limits has been recommended /sanctioned, subject to annual
review process:

I year (Current year assessment as per NF.......…)

II year
III year
IV year
V year

• Kisan Credit Card(working capital/operative limit) recommended/sanctioned

(5th year limit):Rs……..
• The borrower/s has/have been explained about the overall limit but withdrawal
restricted to the concerned year’s limit
• Documentation is being obtained for the overall limit(5th year limit)

Place:

Date: Signature of Appraising Officer Signature of Branch Manager

444
 ANNEXURE -17

Application cum link letter for release of term loan facilities under Kisan
Suvidha Account.

FROM : TO :
The Manager / Senior Manager
…………………………. Canara Bank

Dear Sir,

SUB:- Kisan Suvidha Account No. ………...... – limit of Rs. …….....….. sanctioned to me on

With reference to the subject limit sanctioned to me under Kisan Suvidha Scheme, I request
you to release an amount of Rs……………. from the Kisan Suvidha limit sanctioned to me for the
following purpose :

TYPE OF THE ASSETS BREED/ AGE LOAN

TO BE PURCHASED/ MAKE / NUMBER of OF SUBSIDY, MARGIN AMOUNT
NATURE OF HP Units/ TOTAL THE COST if any REQUIRED
DEVELOPMENT Cost / of Sq ft/ ASSET (Rs)
WORK sq ft./ Acre//Unit……..
acre /
unit….

TOTAL ******

SECURITIES OFFERED:

a) HYPOTHECATION OF EXISTING / PROPOSED ASSETS TO BE PURCHASED OUT OF BANK

FINANCE VALUED AT Rs……………………

b) HYPOTHECATION OF EXISTING /PROPOSED ASSETS TO BE PURCHASED OUT OF BANK

FINANCE VALUED AT Rs…………………….

c) MORTGAGE/ CHARGE OF LANDED PROPERTY / BUILDINGS

445
VILLAGE SURVEY ACREAGE TALUK DISTRICT ENCUMBRANCE, VALUE
NO. if any (Rs)

TOTAL EXTENT ……….......…..ACRES TOTAL ESTIMATED VALUE Rs. ……..........……

REPAYMENT

I/WE UNDERTAKE TO REPAY THE LOAN AS PER THE TERMS OF THE BANK:

I hereby undertake to abide the terms and conditions of the Scheme. I have enclosed the
necessary quotations and estimates. I submit the following documents in this regard.

1.
2.
3.
Yours faithfully,

BORROWER/S
PLACE :
DATE :

For use of Branch Manager:

The applicant has submitted relevant applications, quotations and estimates.

Particulars Sublimit I Sublimit II

Total limit sanctioned
Amount availed

The limit of Rs……………… may be disbursed under Kisan Suvidha for the following purposes.

Purpose Project Margin Loan Security Repayment

Cost Amount period
Sanctioned

Date: Manager/Senior Manager

446
 ANNEXURE - 18

APPLICATION FOR BEE KEEPING

To
The Manager
Canara BanK (FOR BANK'S USE ONLY)
PROPOSAL NO.............................................
BRANCH REF. NO/LOAN NO....................
Loan amount applied for.................................
Loan amount recommended/ sanctioned ...........
Forwarded to RO/CO ....................................
File No .........................................................

Dear Sir,

I/We hereby request you to grant me/us a loan of Rs......................................... (Ru-

pees ...................................................................................) for the following
purpose. I/We furnish herebelow the necessary particulars.

I. GENERAL

1. Name and full address of the applicant :

2. Status of the applicant

Individual :

Partnership (Enclose partnership Deed) :

HUF (Name of the Kartha & other details) :

3. Age :

4. Educational Qualification :

5. Whether belongs to SC/ST/Backward

Community :

6. Main occupation :

7. Experience of the applicant (if any)

in bee keeping :

447
8. Whether related to any of the Employee
of the Bank. if yes, give particulars
of the employee and nature of relation ship :

9. Whether member of any Co-operative Society

or Federation. if yes, give name and
address of the society :

10. Particulars of credit limit enjoyed by the party :

_________________________________________________________________________________
Limits Liability Overdues
_______________________________________________________________________________

a) With our Bank

b) With other Bank
c) With PACS/LDB Societies
d) With Fishermen Federation
Societies
e) Private borrowings
f) Others
________________________________________________________________________________
TOTAL
________________________________________________________________________________

11. Location of the farm and

distance from the branch :

12. __________________________________________________________________________
I. Particulars of area where the Dist/ Village/ Survey Extent
proposed activity is under taken Taluk Town No.
__________________________________________________________________________
a) Own Land

b) Leased land

c) Other Farmers' Field

__________________________________________________________________________

448
II A
_______________________________________________________________________________
Purpose of Cost of the Normal life Subsidy Loan amount
Loan project span requirement
______________________________________________________________________________
1. Equipments:
a) Bee Box
b) Honey Extractor
c) Queen Gate
d) Smoker etc.
2. Bee Colonies
3. Comb foundation sheet
4. Sugar Solution
5. Chemical and Preservatives
6. Transport charges for migration
7.
8.
9.
_______________________________________________________________________________
II B) Details of Security:
a) Immovable
__________________________________________________________________________
Extent of Survey Nature of Village Tq./Dt. Value of
Land No. right the land
_____________________________________________________________________

_____________________________________________________________________
b) Moveables Particulars Value

III
a) Availability and Suitability of
pollen yielding vegetation/flora
b) Sources of availability of Bee
colonies
c) Extraction/Processing facilities
available
d) Marketing arrangements (furnish
Details-Society/Private agency

449
IV Economic Aspects:
Anticipated for succeeding
Last Two Years two years
INCOME:
1. No. of Bee Colonies
2. Total yield of honey in kgs.
3. Rate per kg.
4. Amount

EXPENDITURE
5. C F Sheets
6. Sugar Solution
7. Chemical Preservator
8. Transport for Migration
9. Labour
10. Misc. Expenses
11. Total Expenditure
12. Net Income (4-11)
_________________________________________________________________________________
V Particulars of annual Income
Income from other sources
(Mention source)

Income from Apiculture

______________________________
Total Income
______________________________

Particulars of expenditure
House hold
Other expenses
______________________________
Total Expenditure
______________________________

Net Income = Total Income - Total Expenditure

VI Particulars of Assets and Liabilities of the

applicant as on ______________________

450
 (Rs. in thousands)

Assets Liabilities
Estimated Value of Fixed Mortgage loan..................................
Assets ....................................
Others Assets.............................. Other Borrowings..............................
Cash & Bank Balance.....................
____________ ____________
____________ ____________

VII a) Name and address of the Co-obligant

b) Total worth of the Co-obligant

I/we agree to stand as Co-obligant to the above loan to be sanctioned to

Sri...................................................................................................... My/Our
particulars declared above are true and correct to the best of my/our knowledge.

Signature of the Co-obligant/s

1. I/We agree are agreeable to

a) Abide by the terms and conditions of the Bank in respect of the proposed loan
and to furnish you with all the particulars required from time to time.
b) Repay the loan that is granted with interest on due date and at such rate/s as
may be fixed from time to time by the Bank in quarterly/half yearly installments
of Rs. ............................................... each.
c) Utilise the loan amount for the purpose for which it is granted.
d) Permit any member of staff of the bank to inspect equipments, other properties
owned/purchased out of bank's assistance until full repayment of the loan
that may be granted and also to furnish to such staff all the particulars that may
be desired by them.
e) To deposit ...................................... % of cost with the Bank, being
the margin.
f) It will be in order for the Bank to disqualify me/us from raising any credit
facilities from the Bank in case it is proved that declaration of my/outside
borrowings made contains misrepresentation of facts.

Place :

Date :
Signature of the applicant

451
 (BRANCH MANAGER'S RECOMMENDATIONS)

(Should cover among others, technical feasibility, previous experience, integrity and
repaying capacity of the party)

Signature of the Manager

Place :

Date :

452
 ANNEXURE – 19

REQUEST CUM UNDERTAKING FOR ISSUING ATM/Debit Rupay CARD

From
……..................……
……..................…….

To
Canara Bank
……….................……

Sub: Request for issuing ATM / Debit Card (RuPay card) – in my KCCS/Kisan Suvidha account
No. ….....…………..

1. Bank has sanctioned me/ us Kisan Credit Card (KCCS) /Kisan Suvidha limit of
Rs. …………...................…... I / we have executed an agreement dated ……….....…..
and other loan documents /supplemental agreement dated….....………..for
Rs………...........……in favour of Bank as per the terms of the sanction. I /we request
you to issue ATM / Debit Card facility in the above said KCCS account.

2. I understand that ATM Debit Card issued to operate the subject KCCS/Kisan Suvidha
account is to be linked through an intermediary CASA account. Hence I/We have opened
a separate CASA-SISO account with Sweep In – Sweep Out facilities (CASA account
number- ).

As per the said facility, the loan amount lying in the above said KCC /Kisan Suvidha
account shall be automatically routed through the said CASA SISO account, when amount
is drawn through the ATM card/cheque issued on KCCS/Kisan Suvidha account is
presented in the clearing, and any credit in the said CASA SISO account shall be
credited to the KCCS/Kisan Suvidha loan account in the evening.

3. Further, as requested by me, Bank has agreed to sanction Card limit (for Working
capital)tenable for 5 years based on the 5th year assessment , subject to withdrawal
limit as per the concerned year’s assessment of the s as follows:

Year Amount
I year limit ..
II year limit ..
III year limit ..
IV year limit ..
V year limit ..
TO

453
4. The Bank shall permit the above said limit subject to annual review as per guidelines
issued by the Bank and the terms and conditions contained in the agreement executed
between Bank and me /us and as per sanction letter given by the Bank.

5. I / we agree/s and undertake to abide by all the terms and conditions applicable to
ATM / Debit card facility provided by Bank.

6. Further, I /we hereby undertake to indemnify the Bank on account of any loss or
damages incurred by the Bank in allowing the above said facility to me / us.

7. This request cum undertaking letter shall form part and parcel of the agreement
dated ……............../& supplemental agreement dated….........… executed by me /us
with the Bank.

(Signature of Borrower)

Place:

Date:

454
 Annexure-20

Declaration to be given by the Applicant under the

Krishi Mitra Card Scheme

From To

Name: The Manager/Sr Manager

Father's/Husband's Name: Canara bank
Full Address:

Dear Sir,

Sub: Proposal for credit facility under Krishi Mitra Credit Card Scheme

Whereas I have applied for a limit of Rs. _______________ under the subject Scheme for
purposes stated in the application, I solemnly declare the following:

i) I am undertaking agricultural operations on the lands taken on lease/rental

since…........………

ii) The particulars of the current lease/rental arrangements are as under:

Extent of Lands Name of the

Landowner
Location Address of the
(Village) Land owner
Sy No Type of Lease Oral/Unregistered/
agreement Registered/
Type of Land Type of Lease Sharecropping/fixed
(Irrigated/ arrangement rentals.
Unirrigated)
Crops grown
Boundaries of Leased land Period of Lease
N S E W
Lands of…….. Lands of Lands of……..... Lands of……..
.....…….......
iii) In the event of premature termination of the lease arrangements for any reason,
I undertake to clear the loan availed beforehand.

455
 I further declare that the above information is true. I know that I may be liable in
damages/losses to the Bank in case the above information given by me is
incorrect or false or both. I am further aware that on account of the bank relying
on or depending on the information furnished above, if any claim arises against
the Bank from the landowner or otherwise, I am liable to pay on demand any such
payments/damages etc.

Yours faithfully,

Witness:
(Applicant's signature)
Signature-

Name& Address-

Place:

Date:

456
 Annexure – 21

Undertaking letter to be obtained from joint borrowers for issuing Kisan Rupay Debit
Card to one among them.

From Place
Date:
Name & Address of the Borrowers
1) ………........................…….
2) ………........................…….

To
The Senior Manager/Manager
Canara Bank
…….........................……..

Dear Sir,

Sub: KCCS limit a/c No:….........…. with you- Issuance of Kisan Rupay Debit Card in the
name of Sri…..........…….

You have sanctioned a KCC limit of Rs………… to us and above said loan account is jointly
operated by us. We understand that Bank is having multiple delivery channels for disbursing
loan amount to borrowers and Rupay Debit Card is one among them.

On verifying salient features of Rupay Debit Card, we observe that same is beneficial to us.
Hence, we request you to issue Rupay Debit Card in the name of Sri ……….so as to enable us to
operate our KCC loan account /withdrawal through ATMs, PoS, etc. and we agree to abide by
all rules/regulations and guidelines issued/to be issued by Bank for the purpose of Rupay
Debit Card.

We undertake that we shall not question the Bank or raise any dispute against the Bank in
respect of any transactions done using the above said Rupay Debit Card and we shall jointly
and severally liable to all debits made in the above said KCC loan account using Rupay Debit
Card.

I/We hereby agree to indemnify the Bank against any loss, damage or injury caused to the
Bank on account of issuing Rupay Debit Card in the above said loan account.

Yours faithfully,

Borrowers

457
 ANNEXURE - 22

UNDERTAKING LETTER TO BE OBTAINED FOR SUGARCANE CROP LOAN UNDER TIE UP

ARRANGEMENT

FROM TO
............................................... The Manager
............................................... CANARA BANK

Dear Sir,

Sub: My loan application dated __________________ for sugarcane cultivation for

Rs. ________________________

I/we have applied for a short term crop loan of Rs. _________ as working capital for meeting
cultivation expenses for sugarcane in my/our own farm for the season __________________.
I/we have registered my/our sugarcane crop with M/s ________________________________
for the season under Registration No. ________ and the particulars are furnished herebelow:
__________________________________________________________________________________
Village Survey Extent of Quantity of If the land is
No. land cane proposed leased in name
for supply of the land owner
__________________________________________________________________________________
I/we hereby declare that :-

(i) I am/we are the owners of the land/s and my/our total extent of the land
mentioned above and the patta of the lands are in his/her name.
(ii) I/we have not obtained any loans or advances from any other agencies against the crop
raised in the land specified in the application and that the loans sanctioned under
the above referred application is the first charge against the crops raised in the above
land.
I/we hereby authorise you to remit to M/s _______________________________ further amounts
in respect of of fertilizers, chemicals, etc, as and when they are supplied to me/us and they
produce bills to you, for debit of my/our loan account.

Further, I/we hereby undertake to cultivate my/our land above mentioned in the manner
instructed by M/s ____________________

Place :
Applicant(s)'s signature
Date:

458
RECOMMENDATION OF THE MILL
1. Applicant's Registration No. :
2. Applicant's Name. :
3. Area actually cultivated by applicant and registered with the Mill:-
_________________________________________________________________________________
Acres Date of Survey No. Variety Month in which the crop is likely
planting/ and to be harvested and estimated
First rationing revenue yield in Tons & value
crop/
ratoon
__________________________________________________________________________________
Month Yield Value
_______________________________________________________________________________

________________________________________________________________________________
4. We certify that:
(a) The applicant is not a defaulter in previous season.
(b) There are no loans due to us from the applicant or from any member of his
family.
(c) The particulars furnished in the application are true to the best of our
knowledge.
(d) * The lands under registration are in the name of the applicant/The owner
has given the lands on lease to the applicant/s and the necessary consent
letters are held by the Mill.
(e) We have supplied/arranged of supply seeds and fertilizers to this ryot as given
below. Please deduct the amount permissible towards the supply and credit to:
(i) M/s _____________________________ Rs. _____________
Seeds/fertilizers already supplied.
(ii) M/s _____________________________ Rs. ______________
(iii)Cash to ryot Rs. ______________
_____________________
Total Rs.
______________________

(f) Statements made by the applicant/s are true to the best of our knowledge and
that we have verified all relevant documents and certifiates obtained from the
village accountants.

459
5. The loan applied for is recommended for being considered favourably.

6. In the matter of this loan applied for by the party, we have received his/her/their
irrevocable mandate requesting us to remit the proceeds of all sugarcane supplied by
him/her/them and we have lodged the letter in our file and we undertake to do
accordingly.

Place :
Date :

Cane Development Officer Cane Superintendent

Inspection Division Accounts Officer
(Cane)

* strike out whichever is not applicable.

460
 ANNEXURE - 23

Application cum link letter for release of term loan facilities under KCCS Rupay Debit
Card.

FROM : TO :
…………………………. The Manager / Senior Manager
…………………………. Canara Bank

Dear Sir,

SUB:- KCCS Rupay Debit card Account No. …......……. – limit of Rs. …..............……..
sanctioned to me on

With reference to the subject limit sanctioned to me under KCCS Rupay Debit Card Scheme,
I request you to release an amount of Rs……………. from the KCCS limit sanctioned to me for
the following purpose :

TYPE OF THE ASSETS BREED/ AGE

TO BE PURCHASED/ MAKE / NUMBER of OF SUBSIDY, MARGIN AMOUNT
NATURE OF HP Units/ TOTAL THE COST if any REQUIRED
DEVELOPMENT Cost / of Sq ft/ ASSET (Rs)
WORK sq ft./ Acre//Unit……..
acre /
unit….

TOTAL ******

SECURITIES OFFERED:

a) HYPOTHECATION OF EXISTING / PROPOSED ASSETS TO BE PURCHASED OUT OF BANK

FINANCE VALUED AT Rs……………………

b) HYPOTHECATION OF EXISTING /PROPOSED ASSETS TO BE PURCHASED OUT OF BANK

FINANCE VALUED AT Rs…………………….

c) MORTGAGE/ CHARGE OF LANDED PROPERTY / BUILDINGS

461
VILLAGE SURVEY NO. ACREAGE TALUK DISTRICT ENCUMBRANCE, VALUE
if any (Rs)

TOTAL EXTENT …………..ACRES TOTAL ESTIMATED VALUE Rs. ……........……

REPAYMENT

I/WE UNDERTAKE TO REPAY THE LOAN AS PER THE TERMS OF THE BANK:

I hereby undertake to abide the terms and conditions of the Scheme. I have enclosed
the necessary quotations and estimates. I submit the following documents in this
regard.

1.
2.
3.

Yours faithfully,

BORROWER/S
PLACE :
DATE :

For use of Branch Manager:

The applicant has submitted relevant applications, quotations and estimates.

Particulars Sublimit I Sublimit II

Total limit sanctioned
Amount availed

The limit of Rs……………… may be disbursed under KCCS revised scheme for the following
purposes.

462
Purpose Project Cost Margin Loan Amount Security Repayment
Sanctioned period

Date: Manager/Senior Manager

463
 ANNEXURE - 24

PERSONAL ACCIDENT INSURANCE SCHEME FOR KCCS HOLDERS:

1. Scope of coverage :

This is a Personal Accident Insurance Master Policy covering all the Kisan Credit Card
holders throughout India. This scheme will cover all the KCC holders against death or
permanent disability resulting from accidents caused by external, violent and visible
means and occurring within the geographical jurisdiction of India.

2. Persons covered :

This policy will cover the KCC holders upto the age of 70 years and whose names are
declared by the Banks and in respect of whom the premium is paid by the Banks to the
insurance company. In addition, branches may note the following :

a) In respect of HUF accounts, coverage is restricted to Kartha only.

b) In case of joint accounts, No.1 applicant shall be covered.
c) In case of partnership firms, Managing partner / partner having maximum share
be covered.
d) Accounts of the companies be excluded from coverage.

3. Risk Coverage :

The benefits under the scheme are as under:

a Death due to accident (within 12 months of the accident) Rs. 50,000/-

caused by outward violent and visible means
b Permanent total disability Rs. 50,000/-
c Loss of two limbs or two eyes or one limb and one eye Rs. 50,000/-
d Loss of one limb or one eye Rs. 25,000/-

The above cover is subject to exclusions of the insurers as under:

i. Compensation under more than one of the sub-clauses (a), (b), (c) or (d) of risk
cover age in respect of same injury disablement.

ii. Any payment in case of more than one claim under the policy, during any one
period of insurance by which maximum liability of the company in that period
would exceed the sum payable under sub-clause (a) of this policy.

464
 iii. Payment of compensation in respect of injury or disablement directly or
indirectly arising out of or contributed to by or traceable to any disability existing
on the date of issue of this policy.

iv. Payment of compensation in respect of death, injury or disablement of the

insured from (a) intentional self injury, suicide or attempted suicide (b) Whilst
under the influence of intoxicating liquor or drug (c) directly or indirectly caused
by insanity (d) arising out of or resulting from the insured committing any breach
of the law with criminal intent.

v. Payment of compensation in respect of death, injury or disablement of the

insured (a) due to or arising out of directly or indirectly connected with or
traceable to war invasion act of foreign enemy, hostilities (whether war be
declared or not), civil war, rebellion, revolution, insurrection, mutiny, military or
usurped power, capture, seizure, arrests, restraints and detainments of all Kings,
Princes and people of that nation condition or quality whatsoever.

vi. Payment of compensation in respect of death of or bodily injury to the insured

directly or indirectly caused by or contributed to be or arising from or traceable
to ionizing radiation or contamination by radio activity from any source
whatsoever or from nuclear weapon material.

vii. Provided also that the due observance and fulfillment of the terms and conditions
of this policy (which conditions and all endorsements hereon are to be read as
part of this policy) shall so far as they relate to anything to be done or not to be
done by the insured be condition precedent to any inability of the company under
this policy.

4. Period of insurance:

The insurance cover will be in force for a period of one year from the date of receipt of
premium by insurance companies.

5. Premium :

Branches shall pay to the designated insurance company a premium of Rs. 15 per KCC
holder towards the annual premium. Out of the premium payable, Rs.5/- is to be
recovered from the borrower and balance of Rs.10/- will be absorbed by the Bank. The
cover will cease at the end of one year from the date of the premium. The same has to
be renewed in time within the scope of eligibility under the Scheme.

465
6. Nodal Offices :

All Circle Offices shall act as Nodal Offices.

7. Role of Insurance Companies:

a) The servicing of the business will be undertaken by the four companies on zone
wise basis as under :

Name of the Company Zone States

National Ins. Co. Ltd. Eastern
The New India Assurance Western
Co. Ltd
The Oriental Ins. Co. Ltd Northern
United India Ins. Co. Ltd. Southern
Assam, Bihar, Jharkhand, Manipur,
Meghalaya, Nagaland, Orissa, Sikkim,
Arunachal Pradesh, Tripura, West Bengal.
Gujarat, Madhya Pradesh, Chattisgarh,
Maharashtra, Dadra & Nagar Haveli, Goa,
Daman & Diu.
Haryana, Himachal Pradesh, Jammu &
Kashmir, Punjab, Rajasthan, Uttar
Pradesh, Uttaranchal, Chandigarh & Delhi.
Andhra Pradesh, Karnataka, Kerala,
Andaman & Nicobar, Pondicherry,
Tamil Nadu, Lakshadweep.

Insurance companies will designate an office at district level for co-ordinating

the implementation of the scheme. This designated office of the insurance
company will issue Master Policy covering the KCC holders to each nodal offices
of the Bank.

8. Role of branches :

a) Branches have to cover all existing KCC holders who are presently on the books of
the Bank. The list of KCC holders in the format shown below or in the format
supplied by the insurance company in triplicate, along with the required
premium, is to be sent to the designated office of the Insurance Company. The
same shall be renewed in all the eligible cases.
__________________________________________________________________________________
Sl. Name of Father’s Address Age KCC Existing Name of
No. KCC Name A/c No. Disability Nominee
& (if any) relationship
Holder
1 2 3 4 5 6 7 8

__________________________________________________________________________________
466
 b) To send to designated office of the insurance company as on last day of each
month a statement as per format in triplicate with all the details of new members
included in the scheme along with the requisite premium.

c) It has to be ensured that the KCC holders give the nomination and the same is
informed to the insurance company at the time of effecting insurance and is
included in the Kisan Credit Card Holder pass books.

d) While granting loans the branches should obtain Nomination cum authority letter
as per Form-1(format given at the end of this annexure) along with the loan
papers and submit the details to insurance company along with the premium. No
eligible KCC account should be left uncovered under the insurance scheme.

e) Branch should enter in the master sheet the period of validity of the coverage and
ensure that renewal premium is sent at the end of validity period. As their could
be scope for claims against the Bank for non-coverage, branches are advised to
take utmost care in covering and renewing the risk coverage.

f) Out of premium of Rs.15/- payable to insurance company per card, branch to

debit Rs.10/- to head General Charges – KCCS – Insurance a new sub-head to be
opened under General Charges and balance of Rs.5/- to be recovered from the
card holder by debiting his/her KCC account.

g) The branches should submit the following details in the monthly KCC statement
being submitted to the RO :

“Premium remitted during the month in respect of .......................................

......................... KCC Cards is Rs.............................................”.

NOTE :While the new members can be included in the scheme on monthly basis
then is no provision for deletion of the KCC members already enrolled. If for any
reason they are going outside the scope of KCC scheme during the policy period,
the will still continue to be covered under the scheme for the period for which
they were originally insured.

9. Role of Circle Offices :

a) Circle Offices have to liaise with designated office of the insurance company
and communicate to the branches.

b) The insurance cover will commence from the date of time of receipt of the
premium and the details of KCC holders by Insurance Companies. No risk can be

467
 assumed unless the premium is received in advance as per Sec. 64 VB of the
Insurance Act 1938. It is expected that there will be some time lag between the
collection of premium from the card holders and its remittance to the insurance
company. In cases where any accident occurs in between, the card holder is not
covered during the gap. So as to ensure that the card holder gets covered from
the date of collection of premium, the Nodal Office has to arrange to keep
advance premium with the insurance company. This amount should be sufficient
to take care of the expected number of cards to be issued for a period of atleast
three months by the branches in their jurisdiction. DM/AGM of RO/CO, as the
case may be, is authorized to permit deposit of advance premium by debiting
Sundry Assets A/c. -KCCS insurance deposit. This may be almost a perpetual
deposit and the amount may be increased/decreased based on the activity level
of branches under KCC scheme.

c) Monitoring remittance of premium on a monthly basis by the branches based on

the monthly KCC statement.

d) Circles to monitor advance premia paid by nodal offices on yearly basis.

e) To liaise with insurance companies.

f) It is likely that insurance company may adopt different procedures based on the
local needs. Circles therefore may issue guidelines to branches on procedural
matters from time to time whenever need so arises.

11. Claims procedure:

a. The claims administration will be done by the policy issuing office.

b. The following documents are to be submitted at the time of claim in the event of
death.

i. Duly completed claim form (Form-2 - format given at the end of this
annexure).

ii. Death certificate from attending Doctor (Registered Medical Practitioner), Gram
Panchayat / Hospital.

iii. Report of claims Enquiry cum Verification Committee (indicating the nature of
accident) consisting of the following officers as per Form-3 (as given at the
end of this annexure).

468
 a) Branch Manager of the concerned Branch.
b) Lead Bank Officer
c) Nominated Officer of the Insurance Company

c. The claim enquiry-cum-verification committee will consider and recommend the

claim for settlement based on –

i. the duly completed application form for compensation in the prescribed form
received from the claimant.

ii. Discreet enquiry to find out the cause of death and that the claim is genuine
and payable under the terms and conditions of the scheme required, the
committee may utilize the services of outside agency to confirm the cause of
death. Payment for such enquiries, if any, to be made by branches after
referring to Nodal Office.

iii. They will submit their report in the format and recommend payment of claim
to the designated office of the insurance company within 15 days from the
date of receipt of claim application.

d. After the receipt of claim requirements, the designated office of the insurance
company will issue loss voucher to the concerned Branch. The loss voucher has to
be discharged by the nominee (claimant) or the insured person in case of
disablement claim and returned to the designated office of the insurance
company.

e. The cheque towards the claim amount will be issued in favour of nominee insured
and will be sent to the respective branch for disbursement.

12. Disablement claims :

The following documents are to be submitted at the time of claim in the event of
disablements:

a) Duly completed claim form.

b) Disablement certificate from attending Doctor
(Registered Medical Practitioner)
c) Report from claims enquiry cum verification committee.
d) Photo of the injured person highlighting the disability.

The claims enquiry cum verification committee will scrutinize and submit their
recommendations to the designated office of Insurance company for settlement within
15 days of receipt of claim application.

469
 Claims of persons presumed to be dead due to drowning and whose body has not been
traced, the claims will be settled after two years of the submission of the following
documents:
i) Police report and final investigation report.
ii) Report of findings of customs / port authorities.
iii) Affidavit duly notarized.

12. Time limit for lodging claims :

The nominee of the insured / disabled KCC holder should give notice of accident /
death to the concerned branch within 30 days. The accidental injury resulting into
death / disablement within a period of 12 months from the date of accident only
becomes admissible under the policy.

All the insured persons covered under the scheme are governed by rules of the
Insurance Company and the Bank shall not have any liability towards any claims.

13 Operational Problems / Issues – Clarified by General Insurers’ (Public Sector)

Association of India (GIPSA).

i) Delay in Settlement of Claims :

It will be the endeavor of Insurance Companies to settle the claims within a

period of 30 days from receipt of claims. In case of non-settlement of claims
within 30 days, interest @ 2 % p.a. over and above the Bank Rate would be paid to
the beneficiaries / nominees.

ii) Denial of claims for death due to snake bite, murder, etc., as also accidental
deaths occurring outside rural area :

The Scheme covers KCC holders against death or permanent disability resulting
from accidents caused by external, violent and visible means and occurring within
the geographical jurisdiction of India. Accidental death / permanent disability
(provided it does not occur on account of the insured committing any breach of
law), including death arising due to snake bite, murder (except murder on
account of provocation by the deceased based on circumstantial evidence) are
covered. However, in case of specific instances of non-settlement of claims in
such cases or on the ground that the accident did not occur in the rural area,
Insurance Co. would reopen / reconsider the genuine / deserving cases,
depending on facts of each case.

470
iii) Age criteria / age proof :

If there are specific instances of insurance companies having prescribed different

age criteria for coverage under PAIS (as against 70 years under the Scheme), the
anomalies would be corrected by GIPSA. The prescribed outer age limit is
applicable only at the time of entry to the Scheme and not at the time of
accident.

Further, age proof is an essential document for claim settlement. Banks could
collect the age proof at the time of covering KCC holder under PAIS. Even ration
card is an acceptable age proof.

471
 FORM-1
NOMINATION CUM AUTHORITY LETTER
(KCC)

To
The Manager
Canara Bank Place :
........................................ branch Date :

Dear Sir,

Sub : My/Our Kisan Credit Card Loan No............................................. with you.

I, Sri/Smt.................................................................................................. Son/
Daughter/Wife of ..................................................... residing at
................................................................. hereby nominate Sir/Smt
....................................................................................... Son/Daughter/Wife
of ........................................................................... aged ..........................
years and residing at..........................................................................................
...........……… as nominee for receiving compensation on account my death under the per-
sonal accident insurance scheme for Kisan Credit holders.

I agree to your debiting my/our KCC account, the portion of premium of Rs.5/- per card per
year.

Existing disability if any are as under :

Since the Bank has a limited role in collection of insured amount from the insurance company,
Bank is absolved from any other obligation in their regard.

I have been made known of the rules and regulations of personal accident insurance for Kisan
Credit Card holders.

Signature of the borrower

Witnesses : *
Name : ................................................ .............................................
Signature : ................................................ .............................................
Address : ................................................ .............................................

* In case of thumb impression, it shall be attested by two witnesses.

472
 FORM-2
APPLICATION FOR INTIMATION OF CLAIM
(KCC)

(A) To be filled in case of death only :

I/We ............................................ Son of / Daughter of / Widow of Sri .....................

................. residing at .................................................................................
........................................................................ hereby apply as legal
representative(s) for the grant of Compensation on account death of Sri/Smt./Kumari
......................................................................................... Son of/Daughter of/
Widow of Sri .................................................................................who died in
an Accident on ................................…

Particulars of the accident and other information are enclosed.

Signature of claimant (s)

Date :
Place :

(B) To be filled in case of disability :

I........................................................Son/Wife/Daughter…………………………… of
..........................................residing at …………………………………………..……………….
.............................................................................................. hereby apply
for the grant of compensation on account of Disablement sustained me in an Accident on
................................................................................................... at
...................................................................
Particulars of the accident and other information are enclosed.

Signature of the insured

Date :

Place :

Particulars in respect of Accident and other information are given below :

Name and Father’s Name of KCC holder

died/disabled (Husband’s Name in case
of married women or widow) :

473
Address of the KCC holder died/disabled :

Age and Date of birth :

Sex of the KCC holder died / disabled :

Kisan Credit Card particulars including

Date of issue :

Place, date and time of the accident :

Nature of accident (give full details) :

Name & Address of police station in

whose jurisdiction accident took
place or was registered :

Name & Address of the Medical practitioner :

who attended

Name & Address of the claimant (s) :

(death only) and relationship

Any other information that may be

considered necessary or helpful in the
disposal of the claim :

We hereby swear and affirm that all the facts noted above are true to the best of our knowl-
edge and belief.

Signature of the Bank Manager Signature of the Claimant(s) / Insured

474
 FORM-3

REPORT OF THE CLAIMS ENQUIRY CUM VERIFICATION COMMITTEE (KCC)

On the basis of the enquiry and verification conducted by us on the genuiness of the claim, we
hereby recommend sanction of Rs..............................................(Rupees
.......................................................................only) a compensation in respect
of death/disablement of Mr./Mrs. ..................................................................
.................................................(name of the KCC holder) S.O/W.O
..................................................................................................... a resident
of .................................................................................................... (Full
residential address) resulting from ............................................................(nature
of accident) which took place at ..............................................(name of the place)
on .............................(date).

Representative of Representative of Insurance

the Bank Company

Lead Bank Officer

475
 ANNEXURE- 25

INTEREST SUBVENTION SCHEME FOR LOANS EXTENDED FOR CROP PRODUCTION

PURPOSES:

1. Interest subvention Scheme was introduced by Govt. of India during 2006-07 for short
term crop production loans up to Rs. 3 lakhs provided to farmers, so that farmers get
the loans at 7% p.a. Apart from the above, interest-incentive subvention is also being
extended since 2009-10 to farmers in case of prompt repayment so that the net interest
rate charged to such farmers gets further reduced.

2. As Interest subvention is met through budgetary provision, rate of subvention available

will be announced in the Union Budget. Head Office will be advising the branches
regarding interest subvention available for a particular year. Branches shall act on the
basis of guidelines advised by Head Office.

3. Nature of Interest subvention:

i) Interest Subvention:

Interest subvention will be provided (2% for the year 2013-14) to all crop
production loans to farmers’ upto Rs.3 lakhs disbursed during the financial year
for a period of 12 months from date of disbursement/drawal till actual date of
repayment or due date whichever is earlier.

ii) Incentive Interest Subvention:

Additional (incentive) Interest subvention (3 % p.a for the year 2013-14) is

available to such farmers who repay their short term crop production credit
(covered under the interest subvention Scheme) promptly, but within one year of
disbursement / drawl of such loans, from the date disbursement/drawl to the
actual date of repayment.

4. In case short term production credit availed is not repaid within 12 months from date of
disbursement, Card rate will be applicable for such loans after subvention period.

5. The period of subvention implies that Interest Subvention Schemes of two consecutive
years run concurrently. For example for 2012-13(loans sanctioned from 1st April 2012
to 31st March 2013) and subvention advised for 2013-14 (loans sanctioned from 1st April
2013 to 31st March 2014) will run concurrently

476
6. Considering the instances diversion of loan availed for crop production purposes, Govt.
of India has advised the Banks to strengthen their systems and procedures for
pre-sanction scrutiny and post-disbursement supervision. Banks have also been advised
to carry out post-disbursement audits to ensure that all crop loans for which interest
subvention is claimed are used for stated purpose and that there is no diversion of
funds. The banks are also advised not to claim any interest subvention for loans not
meeting the criteria. In this regard, Branches shall note the following:

i) The borrower should be an agriculturist.

ii) The rate of interest charged should not exceed the rate stipulated by the Govt. of
India.
iii) The amount of loan is fixed according to the prescribed scale of finance for
agricultural loans and the loan is used for stated purpose.
iv) Seasonality is observed with regard to both disbursement and recovery.
v) In case of Oral lessees also, proof of land records to be obtained.
vi) Purpose of loan should be invariably mentioned in application. Classification to
be as per purpose of loan.
vii) All the guidelines on Pre and Post Sanction inspection / Ensuring end use are to be
complied with and recorded.

Branches shall not claim interest subvention in cases where the loan account does
not comply with the above guidelines.

7. Interest subvention for post –harvest loans against Negotiable Warehouse receipts:

The subvention benefit is also available for post harvest loans against Negotiable
Warehouse receipts to KCCS borrowers (Small& marginal farmers) at the same rates. It
is to be extended to eligible post harvest loans for a period of six months and incentive
subvention is extended to such of those loans closed promptly but within 6 months
from availing the loan.

8. DIT Wing, HO has developed system functionality that takes cares of the following:

i) Automatic crediting of Interest Subvention to the eligible crop loan accounts at

the end of half year (September & March) by debiting the specified SA GL.

ii) Automatic crediting of Interest Subvention to revolving crop loan accounts at the
end of half year along with interest incentive for prompt repayments of
disbursements made during the eligibility period.

477
 iii) Automatic crediting of the following at the time of closure of eligible crop loan/
revolving accounts by debiting specified GL heads, so that the borrower is
required to pay only the net interest on the outstanding balance.

a) Regular interest subvention

b) Interest Incentive (both Central and State interest incentive, if any) in case
the account is getting closed before maturity (prompt repayments).

As regards to system functionality under CBS, branches shall adhere to guidelines

advised by DIT Wing, HO from time to time.

9. Branches to note that the following has to be taken care at branch level for system
functionality to be made functional:

• Enabling the Account for Interest Subvention (ALM35)

• Enabling the Account for State interest incentive (ALM35)

DIT has made available to generate a report in Business Object (BO) to view list
accounts where Subvention field not updated.

Report: 280093_STOCK_CROP_LIMIT_CLOSURE_Maintenance_details

After generating report, branches have to select tab “Not appearing in ALM35”. A list of
accounts will be displayed where Subvention field is not updated.

10. During the balance sheet audit, Branches have to obtain the audit certificate from the
auditor and submit the same to AF & PS Section, Circle Office for consolidation and
obtention of consolidated audit certificate for the Circle as a whole. Branches to
ensure that interest subvention outstandings under SA GL account should tally with the
interest subvention claimed in the Audit Certificate.

478
 ANNEXURE -26

ANNUAL REVIEW REPORT FOR KISAN SUVIDHA

Branch ___________________
Loan No. __________________
1. Borrower's name

2. Asset sub classification.

3.(a) Sanctioning Authority and reference No.
(b) Limit sanctioned Rs.
(c) Limit tenable till
(d) Date of loan paper
(e) Date of AOD
(f) Whether any debit entry is outstanding for
more than 12 months in case of short Yes / No
duration crops and 18 months in case
of annual crops.
- If yes, amount of debit outstanding
Rs.
(g) Personal Accident Insurance valid till.
4. Terms and conditions of sanction :
pending to be complied with, if any.

5. Date of latest farm inspection :

6. Details of other existing loan accounts :

(Rs. in lacs)
Sl.No. A/c. No. Limit Liability Overdues

7. Reasons for overdues, if any, & steps taken

to bring down the overdues. Probable date
of clearing the overdues.
Also adverse features, if any
8. Whether the account is operated Yes / No
satisfactorily

479
9. ASSESSMENT OF THE LIMIT:

Any change in cropping pattern from the one given in the original application : Yes/No
If yes, give details.

RECOMMENDATIONS OF THE APPRAISING OFFICER.

Sub limit I – Working Capital Rs………………..

* a) Existing limit be continued/ cancelled

* b) Existing limit to be reduced to Rs. ____________

Sub limit II – Term loan Rs…………..........……….

Reinstatement of sublimit II-

Existing limits Repayment made Extent of limit Remarks
under Sublimit II during the year reinstated

*(Strike out inapplicable clause.)

Place :

Date: Name & Signature of Appraising Officer

ORDERS / RECOMMENDATION OF THE SANCTIONING / RECOMMENDING AUTHORITY :

I concur with the recommendations. Continuation/enhancement/reduction of the limit is

permitted / recommended.

Place :

Date : Signature of Branch Manager

480
 ANNEXURE –27

ANNUAL REVIEW REPORT FOR KISAN OD

Branch :

Loan A/c. No.

Customer ID

1. Borrower's name
2. Asset Sub Classification
3.a) Sanctioning Authority and reference
No.
b) Limit sanctioned
a) Limit tenable till
b) Date of loan paper
c) Date of AOD
d) Whether any Interest debited is Yes / No
outstanding more than 90 days Rs.
- if yes, amount of debit outstanding
4. Terms and conditions of sanction pending
to be complied with, if any
5. Date of latest farm inspection
6. Adverse features, if any
7.Details of other existing loan accounts :
(Rs. in Lacs)
Sl. No. A/c. No. Limit Liability Overdues

8.Out of the above, finance granted / enhancement permitted after granting of Kisan OD
*Residual value of security of landed properties for Kisan OD :
{Residual value of security = value of the mortgaged properties – (the sanctioned limits under
running accounts like KCCS + outstanding liability under single transaction accounts + unavailed
portion of single transaction accounts)}
* Wherever the same security is mortgaged for other limits.

9. Whether there is any dilution in security : Yes / No.

481
10. Reason for overdues, if any & steps taken to bring down the overdues :

11. Probable date of clearing the overdues :

12. Whether the account is operated satisfactorily : Yes / No.

ORDERS / RECOMMENDATIONS OF THE SANCTIONING / RECOMMENDING AUTHORITY :

* a) Existing limit is continued / renewed till _____________ / cancelled.

* b) Existing limit is enhanced / reduced to RS. _________ and to continue till _________.
c)The account is a rephased / restructured account with the following terms :

* (strike out inapplicable clause).

Place :

Date : Officer / AEO SENIOR MANAGER

482
 ANNEXURE – 28

Salient Features of various models of Produce loan Scheme to farmers

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7

Borrowing Farmers Farmers Farmers Farmers Farmers Empanelled Empanelled
entity Pvt. sector Pvt. sector
Warehouses Warehouses –
lending to on-lending as
farmers intermediary
PL against Stock in WH In Private Collateral Negotiable Book Produce
Pr o d u c e - own/leased receipt of sector Management Warehouse debts/ stored by
stock/WHR godowns CWC/SWC (Empanelled) Company- Receipts of Receivables farmers in
warehouse/ WHR(M/s warehouses arising above units
cold storages NCMSL,NHBC accredited from (Rehypo-
etc) by WRDA on-lending thecation)
against
stocks
stored by
farmers
Type of Single Single Single Single Single Operative Operative
loan transaction transaction transaction transaction transaction limit limit
Assessment Value of Value of Value of stock Value of Value of 80% of 80% of
of limit stock stock hypothecated stock stock Capacity / Capacity /
pledged hypothecated as per WHR hypothecated hypothecated average average
as per WHR as per WHR as per NWR market market rate
rate of of principal
principal produce
produce stored *50%
stored *70%
Margin 40% 30% 30% 25% 25% 25% of Book 50% of
debts produce
(however value i.e
drawing stake of the
limit not Borrower
exceed 60% unit in
of value of respect of on
stocks i.e lending
stake of the extended to
Borrower farmers in
unit will be excess of 50%
a minimum of value of
of 25% on produce
the value
of stocks)
Per farmer Rs.10 lakhs Rs.50 lakhs Rs.50 lakhs Rs.50 lakhs Rs.50 lakhs Rs.25lakhs Rs.25 lakhs
limit (onlent (onlent
amount) amount)

483
 Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7
Security- Rs.3 lacs Rs.50 lacs Rs.10 lacs Rs.50 lacs Rs.50 lacs Stock of produce and
Pledge / Rs.25 lacs- book debts
Hyp. of In case
stock collateral Collateral-Mortgage
extended by of L&B of empanelled Pvt
Empanelled sector unit
unit
Mortgage >Rs.3 lacs Collateral >Rs.10 lacs/ Collateral of Collateral of Corp/Personal
of lands by (minimum of lands if Rs.25 lacs lands if lands if Guarantee of empanelled
farmers value already (minimum already already Pvt sector unit/Directors*
equivalent mortgage value mortgage for mortgage
to limit) for existing equivalent to existing for existing
limit/s limit)If limit/s limit/s
Collateral of
empanelled
unit is not
available
Other - - L & B of - L & B of
Collateral empanelled empanelled
unit+ Corp/ unit+ Corp /
Per. Per.
Guarantee* Guarantee
(Empanelled
unit)

RoI(BR BR+1.00% BR+1.00% BR+1.00% BR+1.00% BR+0.50% #BR+1.50% #BR+1.50%

linked)
Upto Rs.5
lacs

>Rs.5 BR+2.00% BR+2.00% BR+2.00% BR+2.00% BR+1.00% On-lending On-lending

lacs-10 with with a
lakhs reasonable maximum
spread of 2% p.a
>Rs.10 BR+3.00% BR+3.00% BR+3.00% BR+3.00% BR+2.00% spread.
lakhs Certificate
of CA to be
obtained
Distance 16 KMs 16 KMs 16 KMs 16 KMs 16 KMs 16 KMs 16 KMs
norms * (relaxation- (relaxation- (relaxation- (relaxation- (relaxation- (relaxation- (relaxation-
Circle Circle Circle Circle Head) Circle Head) Circle Circle Head)
Head) Head) Head) Head)
Pre- To be done To be done To be done Waived Waived To be done To be done
sanction
inspection
Post-san Quarterly Quarterly Quarterly Quarterly Within 7 Monthly-random
inspection days &then inspection/Checking
Quarterly (about 10% of cases)

484
 Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7
Cap on Within an Within an Max. 200% of Within an
Lower of Max. 200% Max. 200% of
Exposure overall limit overall limit the security by overall limit
Rs.4 crores/ of the the security
fixed by fixed by way of fixed by Circle
300% of the security by by way of
Circle Circle L&B,P&M*- based on thesecurity way of L&B,P&M*
capacity of the
L&B, P L&B,P&M* Max. 200%/
Cap of g o d w n s /
&M*(No cap of the
Rs.2 crore if storage for CWC/ security by
collateral is not space SWC/ way of
extended to owned/ Collateral L&B,P&M*/
cover the limit leased in byMgmt. not
Collateral Companies exceeding
Co. issuing Rs.1 crore
NWRs)##
Others $$ MoU with ##Cap of
Collateral Rs.2 crore if
Management collateral is
Company not
extended to
cover the
limit

Per farmer cap on limit is kept at Rs.50 lakhs, considered as Priority-agriculture in

terms of RBI Guideline RPCD.CO.Plan.BC.172/04.09.01/2012-13 dt.3.5.2013.

# As applicable to short term loans to Cold storage/Rural Godowns (Concessional RoI

for Standard/S1/S2 accounts-subject to review.

* Discretion to CO Head to relax the norms

$$ MoU with the Collateral Company to be approved by a Committee of GMs of PC&FI

Wing , RM Wing & Inspection Wing; Charges payable to Collateral Company up to 1%
may be absorbed by the Bank but the net return(RoI less collateral management charges
borne by the Bank to be not to be less than BR+0.50%/as decided in respective MoU)

NWR-Negotiable Warehouse receipts NCMSL-National Collateral Management Services

NHBC- National Bulk Handling Corporation Ltd.

485
 ANNEXURE – 29

Agreement between the Warehouse /Cold storage unit & Bank

This Agreement is executed on ........................... day .................. 20.....at………… by

M/S............................. ( Details of the Warehouse ,if Company/LLP/Partnership-
registered office and authorized person to be indicated ) hereinafter referred to as
Warehouse Owner which expression shall be deemed to include all his/their heirs,
administrators, successors in title and assigns and CANARA BANK , a body corporate
constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act,
1970, having its Head Office at No.112, J C Road, Bangalore560002, and amongst
others having a branch office at . ……. hereinafter referred to as the BANK which
expression shall be deemed to include all their assigns and successors in title and
attorneys.

The Warehouse Owner is owner of Warehouse situated at ………………, approached Bank to

provide finance to farmers who deposited goods/produce with Warehouse Owner on the
basis of Warehouse receipt issued by Warehouse Owner . The Bank has agreed to grant loan
to farmers on the following terms and conditions.

NOW, THE PARTIES TO THIS AGREEMENT COVENANT AS UNDER:

1) The Warehouse Owner hereby represent and confirm that Warehouse Owner has
obtained necessary licence from Municipality /Corporation / Panchayath or any
other authority for construction and operation of Warehouse and accepting goods/
produce from farmers /public.
2) The Warehouse Owner shall strictly comply with rules and regulations issued by
Government for the purpose of regulating and maintaining warehouse.
3) The Warehouse Owner shall issue warehouse receipt in duplicate with photo of
farmers, signature /LTI of farmers after receiving goods/produce from the
farmers. Warehouse Owner shall be custodian of the goods/produce deposited
with them.
4) Warehouse receipt issued by warehouse owner shall contain the following :
a) Receipt Number
b) Name & Complete postal address of warehouse
c) Warehouse Registration Number
d) Name & Address of the depositor of goods ,i.e. the farmer
e) Description of the goods stored
f) Rate of storage and handling charges
g) Details of Insurance taken
h) Validity of the Warehouse Receipt

486
5) If the Farmers, who deposited the goods/produce with Warehouse Owner, need
any financial assistance, they shall submit application with warehouse receipt
(original &duplicate) to the Bank.
6) The Bank shall process the loan and if the farmer is eligible for loan as per the
guidelines issued by the Bank, the Bank shall sanction the loan to Farmer
(hereinafter called Borrower) on the terms and conditions that Bank feels
correct and proper as per the guidelines of the Bank and RBI. Both the parties
agree that sanctioning the loan is at the absolute discretion of the Bank and
Warehouse Owner or Farmer/Borrower shall not claim loan as a matter of right.
7) The Borrower shall transfer/assign/endorse warehouse receipt in favour of Bank
as security for the loan sanctioned by the Bank.
8) After sanctioning loan, the Bank shall forward the warehouse receipt (original &
duplicate) to Warehouse Owner for noting the lien of the Bank over the goods/
produce covered under the said warehouse receipt. The Warehouse Owner shall
note the lien of the Bank over the goods/produce and return original warehouse
receipt to the Bank.
9) The Bank shall disburse the loan on receipt of the confirmation of noting of lien
in favour of the Bank on original Warehouse receipt hereinafter called the “WR”.
10) The Warehouse Owner agrees that they shall hold goods/produce covered under
WR endorsed/transferred/assigned to Bank, as trustee on behalf of the Bank.
11) The Warehouse Owner shall ensure that Borrower shall not avail any finance
from any other Banks/financial institutions/company against the security of
W R deposited with the Bank. The Warehouse Owner shall permit, assist /
co-operate with Bank Officials for inspection and identification of goods/
produce and all the records.
12) The Warehouse Owner shall safe keep the goods/produce covered under WR and
agrees that the said goods /produce shall not be co- mingled as general lot with
the other goods/produce stored in the Warehouse and shall be kept separately
for easy identification, Warehouse Receipt wise and they shall take all necessary
steps for preservation of the quantity and quality of the agricultural goods/
produce.
13) The Warehouse Owner hereby agree to act on the direction of the Bank .In case,
WR endorsed/transferred/assigned in favour of the Bank is produced, the
Warehouse Owner shall not release the produce unless it receives a letter of
release and delivery order from the Bank duly signed by the authorised
signatory of the Branch.
14) The Warehouse Owner agree that they shall submit a statement on monthly basis
duly indicating the value of goods/produce deposited by the Borrowers, stocks
taken out and balance stocks held in terms of quantity and value .
15) The Warehouse Owner shall ensure that the goods/produce covered under WR
are insured for the full market value against all risks comprehensively or as may

487
 be prescribed by the Bank with Bank clause appended thereto and undertakes to
keep the Policy always in currency by duly and punctually paying premium from
time to time .
16) If Borrower fails to pay the loan in terms of the sanction/loan documents
executed by them, the Warehouse Owner on receiving a written instruction from
the Bank shall sell the goods/produce covered under WR by issuing 7 days notice
to the Borrower duly informing the intention of the Bank for disposing of the
goods /produce after getting confirmation of the price of the goods/produce
from the Bank. On selling the agricultural goods /produce, the Warehouse Owner
shall deposit the proceeds so received to the loan account of the Borrower with
the Bank.
17) The Bank shall not be liable for the expenses, charges, wages etc for raising,
maintaining and transporting the goods /produce crops to any extent and the
same shall be borne by the Warehouse Owner.
18) The Warehouse Owner agrees to indemnify the Bank against any loss, damage or
injury caused to the goods/produce stored by the Borrower in the godown .In the
event of any such loss , damage or injury being caused to the goods/produce of
the Borrower , the Warehouse Owner shall forthwith pay the value of the goods/
produce to the Bank.
19) If the Borrower commits default in repaying the loan availed by him, the
Warehouse Owner shall pay the loan amount with interest, cost, penal interest,
etc. on mere demand from the Bank. The Warehouse Owner hereby agrees to
guarantee the loan sanctioned to the Borrower and waives all rights conferred
on him under Sections 130,133,134,135,139&141 or any other relevant provision
of the Indian Contract Act.
20) The Warehouse Owner hereby agree/s as a pre-condition of the loan/
advances given by the Bank, that in case Ware house Owner commit/s default
in fulfillment of any of the obligations under this agreement , the Bank and /
or the RBI will have an unqualified right to disclose or publish the name/s
and photographs of its directors / partners / proprietors of the Warehouse as
defaulter in such manner and through such medium as the Bank or RBI in their
absolute discretion may think fit
21) Nothing herein contained shall operate or otherwise prejudicially affect the Bank’s
rights or remedies in respect of other securities, guarantees, obligations or
decree for indebtness or liability of the Borrower to the Bank.

IN WITNESS WHEREOF THE WAREHOUSE OWNER AND BANK HAVE EXECUTED THESE PRESENTS
ON THE DAY AND YEAR FIRST HEREIN ABOVE MENTIONED.

Canara Bank Warehouse/Cold storage Owner

488
 ANNEXURE - 30

Undertaking Letter of Warehouse/Cold Storage owner/s

From Place:
Date:
…………………. (NAME & DETAILS OF WAREHOUSE OWNER/Borrower)
…………………………..

To
The Branch Manager
Canara Bank
………………………..
……………………....

Dear Sir,

Sub:

At our request, Canara Bank has sanctioned credit facility of Rs ……… ( name of the limit and
loan account no. may be mentioned )to us for the purpose of onward lending to Farmers who
have deposited the goods /produce with us. We have executed necessary loan documents in
favour of the Bank for the purpose of availing above said credit facility. In terms of sanction,
Demand Promissory Note (DPN) executed by Farmers in favour of Warehouse shall be
endorsed/assigned /transferred in favour Bank and Warehouse Receipt issued by us shall be
endorsed/assigned /transferred by Farmers in favour of the Bank.

Sri. …… (hereinafter called the Farmer ) has deposited goods /produce with us as specified
in the Warehouse Receipt no…….. issued by us.

After deposit of the goods/produce by the Farmers in the Warehouse, we have granted loan
of Rs …. to Sri…..on the terms and conditions contained in our letter dated .....…..

In consideration of above, I/We hereby deliver to you DPN dated….......… executed by the
Farmer and Warehouse Receipt no…. issued by us duly endorsed/assigned /transferred in
your favour by the Farmers, as security for the due repayment of all liabilities arising out of
above said credit facility including commission, periodical interest, charges etc, debited to
the loan account by the Bank from time to time.

I /We confirm that the above said DPN and Warehouse Receipt have been duly endorsed
transferred / assigned in your favour and you may hold the DPN and Warehouse Receipt as

489
continuing security for all the sums due to you under the loan documents executed by us in
your favour.

You may hold the said DPN and Warehouse Receipt with full right of enforcement and appro-
priation without prejudice to your other remedies against me/us and rights over any other
securities which you may now or at any time hereafter be held by you.

The original DPN and Warehouse Receipt endorsed/assigned /transferred in favour of the
Bank are enclosed to this letter.

I/We hereby undertake the following:

Ø I/We shall hold goods/produce covered under Warehouse receipt endorsed/transferred/

assigned to Bank, as trustee on behalf of the Bank.

Ø I/We shall safe keep the goods /produce covered under Warehouse Receipt and agrees
that the said goods /produce stored shall not be co- mingled as general lot with the
other goods / produce stored in the Warehouse and shall be kept separately for easy
identification, Warehouse Receipt wise and they shall take all necessary steps for
preservation of the quantity of the agricultural goods /produce.

Ø I/We shall act on the direction of the Bank in case Warehouse Receipt/DPN endorsed/
transferred/assigned in favour of the Bank is produced and I/We shall not release the
produce unless it receives a letter of release and delivery order from the Bank duly
signed by the authorised signatory of the Branch.

Ø I/We shall submit a statement on monthly basis duly indicating the value of goods /
produce deposited by the Farmers, stocks taken out and balance stocks held in terms
of quantity and value.

Ø I/We shall ensure that the goods/produce pledged to the Bank are insured for the
full market value against all risks comprehensively or as may be prescribed by the
Bank with Bank clause appended thereto and undertakes to keep the Policy always in
currency by duly and punctually paying premium from time to time .

Ø The Bank shall not be liable for the expenses, charges, wages etc for raising,
maintaining and transporting the goods /produce to any extent and the same shall be
borne by me/us.

Ø I/We shall indemnify the Bank against any loss, damage or injury caused to the goods/
produce stored by the Borrower in the godown. In the event of any such loss, damage

490
 or injury being caused to the produce of the Farmer, I/We shall forthwith pay the
value of the goods/produce to the Bank.

Ø I/We hereby undertake that any amount received by us from Farmers towards the loan
disbursed by us shall be credited to the loan account maintained with Canara Bank.
Till the amount is credited to the loan account maintained with Canara Bank, I/We
shall hold the said money on trust.

This undertaking shall be irrevocable and shall remain in force until discharged by you in
writing and all the terms and shall be fully binding on my /our legal representatives, execu-
tors, administrators and assigns.

Yours faithfully,

Warehouse/Cold storage owner/s

(Borrowers of the Bank)

491
 ANNEXURE - 31

FORMAT OF CERTIFICATE TO BE FURNISHED BY THE DEALER OF THE PUMPING EQUIPMENTS

TO THE FINANCING BANK

Name and address of the dealer: M/S

To :

CANARA BANK
............................................. Branch

Dear Sir,

We hereby certify that we have on ............................... (date) installed a Complete

Pumping System conforming to IS: 10804-86 at the well of Shri/Smt ................................
.......... .....................................................................................................
....................................................................... (name and address of the
borrower). The pumping system installed by us conforms to BIS standard IS : 10804-86
except in regard to foot-value*.

Yours faithfully,

(SIGNATURE OF THE DEALER)

* Strike wherever not applicable. The reason for not being able to use BIS marked foot-value
may please be furnished.

492
 ANNEXURE - 32

A) TRACTOR FINANCE- GUIDELINES ON DISBURSEMENT AND MONITORING

1. The credit decision will be at the sole discretion of the branch based on feasibility and
viability, despite the leverage given in the MoU to Companies in identifying the
proposals.

2. Quotation/s should clearly indicate the price of tractor and individual accessories
separately.

3. The quotations should clearly indicate the price of tractor / trailer / accessories
separately. It should be ensured that the margin norms are not circumvented by
inflated quotes on the cost of tractors / accessories.

4. As soon as a tractor loan is sanctioned, a letter of confirmation is to be issued to the

dealers, indicating that the payment will be made once the tractor and trailer
(applicable) along with all accessories are supplied as per proforma invoice.

5. The payment of the loan proceeds to the tractor dealers should be made only after the
tractor and all other accessories as per proforma invoice are supplied and our lien
painted on tractor and trailer. This has to be confirmed by inspection of the asset.
Payment to the dealer should be released only after ensuring that the assets have been
delivered.

6. The following details are to be invariably incorporated on the reverse of the Demand
Drafts issued for disbursement of tractor loans to avoid misuse of the DD :

“ This DD is issued for supply of ………………….. tractor and ………………… accessories as per
Performa Invoice No……….......…….. dated ….......………………. to Sri…………….…………..
S/o. ………………………………….(address)”.

The above guidelines are applicable for disbursement of loans to Power Tillers and
combine harvestors also.

7. Branches should ensure that our lien is noted in the RC Book within one month of
disbursement of the loan and RC book copy should be obtained. This aspect has to be
very closely followed up by the branches. In case of undue delay, help should be sought
from the dealer who has supplied the tractor/tiller/trailer. For recovery of overdue
instalments also the help from the dealers can be enlisted.

493
8. Branches to ensure that borrower can effectively use the tractor as per the norms and
has ability to manage tractors.

9. Precautions To Be Taken While Taking Mortgage Of Properties:

i. The branches may make thorough local enquiries regarding the character and
background of the farmers and their title over the lands through independent
enquiries without merely relying on the tractor dealers ’reports.

ii. All the extant guidelines on various precautions to be taken while accepting
security by way of Mortgage.

10. Guidelines for Circles:

a. Ensuring independent appraisal by the branch.
b. Putting in an appropriate mechanism for ensuring proper end use, timely
registration of tractors with RTA and close monitoring of the loans.
c. The need to maintain Circle level liaisoning with the Tractor Companies for
suitable and timely intervention whenever required in the matter of delayed
delivery, non delivery of the machinery, non registration of tractor etc
d. To have Circle level one-to-one meets with the leading Tractor manufacturing
Companies; bringing to the notice of the companies the various irregularities
committed by their Dealers and urging them to assist in setting right such of those
irregularities and taking steps for avoiding recurrence of such instances.
e. To black list the undesirable Dealers as revealed during the investigation by the
Circle and not to accept quotations from such Dealers in future.
f. To monitor the expansion of the portfolio of farm machinery (Tractor and Power
tillers) in relation to scope/potential of the command area of the branches.
g. To approach financing Farm Machinery (Tractors and Power Tillers) as under:
i. Fix a cap of 25 farm machinery loans per branch /year in branches where the
outstanding Farm Machinery portfolio is less than 50. After reaching the cap of
50 farm machinery loans, the branches to seek prior clearance from CO.
ii. The branches with outstanding farm machinery portfolio of more than 50 loans
or recovery is less than 85% under the relative portfolio, have to obtain prior
clearance from CO for every block of 5 farm machinery loans proposed.

494
 List of Tractors/ Power tillers/Combine Harvestor models/Rice Transplanter models

PART A: APPROVED LIST OF TRACTORS

Sl.No NBD No Name of the Manufacturer Make & Model

1 M/s ESCORTS Ltd., Faridabad POWERTRAC- 434
2 M/s ESCORTS Ltd., Faridabad POWERTRAC- 439
3 M/s New Holland Tractor Pvt. Ltd. New Holland 3600 Tractor
4 M/s New Holland Tractor Pvt. Ltd. New Holland 3130 Tractor
5 M/s New Holland Tractor Pvt. Ltd. New Holland 5500
M/s New Holland Tractor Pvt. Ltd. New Holland 7500*
6 M/s SAS Motors Ltd. ANGAD 240 D Tractor*
7 *263 M/s. Asha Exim Pvt. Ltd., Rajkot CAPTAIN DI 2600 MINI TRACTOR
[has limitations for field use as far
as medium to heavy soil types are
concerned]
8 54 M/s Auto Tractors Ltd. PRATAP 284 {MAJOR} TRACTOR
9 55 M/s Auto Tractors ltd. APAR PRATAP 333 TRACTOR
10 52 M/s Auto Tractors Ltd., PRATAP 284 TRACTOR
11 7 M/s Auto Tractors Ltd., Ahmedabad PRATAP 284
12 M/s Action Construction ACE DI 450 Tractor [not
Equipments Ltd., recommended for wetland
cultivation]
13 M/s Action Construction ACE DI 350
Equipments Ltd., [This tractor is not recommended
for wet land cultivation]
14 M/s Action Construction Equipments ACE D 1 450 Tractor
Ltd., [not recommended for wetland
cultivation]
15 M/s Action Construction Equipments ACE D 1450 Tractor (Supplementary
Ltd.,
16 M/s Action Construction Equipments ACE D 1 350 Tractor [not
Ltd., recommended for wetland
cultivation]
17 M/s Action Construction Equipments ACE DI 550 DC Tractor
Ltd.,
18 296 M/s Force Motors Ltd BAJAJ TEMPO OX 25 (ORCHARD
SPECIAL)
19 147 M/s Force Motors Ltd OX25 Orchard DLX
20 274 M/s. Force Motors Ltd Tempo Balwan 300 Tractor
21 280 M/s Force Motors Ltd Tempo Balwan 400

495
Sl.No NBD No Name of the Manufacturer Make & Model
22 281 M/s Force Motors Ltd Tempo Balwan 500
23 221 M/s Force Motors Ltd TEMO OX-45, TRACTOR COMM - BT
24 230 M/s Force Motors Ltd TEMO OX - 25, TRACTOR(Conf.)
25 177 M/s Force Motors Ltd BAJAJ TEMPO OX-35 TRACTOR(ICT)
26 176 M/s Brahma Steyr Tractors Ltd. BRAHMASTEYR955
Ltd.,
27 70 M/s Capol Farm Equipment Ltd. EICHER SONA MARK II
28 71 M/s Capol Farm Equipment Ltd. EICHER 312
29 97 M/s Capol Farm Equipment Ltd. EICHER 243 NC , TRACTOR
30 123 M/s Capol Farm Equipment Ltd. EICHER 243 NC , TRACTOR
31 137 M/s Capol Farm Equipment Ltd. EICHER 243
32 19 M/s Eicher Diesel Ltd. Alwar, EICHER STANDARD SONA/GOLD
Rajasthan TRACTOR
33 47 M/s. Eicher Diesel Ltd. Alwar, EICHER SONA TRACTOR
Rajasthan
34 51 M/s Eicher Farm Machinery EICHER STANDARD GOODEARTH
Equipments Ltd. 115/8D-HEERA TRACTORS
35 25 M/s Eicher Farm Machinery Ltd., EICHER STANDARD HEERA TRACTOR
Parwanoo Industrial Estate, Solan
(Simla)
36 29 M/s Eicher Farm Machinery Ltd., EICHER STANDARD 242 TRACTOR
Parwanoo Industrial Estate, Solan
(Simla)
37 4 M/s Eicher Goodearth Ltd.Faridabad EICHER STANDARD 241 TRACTOR
38 21 M/s Eicher Goodearth Ltd.Faridabad EICHER STANDARD CHANDI
39 42 M/s Eicher Goodearth Ltd.Faridabad EICHER STANDARD
40 44 M/s Eicher Goodearth Ltd.Faridabad EICHER STANDARD/GOODEARTH
115/8/D-241(Six speed)
41 M/s Eicher Tractor Ltd. EICHER -5150 (47 HP)
42 95 M/s Eicher Tractor Ltd. EICHER 241 NC (6 Speed)
43 116 M/s Eicher Tractor Ltd. EICHER 312 TRACTOR
44 117 M/s Eicher Tractor Ltd. EICHER 364 NC TRACTOR
45 120 M/s Eicher Tractor Ltd. EICHER 310 NC TRACTOR
46 111 M/s Eicher tractor Ltd. EICHER 242 NC TRACTOR
Capol farm Equipments Ltd.
47 197 M/s Eicher Tractor Nalgonda, A.P. EICHER 364 P-TRACTOR COMM(ICT)
48 257 M/s Eicher Tractors EICHER 480
49 258 M/s Eicher Tractors EICHER 380
50 286 M/s Eicher Tractors Eicher 5600 Tractor

496
Sl.No NBD No Name of the Manufacturer Make & Model
51 287 M/s Eicher Tractors Eicher 242 Superstar
52 292 M/s EICHER Tractors EICHER 333
53 182 M/s Eicher Tractors Haryana EICHER-485 TRACTOR COMM(ICT)
54 190 M/s Eicher Tractors Haryana EICHER 312 NC TRACTOR COMM(BT)
55 210 M/s Eicher Tractors Haryana EICHER 368 TRACTOR COMM(ICT)
56 89 M/s Eicher Tractors Ltd. Eicher Standard/Good earth 115/
8D-241(5 speed)
57 131 M/s Eicher Tractors Ltd. EICHER 312 NC
58 134 M/s Eicher Tractors Ltd. EICHER 241
59 139 M/s Eicher Tractors Ltd. EICHER PREMIUM 369
60 162 M/s Eicher tractors Ltd. Eicher 242 NC Tractor Comm (BT)
61 141 M/s Eicher Tractors Ltd. EICHER 242
62 163 M/s Eicher Tractors Ltd. Haryana Eicher 364 NC Tractor Comm (BT)
63 201 M/s Eicher Tractors Ltd. M.P. Eicher 586 TRACTOR COMM(ICT)
64 202 M/s Eicher Tractors Ltd. M.P. EICHER-VALTRA 6100 TRACTOR
COMM {ICT}**** Change of
Nomenclature from Eicher
Valtra6100 to Euro Power 6100
65 189 M/s Eicher Tractors Nalgonda, A.P. EICHER 243 NC TRACTOR COMM(BT)
66 5 M/s Escort Tractor Ltd., Faridabad E-355 TRACTOR
67 6 M/s Escort Tractor Ltd., Faridabad E-330 TRACTOR
68 96 M/s Escorts Ltd. ESCORTS 335 M TRACTOR {10+2
SPEED GEAR BOX}
69 98 M/s Escorts Ltd. ESCORT 325 M TRACTOR {10+2
speed box}
70 99 M/s Escorts Ltd. ESCORT 355 M TRACTOR {10+2
SPEED BOX}
71 128 M/s Escorts Ltd. ESCORT 335 M {6+2 SPEED GEAR
BOX}
72 129 M/s Escorts Ltd. ESCORT 325 M {6+2 SPEED GEAR
BOX}
73 130 M/s Escorts Ltd. ESCORT 325 M {6+2 SPEED GEAR
BOX}
74 135 M/s Escorts Ltd. ESCORT 355 {10+2 SPEED GEAR BOX}
75 143 M/s Escorts Ltd. ESCORT 322
76 144 M/s Escorts Ltd. ESCORT 335 M DB {DISC BRAKE}
77 146 M/s Escorts Ltd. ESCORT 340 DB {6+2} GEAR BOX
(ICT)
78 152 M/s Escorts Ltd. FARMTRAC - 60 TRACTOR-
COMM{ICT}

497
Sl.No NBD No Name of the Manufacturer Make & Model
79 153 M/s Escorts Ltd. FARMTRAC - 50 TRACTOR-COMM{BT}
80 165 M/s Escorts Ltd. Escort - 440 Tractor Comm ICT
81 251 M/s Escorts Ltd. POWERTRAC - 455 TRACTOR
82 272 M/s Escorts Ltd. FARMTRAC-35 CHAMPION Tractor
83 273 M/s Escorts Ltd. FARMTRAC 70 DX Tractor
84 56 M/s Escorts Ltd. Faridabad FORD 3600
85 63 M/s Escorts Ltd. Faridabad ESCORT 335 M
86 72 M/s Escorts Ltd. Faridabad ESCORT 325 M
87 93 M/s Escorts Ltd. Faridabad FARMTRAC - 50
88 159 M/s Escorts Ltd. Haryana Escort 335 M {10+2} Speed gear Box
89 167 M/s Escorts Ltd. Haryana ESCORTS-430 (6+2) GEAR BOX
90 168 M/s Escorts Ltd. Haryana ESCORTS-435(8+2) GEAR BOX
91 173 M/s Escorts Ltd. Haryana FARM TRACK - 55 TRACTOR
COMM(ICT)
92 178 M/s Escorts Ltd. Haryana FARM TRACK - 50 XL TRACTOR
93 180 M/s Escorts Ltd. Haryana ESCORT 435 S(6+2) TRACTOR
94 191 M/s Escorts Ltd. Haryana FARMTRAC-45 TRACTOR COMM(ICT)
95 193 M/s Escorts Ltd. Haryana Escort-450 TRACTOR (8+2 GEAR
BOX) COMM (ICT)
96 222 M/s Escorts Ltd. Haryana FARMTRAC-30 TRACTOR
COMM.(ICT)
97 228 M/s Escorts Ltd. Haryana FARMTRAC - 35 TRACTOR
COMM(ICT)
98 229 M/s Escorts Ltd. Haryana FARMTRAC - 70 TRACTOR
COMM(ICT)
99 208 M/s. Escorts Ltd. Haryana ESCORT-450 XL (POWERTRAC)
TRACTOR COMM.'(ICT)
100 209 M/s Escorts Ltd. Haryana ESCORT-440 XL (POWERTRAC)
TRACTOR COMM.'(ICT)
101 8 M/s Escorts Ltd., Faridabad E-345
102 28 M/s Escorts Ltd., Faridabad FORD 3610, TRACTOR
103 33 M/s Escorts Ltd., Faridabad ESCORTS KISAN TRACTOR
104 38 M/s Escorts Ltd., Faridabad ESCORTS 320
105 46 M/s Escorts Ltd., Faridabad ESCORTS 325
106 49 M/s Escorts Ltd., Faridabad ESCORT JUNIOR TRACTOR
107 60 M/s Escorts Ltd., Faridabad ESCORT 325 TCU
108 61 M/s Escorts Ltd., Faridabad FORD/3610
109 68 M/s Escorts Ltd., Faridabad ESCORT 345
110 243 M/s Escorts Ltd., Faridabad Farmtrac 45 DX Tractor
111 244 M/s Escorts Ltd., Faridabad Powertrac 445 Tractor

498
Sl.No NBD No Name of the Manufacturer Make & Model
112 245 M/s Escorts Ltd., Faridabad Farmtrac 60 DX Tractor
113 265 M/s.Escorts Ltd., Faridabad FARMTRAC-30 (HERO) TRACTOR
114 12 M/s Escorts Ltd., Faridabad E 335
115 65 M/s Escorts Ltd., Faridabad ESCORT 355 M
116 104 M/s Escorts Tractor Ltd. FARMTRAC-60
117 113 M/s Escorts Tractors Ltd. ESCORT 340 M TRACTOR
118 108 M/s Escorts Tractors Ltd. FORD 3610
119 121 M/s Escorts Tractors Ltd. Faridabad FARMTRAC -55
120 1 M/s Escorts Tractors Ltd.Faridabad FORD 3600
121 184 M/s Greaves ltd. Ranipet, Tamilnadu SAME GREAVES-503 TRACTOR
COMM(ICT)
122 75 M/s. Gujarat Tractor Corp. Ltd. HINDUSTAN G-453
123 79 M/s Gujarat Tractor Corp. Ltd. HINDUSTAN HWD-50
124 148 M/s Gujarat Tractor Corp. Ltd. HINDUSTAN G 312 MO-DI-5
125 149 M/s Gujarat Tractor Corp. Ltd. HINDUSTAN HWD 50 TRACTOR-
COMM.{BT}
126 154 M/s Gujarat Tractor Corp. Ltd. Hindustan G-614(SP)/ G-804DI
Tractor Comm (ICT)
127 160 M/s Gujarat Tractor Corp. Ltd. Hindustan G-453 Di Tractor Comm
(BT)
128 174 M/s Gujarat Tractor Corp.Ltd. HINDUSTAN-G614DI TRACTOR
Vadodra COMM(BT)
129 59 M/s Gujarat Tractor Corporation ltd. HINDUSTAN G-312
130 24 M/s Gujarat Tractors Corporation HINDUSTAN HWD-50
Ltd. Vadodara
131 2 M/s Gujarat Tractors Corporation HINDUSTAN 50
Ltd., Vadodara
132 20 M/s Gujarat Tractors Ltd. HINDUSTAN SUPER G 614
133 31 M/s. Harsha Tractors Ltd. New Delhi HARSHA TRACTOR
134 11 M/s HMT Ltd. 2511 Tractor (RS)
135 13 M/s HMT Ltd. HMT 2511
136 14 M/s HMT Ltd. HMT 3511
137 15 M/s HMT Ltd. HMT 5911
138 67 M/s HMT Ltd. HMT 2511
139 78 M/s. HMT Ltd. HMT 4511
140 85 M/s HMT Ltd. HMT 5911
141 102 M/s HMT Ltd. HMT 4511 S TRACTOR
142 109 M/s HMT Ltd. HMT 1811 TRACTOR
143 122 M/s HMT Ltd. HMT - 3522
144 132 M/s HMT Ltd. HMT - 3022

499
Sl.No NBD No Name of the Manufacturer Make & Model
145 133 M/s HMT Ltd. HMT - 3511 CS
146 140 M/s HMT Ltd. HMT 3511
147 164 M/s HMT Ltd. HMT5911 Tractor-Comm(BT)
148 235 M/s HMT Ltd. HMT-7511 Tractor - Comm(ICT)
149 270 M/s HMT Ltd. HMT 6522 Tractor
150 91 M/s HMT Ltd. Agri. Machinery Division HMT 2522 TRACTOR
151 92 M/s HMT Ltd. Agri. Machinery Division HMT 2511 II A TRACTOR
152 155 M/s. HMT Ltd. Haryana HMT-4922 Tractor Comm.(ICT)
153 161 M/s HMT Ltd. Haryana HMT 2522 EDI Tractor Comm(BT)
154 179 M/s HMT Ltd. Haryana HMT 4022 TRACTOR Comm(ICT)
155 181 M/s HMT Ltd. Haryana HMT - 4511 TRACTOR COMM(BT)
156 217 M/s HMT Ltd. Haryana HMT-2522 ORCHARD SPECIAL
TRACTOR COMM(ICT)
157 36 M/s HMT Ltd., Pinjore District. HMT 5911
Ambala(Haryana)
158 39 M/s HMT Ltd., Pinjore District. HMT 3511
Ambala(Haryana)
159 M/s Indo Farm Equipment Ltd. HP INDOFARM 2042 DI TRACTOR
160 225 M/s Indo Farm Equipment Ltd. HP INDOFARM 2050 DI TRACTOR
COMM(ICT)
161 239 M/s Indofarm Equipment Ltd. INDOFARM 2040 DI TRACTOR
SUPPLEMENTARY TEST-Comm.
162 276 M/s Indofarm Equipment Ltd. INDOFARM 2035 DI Tractor
163 277 M/s Indofarm Equipment Ltd. INDOFARM 2030 DI Tractor
164 M/s International Tractors Ltd, Sonalika International DI 60 III
Punjab Baagwan Models
165 M/s International Tractors Ltd, International DI 30 Baagban Tractor
Punjab [ not recommended for wetland
cultivation]
166 253 M/s International Tractors Ltd, Sonalika International DI 730 III
Punjab Tractor Comm(ICT)[has not been
recommended for wetland
cultivation]
167 241 M/s International Tractors Ltd. Sonalika International DI 35 Tractor
- Supplementary Test-Comm.
168 242 M/s International Tractors Ltd. Sonalika International DI 745 III
169 271 M/s International Tractors Ltd. SONALIKA International DI 35 III
Tractor
170 214 M/s International Tractors ltd. SONALIKA INTERNATIONAL-DI-750
Hoshiarpur TRACTOR COMM(ICT)

500
Sl.No NBD No Name of the Manufacturer Make & Model
171 204 M/s International Tractors Ltd. SONALIKA INTERNATIONAL DI 60
Punjab TRACTOR Comm'(ICT)
172 205 M/s International Tractors Ltd. SONALIKA INTERNATIONAL DI 55
Punjab TRACTOR Comm'(ICT)
173 211 M/s International Tractors Ltd. SONALIKA INTERNATIONAL DI-740
Punjab TRACTOR COMM(ICT)
174 212 M/s. International Tractors Ltd. SONALIKA INTERNATIONAL DI-750 III
Punjab TRACTOR COMM(ICT)
175 218 M/s. International Tractors Ltd. SONALIKA INTERNATIONAL DI-730
Punjab TRACTOR COMM(ICT)
176 216 M/s. International Tractors Ltd. SONALIKA INTERNAIONAL DI-732
Punjab TRACTOR COMM(ICT)
177 30 M/s. Kirloskar Pneumatic Ltd. D-6006 KK TRACTOR
Nasik Road
178 10 M/s. Kirloskar Tractors Ltd., Nasik D-4006 K
179 22 M/s. Kirloskar Tractors Ltd., Nasik KIRLOSKAR, D-3006 K
180 M/s John Deere India Pvt Ltd., John Deere, 5045 D Tractor
181 M/s John Deere India Pvt Ltd., John Deere 5050 D Tractor
[Suitable for wet land operations as
per the Commercial Test Report]
182 M/s John Deere India Pvt Ltd., John Deere 5042D Tractor
[Suitable for wet land operations as
per the Commercial Test Report]
183 M/s John Deere India Pvt Ltd., John Deere 5055E Tractor
[Suitable for wet land operations as
per the Commercial Test Report]
184 M/s John Deere India Pvt Ltd., John Deere 5060E Tractor
[Suitable for wet land operations as
per the Commercial Test Report]
185 M/s. John Deere Equipment Pvt Ltd., JOHN DEERE 5038 D TRACTOR
186 M/s. John Deere Equipment Pvt Ltd., John Deere 5041 C Tractor
187 M/s. John Deere Equipment Pvt Ltd., John Deere 5036 C Tractor
188 M/s John Deere Equipment Pvt Ltd., John Deere 5104 Tractor
189 M/s. John Deere Equipment Pvt Ltd., John Deere 5204 Tractor
190 M/s. John Deere Equipment Pvt Ltd., John Deere 5310 (Collar Shift)
Tractor [Tractor is not
recommended for wetland
cultivation by the manufacturers]
191 M/s. John Deere Equipment Pvt Ltd., John Deere 5103 Version 2 Tractor
192 283 M/s. John Deere Equipment Pvt Ltd., JOHN DEERE 5310 (collar shift)

501
Sl.No NBD No Name of the Manufacturer Make & Model
193 297 M/s John Deere Equipment Pvt Ltd., JOHN DEERE 5103 ECONOMY
194 293 M/s John Deere Equipment Pvt Ltd., JOHN DEERE 5203 S
195 294 M/s John Deere Equipment Pvt Ltd., JOHN DEERE 5203 VERSION 2
196 295 M/s John Deere Equipment Pvt Ltd., JOHN DEERE 5103 S VERSION
197 M/s Kubota Agricultural Machinery Kubota B 2420 Tractor
India (P) Ltd.,[not recommended
for wet land cultivation]
198 M/s Kubota Agricultural Machinery Kubota L 3408 DD Tractor
India (P) Ltd., [ not recommended for fitting of
cage wheel for puddling operation]
199 M/s Kubota Agricultural Machinery Kubota L 4508 DD Tractor
India (P) Ltd., [not recommended for fitting of
cage wheel for puddling operation]
200 M/s. Mahindra & Mahindra Ltd MAHINDRA 295 DI SUPER TURBO
Tractor
201 M/s. Mahindra & Mahindra Ltd Mahindra 215
(Brand name : Yuvraj 215)
[tractor is not recommended for
wet land cultivation]
202 M/s.Mahindra & Mahindra Ltd Shaktimaan 30 Tractor
203 252 M/s. Mahindra & Mahindra Ltd Mahindra Arjun 445 DI Tractor
204 254 M/s. Mahindra & Mahindra Ltd Mahindra Arjun 555 DI
205 269 M/s. Mahindra & Mahindra Ltd MAHINDRA ARJUN 405 DI Tractor
206 57 M/s. Mahindra & Mahindra Ltd. MAHINDRA 255 TRACTOR
207 62 M/s. Mahindra & Mahindra Ltd. MAHINDRA 595 TRACTOR
208 64 M/s. Mahindra & Mahindra Ltd. MAHINDRA 265
209 66 M/s. Mahindra & Mahindra Ltd. MAHINDRA 444 SUPER
210 69 M/s. Mahindra & Mahindra Ltd. MAHINDRA 575 DI
211 76 M/s. Mahindra & Mahindra Ltd. MAHINDRA B275 DI
212 77 M/s. Mahindra & Mahindra Ltd. MAHINDRA 265 DI
213 83 M/s. Mahindra & Mahindra Ltd. MAHINDRA 255 FE
214 86 M/s. Mahindra & Mahindra Ltd. MAHINDRA 235 DI
215 94 M/s. Mahindra & Mahindra Ltd. MAHINDRA 595 TRACTOR
216 101 M/s. Mahindra & Mahindra Ltd. MAHINDRA B-275 TRACTOR
217 119 M/s. Mahindra & Mahindra Ltd. MAHINDRA 575 DI TRACTOR
218 126 M/s. Mahindra & Mahindra Ltd. MAHINDRA B-275 DI
219 127 M/s. Mahindra & Mahindra Ltd. MAHINDRA B-265 DI
220 136 M/s. Mahindra & Mahindra Ltd. MAHINDRA 475 DI
221 151 M/s. Mahindra & Mahindra ltd., MAHINDRA 365 DI TRACTOR-
Mumbai COMM{ICT}

502
Sl.No NBD No Name of the Manufacturer Make & Model
222 166 M/s. Mahindra & Mahindra Ltd. MAHINDRA B-275
223 234 M/s. Mahindra & Mahindra Ltd. Mahindra Arjuna 455 DI Tractor
224 278 M/s. Mahindra & Mahindra Ltd. Mahindra 595 DI Super Turbo
225 17 M/s. Mahindra & Mahindra Ltd. MAHINDRA 500
Mumbai
226 156 M/s. Mahindra & Mahindra Ltd. Mahindra 225DI Tractor-Comm(BT)
Mumbai
227 158 M/s. Mahindra & Mahindra Ltd. Mahindra 585 DI Tractor-Comm(ICT)
Mumbai
228 175 M/s. Mahindra & Mahindra Ltd. MAHINDRA 3015 DI TRACTOR
Mumbai COMM(ICT)
229 183 M/s. Mahindra & Mahindra Ltd. MAHINDRA-3315DI TRACTOR
Mumbai COMM(ICT)
230 187 M/s. Mahindra & Mahindra Ltd. MAHINDRA 2515 DI TRACTOR
Mumbai COMM(ICT)
231 196 M/s. Mahindra & Mahindra Ltd. MAHINDRA 585 DI TRACTOR
Mumbai COMM(ICT) {MECHANICAL
CONSTANT MESH GEAR BOX)
232 203 M/s. Mahindra & Mahindra Ltd. MAHINDRA B-275 '(High Torque)
Mumbai Tractor Comm.' (ICT)
233 206 M/s. Mahindra & Mahindra Ltd. MAHINDRA -255 Tractor
Mumbai "Comm."(ICT)
234 219 M/s. Mahindra & Mahindra Ltd. MAHINDRA-605 DI TRACTOR
Mumbai COMM(ICT)
235 3 M/s. Mahindra & Mahindra Ltd., MAHINDRA B-275
Mumbai
236 37 M/s. Mahindra & Mahindra Ltd., M 270 Tractor
Mumbai
237 41 M/s. Mahindra & Mahindra Ltd., Mahindra 495
Mumbai
238 50 M/s. Mahindra & Mahindra Ltd., MAHINDRA B-275
Mumbai
239 16 M/s. Mahindra & Mahindra Ltd. MAHINDRA 444 SUPER
Mumbai
240 298 M/s. Mahindra & Mahindra Pvt Ltd MAHINDRA 235 DI AIR FLOW
TRACT
241 M/s Mahindra Gujarat Tractor Ltd., Shaktimaan 35 [not
recommended for wet land
cultivation]
242 M/s Mahindra Gujarat Tractor Ltd., Shaktimaan 40

503
Sl.No NBD No Name of the Manufacturer Make & Model
243 M/s Mahindra Gujarat Tractor Ltd., Shaktimaan 45
[ not recommended for wet
land cultivation]
244 M/s Mahindra Gujarat Tractor Ltd., Shaktimaan 31 Tractor
[not recommended this
tractor for wet land operations]
245 M/s Mahindra Gujarat Tractor Ltd., Shaktimaan-55 Tractor
[not recommended this tractor for
wet land operations]
246 M/s Mahindra Gujarat Tractor Ltd., Shaktimaan-60 Tractor
[not recommended this tractor for
wet land operations]
247 @264 M/s. Mahindra Gujarat Tractor Ltd., HINDUSTAN MG 405
Vadodara TRACTOR[ is suitable for dry
land cultivation only]
248 250 M/s. New Holland Tractors Ford 3030 Tractor
249 233 M/s. New Holland tractors (I) Ltd FORD 3230 TRACTOR
NEW DELHI
250 192 M/s. New Holland Tractors (India) FORD-3630 TRACTOR COMM(ICT)
P. Ltd.New Delhi
251 170 M/s. New Holland Tractors (India) FORD-5630 TRACTOR COMM (ICT)
Pvt. Ltd.New Delhi
252 266 M/s. New Holland Tractors (India) FORD New Holland 3630 TX Tractor
Pvt. Ltd.,New Delhi
253 90 M/s. Partap Steel Ltd. Belaram UMZZ 6 KM
254 118 M/s. Partap Steels VEER PARTAP 235 TRACTOR
255 73 M/s. Partap Steels Ltd. Veer Pratap PS 3035
256 80 M/s. Partap Steels Ltd. Veer Partap PS-1027
257 100 M/s. Partap Steels Ltd. VEER PARTAP BELARUS UM 2-6 KM
TRACTOR
258 103 M/s. Partap Steels Ltd. VEER PARTAP PS 1027 M TRACTOR
259 27 M/s. Pratap Steel Rolling Mills Ltd., Veer Pratap PSs-1027 Tractor
Ballabgarh(Haryana)
260 M/s. Preet Tractors PREET 6049 –I [This tractor is not
recommended for wet land
cultivation]
261 M/s. Preet Tractors Preet 3549 I Tractor
262 M/s. Preet Tractors Preet 4049 I Tractor
263 M/s. Preet Tractors PREET 3549 Tractor
264 279 M/s. Preet Tractors PREET 6049

504
Sl.No NBD No Name of the Manufacturer Make & Model
265 106 M/s. Punjab Tractor Ltd. SWARAJ 724 TRACTOR
266 114 M/s. Punjab Tractor Ltd. SWARAJ 720 FE
267 115 M/s. Punjab Tractor Ltd. SWARAJ 855 FE
268 169 M/s. Punjab Tractor Ltd. SWARAJ-855 TRACTOR COMM.(BT)
269 226 M/s. Punjab Tractor Ltd. Punjab Swaraj 735 FE {8+2 GEAR BOX}
TRACTOR COMM(ICT)
270 227 M/s. Punjab Tractor Ltd. Punjab SWARAJ 724 FE {8+2 Speed GEAR
BOX} TRACTOR COMM(ICT)
271 45 M/s. Punjab Tractors SWARAJ 724
272 48 M/s. Punjab Tractors SWARAJ 720, TRACTOR
273 138 M/s. Punjab Tractors * SWARAJ 922 FE
274 288 M/s. Punjab tractors Swaraj 834 FE Tractor
275 290 M/s. Punjab Tractors Ltd SWARAJ 945 FE
276 9 M/s. Punjab Tractors Ltd. SOORAJ 2700
277 18 M/s. Punjab Tractors Ltd. SWARAJ 855
278 74 M/s. Punjab Tractors Ltd. Swaraj 735
279 82 M/s. Punjab tractors Ltd. SWARAJ 724 FE
280 84 M/s. Punjab Tractors Ltd. SWARAJ 735 FE
281 124 M/s. Punjab Tractors Ltd. SWARAJ 724 FE
282 125 M/s. Punjab Tractors Ltd. SWARAJ 735 FE
283 236 M/s. Punjab Tractors Ltd. Swaraj 733 FE (8+2) speed gear box,
Tractor, Comm.(ICT)
284 268 M/s. Punjab Tractors Ltd. SWARAJ 939 FE Tractor
285 26 M/s. Punjab Tractors Ltd. Dist. SWARAJ 735 TRACTOR
Ropar(Punjab)
286 157 M/s. Punjab Tractors Ltd. Punjab Swaraj 924 FE Tractor (ICT)
287 185 M/s. Punjab Tractors Ltd. Punjab SWARAJ-733 FE TRACTOR
COMM(ICT)
288 198 M/s. Punjab Tractors ltd. Punjab SWARAJ 726 FE TRACTOR
COMM(ICT)
289 200 M/s. Punjab Tractors Ltd. Punjab SWARAJ 735 FE TRACTOR COMM(BT)
290 213 M/s. Punjab Tractors Ltd. Punjab SWARAJ-722 SUPER TRACTOR
COMM(ICT)
291 215 M/s. Punjab Tractors Ltd. Punjab SWARAJ-744 FE TRACTOR
COMM(ICT)
292 267 M/s. Punjab Tractors Ltd., Ropar, Swaraj 855 FE Tractor
Punjab
293 188 M/s. Punjab Tractors Ltd.Punjab SWARAJ 725 FF TRACTOR
COMM(ICT)
294 199 M/s. Punjab Tractors Ltd.Punjab SWARAJ 724 FE TRACTOR COMM(BT)

505
Sl.No NBD No Name of the Manufacturer Make & Model
295 M/s. SAME DEUTZ-FAHR INDIA (P) Ltd Agrolux 45 E
296 M/s. SAME DEUTZ-FAHR INDIA (P) Ltd Agrolux 60 E 2 wheel drive
Agrolux 60 E 4 wheel drive
297 M/s. SAME DEUTZ-FAHR INDIA (P) Ltd Agrolux 50 E 2 wheel drive
Agrolux 50 E 4 wheel drive
298 M/s. SAME DEUTZ-FAHR INDIA (P) Ltd Agrolux 70 E 2 wheel drive
Agrolux 70 E 4 wheel drive
299 291 M/s. SAME DEUTZ-FAHR INDIA (P) Ltd SAME 403 Tractor
300 246 M/s. SAME Greaves Tractors Ltd. Same Greaves 603 Tractor
301 238 M/s. SAMEGEAVES Tractors Ltd. SAME GREAVES 423 Tractor-
Change of name (SAME 393) DPD Comm(ICT)
FS 588 dated 21.01.2003
302 237 M/s. SAMEGREAVES Tractors Ltd. SAME GREAVES 353 Tractor-
Change of name (SAME 393) DPD Comm(ICT)
FS 588 dated 21.01.2003
303 145 M/s. Sonalika Agriculture Industries ** SONALIKA PUNJAB SHAKTHI**
304 M/s. Standard Corporation India Ltd., STANDARD 124 TRACTOR
305 247 M/s. Standard Combines Pvt. Ltd. Standard 475 Tractor
306 248 M/s. Standard Combines Pvt. Ltd. Standard 460 Tractor
307 249 M/s. Standard Combines Pvt. Ltd. Standard 450 Tractor
308 255 M/s. Standard Combines Pvt. Ltd. STANDARD 345
309 256 M/s. Standard Combines Pvt. Ltd. STANDARD 335
310 M/s. Tractors & Farm Equipment MF 9000 DI Planetary Drive Tractor
Commercial variant
311 186 M/s.Tractors & Farm Equipment Ltd. TAFE MF-245 TRACTOR COMM(BT)
Chennai
312 224 M/s.Tractor & Farm Equip. Ltd. MASSEY FERGUSON 1035-S TRACTOR
Chennai COMM(ICT)
313 53 M/s.Tractor & Farm Equipment Ltd. TAFE 25 TRACTOR
314 58 M/s. Tractor & Farm Equipment Ltd. MF 1035 TRACTOR {FITTED WITH DI
ENGINE}
315 105 M/s. Tractor & Farm Equipment Ltd. TAFE-MF 1035 TRACTOR
316 150 M/s. Tractor & Farm Equipment Ltd. TAFE-25 DI TRACTOR-COMM{BT}
317 223 M/s. Tractor & Farm Equipment Ltd. TAFE-30 DI 'J' TRACTOR COMM(ICT)
Chennai
318 195 M/s. Tractor & Farm Equipments Ltd. MASSEY FERGUSON 241 DI "J"
Chennai TRACTOR COMM(ICT)
319 107 M/s. Tractor and Farm Equipment Ltd. TAFE MF 245 TRACTOR
320 110 M/s. Tractor and Farm Equipment Ltd. TAFE 30 DI TRACTOR

506
Sl.No NBD No Name of the Manufacturer Make & Model
321 112 M/s. Tractor and Farm Equipment Ltd. TAFE 18 DI TRACTOR
322 220 M/s. Tractors & Farm Equip. Ltd. TAFE-30 DI "J" 2 CYLINDER TRACTOR
Chennai COMM(ICT)
323 289 M/s. Tractor and Farm Equipment Ltd. TAFE MF 241 DI J
324 284 M/s. Tractors & Farm Equipment TAFE 30 DI (Heavy Duty)
325 285 M/s. Tractors & Farm Equipment TAFE MF 1035 DI Tractor
326 231 M/s. Tractors & Farm Equipment TAFE 5900 GAJRAJ" TRACTOR
Limited, Chennai
327 87 M/s. Tractors & Farm Equipment Ltd. TAFE 25
328 171 M/s. Tractors & Farm Equipment Ltd. MF 375 ET TRACTOR COMM(ICT)
329 275 M/s. Tractors & Farm Equipment Ltd. TAFE 2750 DI Trator
330 81 M/s. Tractors & Farm Equipments MF 1035 DI
331 172 M/s. Tractors & Farm Equipments Ltd MF-1035-TRACTOR COMM (BT)
Chennai
332 142 M/s. Tractors & Farm Equipments Ltd. TAFE MF 1035 DI
333 43 M/s. Tractors & Farm Equipments Ltd., MF 245
Nungambakkam, Madras
334 259 M/s. Tractors & Farm Equipments. Ltd MF 5245 DI MAHAAN
335 260 M/s. Tractors & Farm Equipments. Ltd TAFE 4410 SAMRAT
336 32 M/s. Tractors and Farm Equipment MF 1040 TRACTOR
Ltd., Madras
337 40 M/s. Tractors and Farm Equipment Nungambakkam, Madras
Ltd., MF 1035
338 282 M/s. Trishul Agro Industries TRISHUL MT 625 DI Tractor
339 34 M/s. United Auto Tractors Ltd. UNIVERSAL 340 TRACTOR
Hyderabad
340 35 M/s. United Auto Tractors Ltd. UNIVERSAL 445 TRACTOR
Hyderabad
341 88 M/s. VST Tillers Tractors Ltd. MITSUBISHI SHAKTI MT 180 D
342 194 M/s. VST Tillers Tractors Ltd. MITSUBISHI SHAKTI MT 180-D-
Bangalore TRACTOR COMM(BT)
343 23 M/s. VST Tillers Tractors Ltd., MITSUBISHI D (IMPORTED)
Bangalore

507
PART B: APPROVED LIST OF POWER TILLERS

Sl. No. GOI Letter No. & Date CTR No. Model Name
(1) (2) (3) (4)
1 No. 8 4/96 MY (I&P) dated 30.10.2000 PT 31/353 Krishi NV 708
2 No. 8 4/96 MY (I&P) dated 30.10.2000 PT 34/444 Kamco Kubota KMB 200
3 No. 8 4/96 MY (I&P) dated 30.10.2000 PT 35/461 Mitsubishi Shakti Model CT
85 with8 V Engine
4 No. 8 4/96 MY (I&P) dated 30.10.2000 PT 40/549 Mitsubishi model CT 85/
VWH 120
5 No. 8 4/96 MY (I&P) dated 30.10.2000 PT 43/736 VST Shakti Di 130
6 No. 8 4/96 MY (I&P) dated 30.10.2000 PT 45/753 Shrachi Dong/eng-12L
7 No. 8 4/96 MY (I&P) dated 30.10.2000 PT 47/761 Khazana S 1100
8 No. 8 4/96 MY (I&P) dated 30.10.2000 PT 48/764 Rajda Tong Yang
9 No. 8 4/96 MY (I&P) dated 30.10.2000 PT 53/813 Shrachi SF 12
10 No. 8 4/96 MY (I&P) dated 30.10.2000 PT 55/816 Greaves Gs 15 L
11 F No 7-70/2001-MY (I&P) dated GoI, PT 65/864 Khazana S 1100
MoA (DAC) dtd.16.05.2002
12 F No 7-11/2001-MY (I&P), GoI, MoA PT 63/860 Texmaco Dhanwan
(DAC) dated 19.09.2002
13 F No 7-5/2001-MY (I&P), GoI, MoA PT 66/880 Ganga Sifang GN 121-1521
(DAC) dated 31.10.2002
14 Souza Sifang Agro Engineering SOUZA SIFANG GN 121 – (15)
Pvt. Ltd., Bangalore
15 M/s Southern Agro Engine Pvt. Ltd. MANAM MCF-121 Power
(Indian supplier) tiller

508
PART – C: List of Combined Harvestor Models approved:
Sl. No Make or Model
1 AS- Shaktiman – 930 Self Propelled
Combine Harvester Nabha
2 Preet 949 Combine Harvester
3 Preet 849 Self Propelled Combine
Harvester
4 Preet 749 Combine Harvester
5 Preet 649 Combine Harvester
6 SYAN-998, Self Propelled Combine
Harvestor
7 ROOP RAI 930 Self Propelled Combine
Harvestor
8 Preet 949 self propelled track type
Combine Harvestor
9 KARTAR 3500 (GAJJENDRA) Self propelled
combined harvestor
10 ESCORTS CLAAS CROP TIGER COMBINE
HARVESTOR (Self Propelled Combine
Harvestor, Track Type)
11 CLAAS CROP TIGER WHEEL COMBINE
HARVESTOR (Self Propelled Combine
Harvestor)
12 SELF PROPELLED COMBINE HARVESTER
"CLAAS CROP TIGER – 60"
13 MANJIT 986 SELF PROPELLED COMBINE
HARVESTORS
14 DASMESH 7100 SELF PROPELLED COMBINE
HARVESTOR
509
Manufacturer
M/s Shaktiman Agro Industries (Regd.),
M/s. PREET TRACTORS PVT. LTD.,
Nabha
M/s. PREET TRACTORS PVT. LTD.,
Nabha
M/s. PREET TRACTORS PVT. LTD.,
Nabha
M/s. PREET TRACTORS PVT. LTD.,
Nabha
M/s Syan Agro Industry (Regd)
Near GSK LTD., Patiala Road,
Nabha – 147201, Dist., Patiala
Punjab
M/s Roop Rai agro Industries
Patiala Road, Nabha-147201
Distt. Patiala,Punjab
M/s. Preet Agro Industries Pvt. Ltd.,
P.O Box -28, Patiala Road
Nabha -147201 (Punjab)
M/S Kartar Agro Industries Pvt Ltd
Amloh Road, Bhadson -147 202
Dist Patiala ( Punjab)
M/s Escorts Claas Ltd.
15/3, Mathura Road
Faridabad -121 003 (Haryana)
M/s Claas India Ltd.
15/3, Mathura Road
Faridabad -121 003 (Haryana)
M/s Claas India (P) Ltd.
15/3, Mathura Road
Faridabad -121 003 (Haryana)
M/S Manjit Agro Works
Patiala Road
NBHA (Punjab) -147201
M/S Dasmesh Agricultural Industries,
Rajkot Road, Malerkotla , District.
Sangrur (Punjab)-148023
Sl. No Make or Model Manufacturer
15 DASMESH 912 COMBINE HARVESTOR M/S Dasmesh Agricultural Industries,
Rajkot Road, Malerkotla , District.
Sangrur (Punjab)-148023
16 DARSHAN 9000 M/s Dev Agro Industries
17 K S 9300 SELF PROPELLED COMBINE M/S K S Agricultural Industries Rajkot
HARVESTOR Road, Malerkotla , District. Sangrur
(Punjab)-148023
18 Vishal 248 Dolphin (Track type) M/s Vishal Agricultural Works
Near New Grain Market,
Bhawanigarh Road, Samana-147101,
Dist Patiala (Punjab)
19 Vishwakarma 841 M/s Vishwakarma Agro Industries
Kodial Road, Dirba Mandi (Sangrur)
148035 (Punjab)
20 M S 985 Self Propelled Combine Harvester M/s M S Agro Industries
Patiala Road, Nabha-147201 (Punjab)
21 Kubota DC 68 G (Track Type) Combine M/s Kubota Agricultural Machinery
Harvester (Suzhou) Co., 77 Suhong East Road,
Industrial Park Suzhou, Jiangsu -215026
China
22 Vishal 435 M/s Manku Agro Tech Pvt. Ltd.
Sehajpura Road, Samana
(Punjab)-147101
23 Vishal 368 (Track Type) M/s Manku Agro Tech Pvt. Ltd.
Sehajpura Road, Samana
(Punjab)-147101

510
Part D: List of Rice Transplanter models approved:

Sl. Make or Model Manufacturer

No
1 Kubota NSPU 68 C (Self propelled – Ride on)
2 Kubota NSP 4W (Self propelled – Walking Type) M/s Kubota Agricultural Machinery
3 Yanji Shakthi Rice Transplanter/
Model-2ZT-238/-8 (Riding Type)
M/s Kubota Agricultural Machinery
(Suzhow) Co Ltd (KAMS)
77 Uhong East Road, Industrial Park
Suzhou, Jiangsu – 215026, Peoples
Republic of China
(Suzhow) Co Ltd (KAMS), 77 Uhong East
Road, Industrial Park
Suzhou, Jiangsu – 215026, Peoples
Republic of China
M/s VST Tillers Tractors Limited,
Bangalore

511
 ANNEXURE - 33

Scoring model for assessing eligibility of applicants for financing both new and second
hand tractors (Maximum Marks = 100).

PART A. Borrower Risk Characteristics

Sl. Particulars Marks Marks

No. Allotted Scored
1 Type and Extent of Land Holding
Applicant owns 16 acres Perennially irrigated/ 32 acres dry 18
land and above.
Applicant owns 14 acres Perennially irrigated/ 28 acres dry 16
land.
Applicant owns 10 acres Perennially irrigated/ 20 acres dry 14
land.
Applicant owns 6 acres Perennially irrigated/ 12 acres dry 12
land and above.
2 Net income from all sources - after deducting existing
repayment obligations
Applicant has net income above 1.50 Lacs 16
Applicant has net income above Rs.1.00 Lacs upto Rs.1.50 Lacs 14
Applicant has net income above Rs.0.75 Lacs upto Rs.1.00 Lacs 10
Applicant has net income above Rs.0.50 Lacs upto Rs.0.75 Lacs 08
3 Frequency of Tractor Ownership
Owned Tractor earlier 2 times and more 12
Owned Tractor once earlier 08
Tractor Purchased for first time 04
4 Status as Farmer
Applicant is a highly progressive farmer 06
Applicant is progressive farmer 02
5 a) Dealings with branch (Existing
Customer)*
Satisfactory Dealings for more than 5 years 08
Satisfactory Dealings for 3-5 years 04
Satisfactory Dealings for 1-3 years 02
Satisfactory Dealings for less than 1 year 01
b) Value of the Account (New Customer)**
Local enquiries about of the borrower

512
Sl. Particulars Marks Marks
No. Allotted Scored
Excellent report 08
Good report 06
Satisfactory report 04
6 No of borrowers
Single 08
Joint Borrowers with 2 borrowers of same family 06
Joint Borrowers with 3 borrowers of same family 03
Joint Borrowers with 4 borrowers of same family 01
Sub-Total (Borrower Risk Characteristics) Maximum 68

* 5 (a) to be used for existing customers

** 5 (b) to be used for new customers

513
 PART B. TRANSACTION RISK CHARACTERISTICS:

Sl. Particulars Marks Marks

No. Allotted Scored
1 Tangible/Liquid Security/Co-obligation
Applicant offering as security other tangible assets like
NSCs, KVP, the Bank’s FDs, surrender value of LIC Policy ,
Gold (appraised value) etc with requisite margin to
cover more than 60% of the loan amount. 08
To cover 50 to 60% of the loan amount 06
To cover 40 to 50% of the loan amount 04
To cover 30 to 40% of the loan amount 02
2 Mortgage Cover
Market value of the land offered as security covers more
than 150% of the loan amount 12
Market value of the land offered as security covers more
than 100% of the loan amount (but less than 150%) 10
Market value of the land offered as security covers more
than 75% of the loan amount (but less than 100%) 08
Market value of the land offered as security covers more
than 50% of the loan amount (but less than 75%) 04
3 Crops grown
Applicant grows cash crops (viz., Sugarcane, cotton,
Tobacco, chilli etc on entire land holdings – (high income
crops to be decided by the branch for each area based on
crop performance in the past few years) 08
Applicant grows cash crops on more than 75% of the area
but less than 100% of the area 06
Applicant grows cash crops on more than 50% of his land
holdings but less than 75% 04
Applicant grows cash crops on less than 50% of land 02
holdings
4 Hiring Potential
The area has high potential for custom hiring such as
areas in around the sugar mills, brick manufacturing units
tobacco processing units etc. 04
The area has medium potential for custom hiring 02
Sub-Total – Transaction Risk Characteristics - Maximum 32
GRAND TOTAL (A + B) 100

514
C. Interpretation of the marks scored

Sl. No. Score/Interpretation Security norms recommended

1 70 and above:Low Risk and Highly Secure Loans upto Rs.1.00 lakhs:
Hypothecation of machinery/
equipment to be purchased.

Loans above Rs.1.00 lakhs:

Hypothecation of machinery/
equipment to be purchased +

Mortgage of landed property value of

which is at least equal to the loan
amount
(or)
Security of tangible assets like NSCs,
KVP, the Bank’s FDs, surrender value
of LIC Policy, Gold (appraised value)
etc., with requisite margin valued
equivalent to the loan amount.
2 Between 40 & 69:Medium Risk and Highly - Same as above-
Secure
3 39 and below Such cases/proposals are to be
rejected

Note: Circle DGM is empowered to exercise discretion as detailed in Para 14.3.3 of Chapter 14
of this manual.

515
 ANNEXURE - 34

TRIPARTITE AGREEMENT TO BE OBTAINED IN RESPECT OF DAIRY LOANS

This deed of Tripartite agreement entered this day of ........................................

20 ......... between Sri/Smt ................................................................
herein after called for brevity the borrower of the First part, which term wherever
context so requires or admits shall also include his/her attorneys, heirs, legal
representatives, successors and assignees and ........................................ (Name)
Secretary, Dairy Co-operative Milk Producers' Co-operative Society situated at
................................ and registered under ................................ Act ............ having
its principal place of business at ............................... hereinafter called for brevity as
'Society' of the Second Part, which term includes successors and assignees legal
representatives etc., which expression wherever the context requires or admits, shall
also include attorneys, successors, assignees of the society and executed in favour of the
Canara Bank, a body corporate constituted under the provisions of Banking
Companies (Acquisition and transfer of undertakings) Act 1970 and having its Head Office
at Bangalore and amongst others, a branch at ……………………………………. hereinafter called
for brevity as Bank, of the Third Party which term include successors, assignees legal
representatives administrators etc. which expression wherever the context requires or
admits shall also include its attorneys, representatives successors or assignees of the
Bank, on the following terms and conditions :

WHEREAS the Bank has granted a loan of Rs............................................................

to borrower for purchasing .............................. milch animals. It is agreed by the
borrower to sell the milk produced by him daily from the milch animals financed by third
party to the society till the entire loan of the Bank is discharged and further authorise the
society to deduct 50% out of the amount due to him on account of sale of milk supplied by
him to the society and to remit the said amount of the Bank on its behalf towards the loan,
till the entire loan is discharged. The Society "second party" hereby undertakes to collect
the entire milk supplied by the borrower and to deduct 50% amount to be paid, each week
by the society to the borrower towards supply of milk by borrower and agrees to remit
the said amount to the Bank every week, through Demand Draft till entire loan taken by the
borrower is discharged. The society further agrees to pay the remaining amount to the
borrower.

In Witness whereof the parties affixed their signatures.

516
(Borrower) (Society) (Bank)

WITNESS :
1)....................................................
2)....................................................

517
 ANNEXURE - 35

APPLICATION FOR FINANCING CROSS BRED CALF REARING

To
THE MANAGER
CANARA BANK
.....................................................

Dear Sir,

I/We request you to grant me/us the financial facilities of Rs...................................

by way of loan for the purpose of rearing cross-bred heifer. The relevant particulars are
furnished below:

1. Name of the applicant 2. Age :

& Father's /Husband's Qualification :
Name : whether belongs
Address : to SC/ST :

3. Extent of land holdings 4. Annual Income

in acres in Rs.

5. Whether the applicant is 6. Whether eligible

a small farmer/marginal for subsidy : yes\no
farmer/Agricultural
labour

7. If the applicant has any

dairy units give details
such as number, value, etc.

8. Cost, Subsidy, loan amount

Margin/
Cost Subsidy Loan
a) Cost of the heifer/local _____________ _____________ ___________

b) Total cost of concentrates

at ........kgs Per month at
Rs.....Per kg for 28 months _____________ _____________ ___________

TOTAL

518
9. Aproximate value of the
cow (heifer) after the
first calving Rs.......
10. Income & expenditure during the first lactation period
(300 days) when the heifer is retained after first calving
________________________________________________________________________
EXPENDITURE Rs. INCOME Rs.

a) Total cost of concen- a) Total receipt

trate at kg per day
at Rs. per kg for 300
days
by sale of milk
................. at Rs......... per
litre for .......
litres per day
for 300 days .......................

b) Cost of fodder for b) From sale of

300 days ................ dung .......................

c) Other expenses ................

d) Excess of income over

expenditure .................
_____________ ________________
TOTAL
_____________ ________________

11. Surplus
a) In case heifer (cow) is sold after
first calving column 10 - column 9 :
Rs.............................................................

b) In case heifer (cow) is retained

for first lactation surplus :
Rs.............................................................

12. Loan repayment:

a) If the heifer (cow) is not sold immediately after calving in 5 to 6 years by monthly
instalments of Rs..................................... each from starting of lactation,
with an initial grace period of 30 months.

519
 b) If the heifer (cow) is sold after claving : in one lumpsum along with interest
as soon as the cow is sold.

I certify that the information furnished above is correct to the best of my knowledge and I
undertake to abide by the terms and conditions laid down by the bank from time to time.

Place :
Date : Signature/Thumb impression of the applicant

Manager /AEO/Officer Report :

I/We/AEO/Officer attached to the branch has inspected the subject farm on .....................
and made an assessment of the loan requirements. Having regard to the appraisal done,
we recommend/have sanctioned a loan of Rs..................................... at ...............
% per annum ...........% margin and subsidy of Rs........................................ is avail-
able/not available from ............................... agency, for the purpose/s mentioned in
the application against the security of

i) Hypothecation of ............................................ valued at

Rs...........................................
ii) Co-obligation/guarantee of Sri....................................................................
......................................................
iii) Mortgage (equitable/registered) on the landed properties measuring an extent of
........................................ acres Sy. No................................... valued
Rs...........................................

The loan will be repaid within .............................. months/years in monthly/

quarterly/half yearly/annual instalments of Rs............................................. each or
in one lumpsum with repayment holiday of ........................... months.

We confirm having obtained all the necessary loan papers.

Place:
Date: ___________________ _____________
A E O/Officer MANAGER

520
 ANNEXURE - 36

ASSESSMENT OF WORKING CAPITAL REQUIREMENTS FOR LAYER

AND BROILER POULTRY FARM

I. WORKING CAPITAL REQUIREMENT FOR LAYER FARMS

BATCH SIZE : 5400 BIRDS

SYSTEM : 1+1+5
__________________________________________________________________________________
Particulars Unit Batches Batch Weeks Qty Unit Total
Size cost cost
_______________________________________________________________________________________
Day old chicks No. 1 5400 - 5400 17.60 95040
Feed
- Brood stage Kgs. 1 5504 8 10348 9.50 98301
- Grow stage Kgs. 1 5310 12 28674 9.00 258066
Medicine/electricity/water
- Brood stage Rs. 1 5504 8 - - 13210
- Grow stage Rs. 1 5310 12 - - 15930
Insurance Rs. 1 5616 - - - 19656
Sundry debtors Egg sales of one week. 150837
Total 651040
Margin @ 30% 195312
Limit 455728
_________________________________________________________________________

Note: Receivables if necessary may be considered while working out the WC requirement.
Simultaneously, any sundry creditors are to be deducted while calculating WC.

ASSUMPTIONS - LAYER FARM

1. The layer birds shall be reared under 1+1+5 system.

2. The brooding period - 8 weeks. Growing period - 12 weeks and laying period - 52 weeks.
The birds in growing stage will be shifted to layer shed 2 weeks in advance to facilitate
them to get acclamatised to the new environment.

521
3. The mortality under various stages of growth is assumed as under:
_____________________________________________________________________
Stage Mortality Flock strength
% Beginning End Average
_____________________________________________________________________
Brooding 4 5616 5391 5504
Growing 3 5391 5229 5310
Laying 6 5229 4915 5072
_____________________________________________________________________
Chicks purchased per batch is 5400
Plus free chicks (4%) 216
Total chicks inducted 5616
_____________________________________________________________________

4. The cost of day old chicks is Rs.17.60 per chick.

5. The feed cost and other costs per bird per week and other costs include medicine,
labour, electricity, supervision, marketing, etc, is assumed thus:
_____________________________________________________________________
Stage Feed/bird/ Price Other costs
Week in gm per kg (Rs.) (Rs.)
_____________________________________________________________________
Brooding 235 9.50 0.30
Growing 450 9.00 0.25
Laying 770 8.50 0.10
_____________________________________________________________________
The feed rate is assumed at 80% of prevailing market cost as the party is going to have
his own feed mill.

Medicine:
_____________________________________
Stage Medicine cost/week/bird
______________________________________
Brood 30 paise
Grow 25 paise
Lay 10 paise
______________________________________
6. The birds shall be compulsorily insured @ Rs.3.50 per bird.
7. Egg production: 5.77 eggs per bird per week.

NOTE :Cost of inputs considered are only indicative. Branches are to consider the actual
cost of inputs as prevalent in the area of operation.

522
II. WORKING CAPITAL REQUIREMENT FOR BROILER FARMS

BATCH SIZE : 5000 BIRDS

FORTNIGHTLY BATCHES
OCC LIMIT : (In Rs.)
_________________________________________________________________________________
Particulars Unit Batch Batch Weeks Qty Unit Total
Size cost cost
________________________________________________________________________________
Day old chicks No. 1 5000 - 5000 10.00 50000
Feed
- Start Kgs 4 5049 2 19186 11.50 220641
- Finish Kgs 4 4948 2 29292 11.50 336860
Medicine
- Start Rs 4 5049 2 10098 10098
- Finish Rs 4 4948 2 5938 5938
Insurance Rs. 1 5100 5100 0.50 2550
Sundry Debtors 25% of monthly sales 120001
Total 746087
Margin @ 30% 223826
Limit 522261
________________________________________________________________________________
ASSUMPTIONS: BROILER FARMS
1. The birds shall be reared in All in All out (ALAO) system.
2. Period of rearing is 7 weeks.
3. The mortality at different stages of rearing is assumed thus:
__________________________________________________________________________________
Stage Mortality Flock strength
% Beginning End Average
________________________________________________________________________________
Start 2 5100 4998 5049
Finish 2 4998 4898 4948
Average 4999
_________________________________________________________________________________
Total chicks inducted 5000
Plus 2% free chicks 100
Total chicks 5100
_______________________________________________________________________________

523
4. The cost of day old chicks is Rs.10.00 per bird.

5. The feed consumption and other costs per bird:

________________________________________________
Stage Feed/ bird /week Price of feed/kg
in gm (Rs.)
______________________________________________
Start 475 11.50
Finish 740 11.50
________________________________________________

6. The cost of medicines/vaccines is assumed thus:

______________________________________
Stage Medicine cost/bird/ week
______________________________________
Start 25 paise
Finish 15 paise
______________________________________

7. Provision is made in the working capital assessment @ 25% of monthly sale of birds for
receivables.

NOTE : Cost of inputs considered are only indicative. Branches are to consider the actual
cost of inputs as prevalent in the area of operation.

524
 ANNEXURE - 37

SCORING SHEET FOR WAIVER OF INSURANCE OF BIRDS (POULTRY)

Parameter Maximum Score

Score allotted
1. Past dealings of the party(Past 3 years)
A- Std. Asset & ASCC-1 for all the 3 years 10
B- Std. Asset &ASCC - 2/3 in any one of the years 05
C- Std. Asset &ASCC- 2/3 in two of the 3 years 03
2. Mortality of the birds during the past three
years (average)
A- Less than 5 % 10
B- More than 5 % up to 10 % 05
C- More than 10% up to 15% 03
3. Tangible security available to the advance (%
average) excluding birds and movables
A- 151% & above 10
B- 131% to 150% 05
C- 101% to 130% 03
4. Experience of the party in the line
A- More than 5 years with absolutely no problems 10
B- More than 3 years and up to 5 years or a 05
Technocrat C- 1 to 3 years 03
5. Debt: Equity Ratio for term loans *
A- 1:1 10
B- 2: 1 05
C- 3:1 03
* If no term loans are availed from any of the
agencies, full marks can be awarded.
6. Maintenance of Farm Records (Purchase Register,
Production register, Stock Register, Sales Register,
Medication register etc.)
A- Excellent 10
B- Good 05
C- Satisfactory 03

525
7. Veterinary care and vaccination
A- Technocrat employed/ vaccination undertaken 10
regularly
B- Regular visits by doctor or adequate 05
consultation facility / vaccination undertaken
regularly
C- Full dependence on the local Govt. 03
Veterinary Hospital
8. Submission of Statements (Financial statements,
Income and expenditure, ITAO/ WTAO etc.)
A- All statements are regular 10
B- Delayed submission 05
C- Irregular 03
9. Vulnerability to natural calamities i.e floods
and cyclones
A- Rare 10
B- Frequent 03
10. Fall back arrangements for replenishment
of the birds (other sources of income) in case of
eventualities

A- Excellent (own funds) 10

B- Good (50% bank finance) 05
C- Adequate (100% Bank Finance) 03

Total 100

526
 ANNEXURE - 38

MONTHLY STATEMENT TO BE OBTAINED FROM THE BORROWERS IN RESPECT OF LOANS

GRANTED TO DEEP SEA FISHING VESSELS

Loan Account No. _______________

Statement showing position of sea catches stored in Cold Storage :

From : To :
_______________________________ CANARA BANK
_______________________________ _________________________

With reference to our loan account with you, we give below a statement of position of sea
catches stored in the Cold Storage situated at ___________ as on _______________

a. Details of Vessel (like make,

REGN no., Regd. with, :
Variety, Quantity,Value,capacity etc.)
b. Details of catches available
at cold storage as per last
statement :
c. Add: Details of catches made
during the present voyage
(Voyage undertaken from
____20_____ to______20____ :
d. Less: Details of sales made
during the period of statement :

_______________________________
e. Final stock available
_______________________________

I/We hereby declare that the goods hypothecated to you are my/our absolute property and
that no prior charge has been created on the goods and that the above is a correct and
true statement of the stock held by me/us on the close of this day, which I am/we are
holding in trust for you as per terms of agreement executed by me/us on _______________
in your favour. The vessel is insured for Rs. _____________ (if there are more than one
vessel mention the individual limits separately). I/We confirm the value of stock has been
calculated at market rate/landed cost/invoice price.

Place :
Date : (Authorized signatory with seal)
Borrower

527
 FOR BRANCH USE ONLY

Variety Quantity Value

Total value :

Less margin :

Net value :

Sanctioned limit :

Drawing limit :

Liability as on : __________________________

I certify that the sea catches stored in _____________ vessel was checked by me on the
_____________ at the time of unloading at _________ port and at the cold storage unit and
the above statement is in accordance with the books of accounts and documents preserved
by party in support of that. The stocks are fully insured.
Place :

Date :
Manager

______________ Branch

528
 ANNEXURE-39

APPLICATION / ASSESMENT OF TENANT FARMERS' JLGs

Format to be submitted by JLG in respect of crops being raised by its members

Sl Name of Name Survey Owners, Crops to be Loan To be Members’ For the use of
No JLG of Nos. Name grown Required repaid signature the branch
members village (Rs) within Eligible Loan
Crop Acreage amt as permit-
per SOF ted
1
2
3
4
…
…
Total

Yours faithfully,

1)

2)

3)

(Authorized Signatories of JLG) Date:

For use of the branch

1. A loan of Rs. been sanctioned to M/s………………………………………

(name of JLG) as per above details.

2. Total exposure to JLGs (including the earlier version of the Scheme of Financing Tenant
farmer Groups) including the limit now permitted is Rs. and is within the
overall limit of Rs. fixed for the branch.

Date:

Place: AEO/Officer Manager/Senior Manager

529
 ANNEXURE -40

HYPOTHECATION DEED TO BE EXECUTED BY THE SHGS WHENEVER ASSESTS ARE CRE-

ATED OUT OF BANK FINANCE

This agreement executed at …………….... on this …..… day of ......…….. Two thousand …....………..
(20…...)

By Shri/Smt………………………. Son/Wife of …………………………….. aged ……. Years, residing at

…………………………………………………………………………………………. and member of
…………………………………. (name of SHG with address) (hereinafter called the member which
expression shall, wherever the context so requires or admits, be deemed to include his/her
heirs, successors in title, survivor/s of them and their successors in interest) in favour of

Canara Bank, a body corporate constituted under Banking Companies (Acquisiton and
Transfer of Undertakings) Act, 1970 having its Head Office at 112, J.C.Road, Bangalore-560002
and having amongst others, a branch office at ………………….. (hereinafter called the “Bank”
which term wherever the context so requires or admits shall be deemed to include its assigns,
attorneys and successors in title)

Whereas …………………….a Self Help Group (SHG) having its office at ………………… has availed
financial assistance from the bank for carrying out economic activities and lending to its
members and executed Articles of Association dated …………….. based on the authorization
given in the inter-se agreement dated …………… executed among the members. Whereas the
member of the borrower is one of the subscriber to the above said inter-se agreement and
had borrowed a sum of Rs……………… from SHG on ……………. and purchased the movable assets
briefly described in the schedule hereunder out of the said amount.

Whereas the member in the inter-se agreement dated ……………. executed between the other
members of SHG had undertaken to hypothecate the movable assets acquired by them in
favour of the Bank as security for the due payment of the amount by SHG from time to time.

Now, this agreement witnesses that in consideration of SHG granting financial assistance to
the member out of the financial assistance granted by bank, the member hereby hypothecate
the schedule mentioned movable assets (hereinafter called as “Hypothecated Assets”) in
favour of the Bank as security for the due payment of the amount by SHG to the bank from
time to time on the following terms and conditions.

a. The Member hereby declares and confirms that he/she are in possession of the
hypothecated assets and continue to hold the hypothecated assets in a good
condition for and on behalf of the bank and shall keep the hypothecated assets
free from distress, attachment, sale etc.

530
 b. The Member shall at their own risk and responsibility insure the movable assets
hypothecated to bank for its full market value against fire, and/or such other
risks as may be required by the bank or prescribed by any law/scheme for the
time being in force with the ‘Bank Clause’ and hand over the policy to the Bank.
c. The Member shall not mortgage, pledge, charge, hypothecate, sell or dispose of
in any manner the hypothecated goods.
d. The Member shall indemnity the Bank against any loss by reason or damage to or
destruction or loss of the hypothecated assets for any cause whatsoever by
reason of claim by third party in respect of the same.
e. The Member shall not remove or dismantle any of the hypothecated assets
without the consent in writing of the Bank except in any case where such removal
or dismantling shall be in the opinion of the member be rendered necessary by
reason of the same being worn out, obsolete, discarded, injured, damaged or
broken and in such case will replace so worn out, obsolete, discarded, injured,
damaged or broken by other of a similar nature.
f. The Member agrees that the hypothecated assets shall be a continuing security
for all the indebtedness and liabilities of SHG and in the event of SHG failing to
pay the balance or any other moneys due to the bank, he/she shall deliver to the
bank on demand made by the bank the hypothecated assets without raising any
question to enable the bank to sell or otherwise dispose of the same for the
purpose of realization of the dues.
g. The Member agrees that the officers or nominees of the Bank shall without any
obligation to do so be entitled to enter and remain at any place where the
hypothecated assets may be kept to view, inspect, make inventories and value
the same or take possession of the same; to sell or use or otherwise dispose off
all or any of the hypothecated goods by public auction or private treaty without
intervention of Court and apply the net proceeds towards liquidation of all sums
due by the SHG as per the rules of the Bank and as the Bank may deed fit and
necessary.

SCHEDULE OF HYPOTHECATED ASSETS

In witness whereof the Member has executed this presents on the day, month and year above
mentioned in the presence of
1. Sri/Smt……………………………
2. Sri/Smt……………………………. (authorized representative of the SHG)

Member
(The contents of the agreement have been read over and translated into ………………..............
vernacular language) and having understood the contents thereof subscribed to these
presents)

531
 ANNEXURE- 41

ASSESSING OF SELF HELP GROUPS UNDER SHG BANK CREDIT LINKAGE-SCORING MATRIX

Name of the SHG :

Name of the NGO / MFI / VA (Facilitator) :

Sl. Criteria Assessment Basis Marks Verifiable Marks

No. source scored
1 Number of Members a)From 16 & upto 30 10 Attendance
b)Between 10-15 07 register
c)Less than 10 08
2 Composition a)Target Group only 10 Income levels
b)Having 1 to 5 non 05 & based on
target group member judgement
c)Having more than 5 02 of assessing
non target group official
member
3 Age of the SHG a)More than 2 years 10 By-law /
b)1-2 years 07 register
c)6 months to 1 year 05
4 Attendance of members a)More than 90% 10 see
in the group meetings b)70 to 90% 05 explanation
c)Less than 70% 02 at the end
5 Awareness among members a)Known to all 10 By attending
knowledge of SHG rules, members Group
functions, procedure of b)Known to 50% or 07 meetings
meeting more one to one
c)Known to less than 03 discussions
50% with members
6 Feeling of Homogenity / a)Very strong 07 By personal
solidarity b)Moderate 04 observations
c)Not very much 00 and inter-
action with
members
7 Participation in group a)Participation by 10 By personal
discussion majority observation

532
Sl. Criteria Assessment Basis Marks Verifiable Marks
No. source scored
b)Participation by only 05 during
few members'
group meeting
8 Rotation of group leaders a)Every year 05 By verifying
b)Between 1-2 years 02 minutes book.
c)Once in two years 01
9 Imposition of sanctions and a)Strongly enforced 07 By verifying
enforcement of bye-laws b)Sometimes 03 loan ledger,
c)Not at all 00 savings register,
minutes book,
etc.
10 Group Meeting a)Four meetings per 10 By verifying
month minutes book
b)2-3 meetings per 07 and cross
month verification
c)1 meeting per month 05 with group
members.
11 Maintenance of books and a)Attendance Register 01 By personal
records b)Minute Book 04 verification of
c)Loan ledger 04 relevant books
d)Savings Ledger 04 / ledgers.
e)Internal Pass Book 02
12 Minutes Book a)Written in detail 05 Peruse minutes
b)Maintained but does 03 book pertaining
not contain full to meetings
information held during last
3 months
13 Savings :
a) Regularity If default rate is upto 10 By perusing
10 % Savings
Upto 25% register.
Upto 50% 07
But default is met 05
during succeeding
month
b) Quantum of savings More than Rs.5000/- 10 - do -
(through members Between Rs.2000/- 07
only) at the time of and Rs.5000/-
assessment. Below Rs.2000/- 05

533
Sl. Criteria Assessment Basis Marks Verifiable Marks
No. source scored
14 Group's internal Loaning :
a) Utilisation of savings a)Above 90% 07 By perusing
by grant of internal b)51 to 90% 04 loans/savings
loans c)30 to 50% 02 register and
b) Interest rate on group's a)Depending upon 05 ascertaining
internal loans purpose from
b)Less than 18% 02 members.
c)19 to 30% 01 - do -
c) Group's internal loan a)95 to 100% 07 - do -
Recovery rate b)Between 80 to 95% 04
c)Between 70 to 80% 02
d) No. of members a)More than 50% 07 - do -
benefited out of b)Between 25 & 50 % 04
group's internal c)Less than 25% 02
loaning

15 Sanction & disbursement of a)Selection, sanction, 10 By cross

loans disbursement, verifying
recovery are made dates in the
in group meetings loan ledger
b)Other than group 5 with minutes
meetings book and also
ascertaining
from group
leaders and
members.
16 Operation of Bank account a)By elected 05
and other dealings with Bank members
b)By non-elected 03
members
c)By animator / 01
others
Total Marks scored

Marks : Maximum : 170

Middle : 91
Lower : 37

534
 Scoring
SHG with more than 125 points
SHG with 100-124 points
SHG with less than 99 points
Status for selection
Selection without reservation.
Selection with caution.
Need further development before linkage.
Evaluation may again be taken after 3 months.

Item No. 4 – Explanation – Please use following formula :

Total number of members attending meeting during last three months X 100
(Total No. of members in the groups) X No. of meetings held during the last 3 months.

Date :

Place : Signature of Appraising Officer Signature of Branch Manager

535
 ANNEXURE -42

APPLICATION CUM APPRAISAL TO BE SUBMITTED BY MCG WHILE APPLYING FOR LOAN ASSIS-
TANCE (DIRECT LENDING) cum LOAN REQUEST

Name of the MCG:

Address & Phone No:

D D M M Y Y Y Y
Formed/Established Registered : YES NO

D D M M Y Y Y Y
If registered, give number
and date and furnish true
copy of the Certificate of
Registration

Number of Members in the Group :

Name of NGO/MFI/NBFC(
who is handholding the Groups)

NGO Address Telephone No.

Loan Request Letter from MCG Group

To
Date: …………………………
The Branch Manager
CANARA BANK
…………………… Branch.

Dear sir,
1. We, the members of the above MCG hereby apply for a loan aggregating Rs…….. (Ru-
pees ……………………………………. Only) for our members. We enclose herewith the resolution
passed by the Group members in this regard.

The particulars of the Group and loan requirements of individual members are given
below:

536
Particulars of …………………………………………………….. (Name of MCG) as on ……………..

Sl.
No. PARTICULARS
1 Date of Formation :
2 No. of Members :
3 Group Savings from members, if any :
4 Loan Requirement of Members :
Name of Members Amount of loan Activity for which loan required
required

2. Eligibility norms:- We have gone through the eligibility norms furnished here below
and fulfill the norms:--
a) The group of people not exceeding ten belonging to economically disadvantaged
sections are eligible for availing the Credit facility.

b) The minimum and maximum number of members in a group is restricted to 3-5 in

urban areas and 5-10 in rural and Semi urban areas.

c) The group shall consist of members whose individual income does not exceed
Rs.50000/- P A.

d) The individual members should be permanent residents of the area for the last
three years.

e) The applicants should be residing within a radius of 16 KMs from the branch and
all the members preferably shall reside in a cluster.

f) Not more than one person from a family can be included in a group.

537
 g) Individual member will be financed against an agreement executed by the group
members to make all the members jointly and severally liable for the loans availed
by the Members.

h) The members should not be a member of any other SHG/MCG. The MCG or its
members should not be a borrower/defaulter to any other Banks/Financial
institutions and co operative societies. The group member has to give a
declaration to that effect.

i) For availing the Debt swap loans, the members in the groups should have availed
the loan from the money lender before one year from the date of applying for
the loan.

j) For availing the Debt swap loans, the members in the groups should give an
undertaking that he/she will not borrow from money lender/s again.

3. REPAYMENT SCHEDULE

a) We agree to repay the loan amount as per repayment schedule which may be
fixed by the Bank.
b) A copy of the Inter-se Agreement executed by all the members of the group is
enclosed.
c) We hereby declare that the particulars given above are true and correct to the
best of our knowledge and belief.
d) We hereby authorize the bank to disclose all or any particulars or details or
information relating to our loan accounts with the Bank, to any other financial
institution including NABARD, Government or any agency as may be considered
necessary or desirable by the Bank. It will be in order for the Bank to disqualify
our Group from receiving any further credit facilities from the Bank and/or recall
the entire loan amount or any part thereof granted on this application, in case
any information, furnished herewith is found incorrect and/or containing
misrepresentation of facts.

i) I/we understand that as a pre-condition, relating to grant of the loans/advances/

other non-fund based credit facilities to me/us, Canara Bank requires my/our
consent for the disclosure by the Bank, any information and data relating to me/
us, of the credit facility availed of/to be availed, by me/us, obligations assumed/
to be assumed, by me/us, in relation thereto and default, if any, committed by
me/us, in discharge thereof.

538
 Accordingly I/we, hereby agree and give consent for the disclosure by Canara Bank of
all or any such:

a. Information and data relating to me/us

b. The information or data relating to any credit facility availed of/to be availed, by
me/us, and

c. Default, if any, committed by me/us, in discharge of my/our such obligation.

I/we, declare that the information and data furnished by me/us to Canara Bank are
true and correct.

We declare that:

a) The Credit Information Bureau (India) Ltd., and any other agency so authorized
may use, process the said information and data disclosed by the Bank in the
manner as deemed fit by them; and

b) The Credit Information Bureau (India) Ltd. and any other agency so authorized
may furnish for consideration, the processed information and data or products
thereof prepared by them, to Banks/Financial Institutions and other credit
granters or registered users, as may be specified by Reserve Bank in this behalf.

We confirm that, we have read the terms and conditions regarding grant of loan and
we fulfill the eligibility criteria stipulated by the bank for availing the loan facility. We
accept to be bound by the terms and conditions unconditionally and to any change
made therein from time to time. We agree and understand that grant of loan by Canara
Bank is the sole discretion of Canara Bank and Canara Bank reserves the right to reject
our application without assigning any reason.

Further, I/we hereby confirm that I/We shall not raise any dispute in whatsoever
manner regarding information/details furnished/to be furnished to CIBIL/other
authorities and same is binding on me/us.

We have opened SB Account in the name of ……………….....…………… Group under Account

No……………. We request you to credit the total loan amount of the members as above
to …....…. SB Account. We undertake to make available the loans to the respective
members as mentioned above.
539
Yours faithfully,

Authorized Representatives ……………………………………………………………………………………………………

FOR THE USE OF BRANCH:

Having regard to the appraisal made, a loan of Rs……………. (Rupees …………….. only)
at ……..% interest p.a. is (i.e. Base Rate +/-……………………%) sanctioned to ……………………………
(name of the MCG).

The loan will be repaid within …………. months/years, in monthly/quarterly/half yearly/

annual installment of Rs…………………. each with repayment holiday of …………… months, inter-
est and other charges will be paid as and when debited.

Place:

Date: Manager/Senior Manager

540
 ANNEXURE-43

INTER-SE AGREEMENT TO BE EXECUTED BY THE MEMBERS OF MCG

(To be stamped as a General Power of Attorney )

THIS AGREEMENT made …………………… this ……………………………... day of …………….. 20….....

Between

1. Shri./Smt./Kum………………………………………………………………………………………Son/Wife/
Daughter of ……………………………………………………… aged ……………….residing at
……………………………………………..and

2. Shri./Smt./Kum…………………………………………………………………………………..Son/Wife/
Daughter of ………………………………………………………… aged ………………. residing
at……………………………………………..and

3. Shri./Smt./Kum……………………………………………………………………………………Son/Wife/
Daughter of ……………………………………………………… aged ……………residing
at…………………………………………………..and

4. Shri./Smt./Kum…………………………………………………………………………………….…Son/Wife/
Daughter of ………………………………………………aged …………residing at
…………………………………………………..and

5. Shri./Smt./Kum……………………………………………………………………………………Son/Wife/
Daughter of ……………………………………………………… aged …………residing at
……………………………………………………..and

6. Shri./Smt./Kum……………………………………………………………………………………Son/Wife/
Daughter of ……………………………………………………… aged ……………residing
at…………………………………………………..and

7. Shri./Smt./Kum……………………………………………………………………………………….Son/Wife/
Daughter of ……………………………………………………… aged ……………residing
at…………………………………………………..and

8. Shri./Smt./Kum…………………………………………………………………………………………on/Wife/
Daughter of ………………………………………………… aged ……………….residing at
……………………………………………...and

541
 9. Shri./Smt./Kum…………………………………………………………………………………………Son/Wife/
Daughter of …………………………………………………… aged …………residing at
……………………………………………………...and

10. Shri./Smt./Kum……………………………………………………………………………..………Son/Wife/
Daughter of …………………………………………………………… aged …………residing at
……………………………………………………...and

Who are the members of the Micro Credit Group, hereinafter referred to collectively as “MCG
Members” which expression shall, unless repugnant to the context or meaning, include every
member of the said MCG and their respective legal heirs, executors and administrators.

WHEREAS all MCG members are residents of …………………. (Village/Mohalla) and ……………………
(District/State) and are known to each other.

WHEREAS the MCG members above named fully satisfying the eligibility criteria fixed by the
bank for obtaining loan, have joined voluntarily together and formed the MCG with an intent
to carry on lawful income generating activity for mutual benefit and has proposed to avail
financial facility from Canara Bank, subject to the terms and conditions hereinafter
appearing:

1) Each member shall strive for the success of the MCG and shall not act in any manner
detrimental to the business interests of the MCG.

2) The MCG members shall be jointly and severally liable for all the debts contracted by
the MCG.

3) Each of the MCG members hereby agree to abide by and ratify all such acts, deeds and
things as the authorized representatives may do in the interest of the said activities.

4) The authorized representatives shall take decisions in the day to day working of the
MCG and each representative shall actively involve herself or himself and co-operate in
looking after the day-to-day affairs of the MCG activities, in particular to attend to the
following activities:-
• Forming the rules and bye laws of MCG
• Conducting of the mandatory periodical meetings.
• Maintenance of various books and registers.
• Opening and operating of the Bank accounts.
• Submission of the credit proposals to the Bank.
• Disbursement of the loans to the individual members.
• Recovery of the loans from the members and crediting to MCG account.
• Honesty and sincerity in the duty.

542
5) Every member of the MCG hereby authorizes the representatives to apply for the loan
on behalf of the MCG and execute necessary agreements/documents on behalf of the
MCG for the purpose. The authorized representative may collect loan amounts from
the Bank on behalf of the MCG, deposit the same in the savings accounts of the MCG for
on lending to members in accordance with the decision of the MCG and also deposit
recovery of loan installment from members in the loan account/s of MCG with the
Bank.

6) The MCG Members hereby specifically authorize the representatives:-

i. To open Savings and Loan accounts in Canara Bank approved by the MCG and
operate the same under the joint signature of any two of the following authorized
representatives.

Shri/Smt./Kum………………………………………………………………...
Shri/Smt./Kum………………………………………………………………...
Shri/Smt./Kum………………………………………………………………...

ii. To receive all payments due to MCG and issue requisite receipts or
acknowledgements for and on behalf of the MCG.

iii. To institute and defend on behalf of the MCG members any legal proceedings and
safeguard the interest of each member of the said MCG and for this purpose
engage or disengage any lawyer or advocate or agent and incur the necessary
legal expenses in connection therewith.

7) In the event of death of any of the members of the MCG, his/her legal heirs shall be
entitled for the benefits and be liable for the obligation of the deceased member under
this agreement.

8) It is agreed that no new person shall be inducted as a member of the MCG without
consent of all the existing members.

IN WITNESS WHEREOF the aforesaid members of the MCG have set their respective hands
hereunto at the place…………….. and on ………….. day of ………. Month…………… year first herein
appearing.

Name of members of MCG Signature/Thumb Impression of the members

543
1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

WITNESSES:-

1.

2.
(Note: the MCG shall not consist more than 10 persons)

544
 ANNEXURE 44

Articles of Agreement For Financing Micro Credit Groups

This Articles of Agreement made on this……………..day of……………..20……at ……………………………..

By and between M/s ……………………………………………(name of MCG) an unregistered association
of persons/individuals having its office at …………………………………………….
Represented by its authorized representative.

Shri/Smt ……………………………………………………………………………………………………………………..............
(Name) (Designation)
Shri/Smt …………………………………………………………………………………………………………………………..........
(Name) (Designation)
Shri/Smt ………………………………………………………………………………… …………………………………..........
(Name) (Designation)

Who are fully authorised by all the members of the MCG(as per inter-se agreement entered
into among members ) hereinafter referred to as the "borrower", which expression shall
unless repugnant to the subject or context thereof, mean and include members of the
registered/unregistered association for the time being, their respective successors, legal
heirs, administrators and assigns of the one part and CANARA BANK a body corporate
constituted under Banking companies (acquisition and Transfer of undertaking) Act 1970
having its Head Office at Bangalore and the branches, inter alia, one at _____________
hereinafter called the "Bank" which expression shall unless repugnant to the subject or
context thereof mean and include its successors and assignees of the second part.

Whereas the borrower is an unregistered association of persons who have inter-se agreed to
help each other as Micro Credit Groups with a view to developing and ameliorating the
socio-economic conditions of their members.

Whereas having formed the association as a micro credit group, the borrower as per
application dated-----------------made by the said.

Shri/Smt……………………………………………………………………………………….…………………...................……
(Name) (Designation)
Shri/Smt …………………………………………………………………………………………………………………......……………
(Name) (Designation)
Shri/Smt………………………………………………………………………………………………………..................……….
(Name) (Designation)

545
Duly authorised to borrow in terms of its resolution dated ---------------------- (copy enclosed),
requested the Bank to grant a loan/extend credit facility of Rs………… up to a limit of
Rs……............../- (Rupees-----------------------------only) for on-lending to its members.

And whereas the Bank has agreed to grant the loan/extend credit facility to the borrower on
certain terms and conditions.

And whereas the Bank and borrower are desirous of reducing the agreed terms into writing.

Now, therefore, this agreement witnesseth as follows:

1. The Bank has agreed to grant and the borrower has agreed to borrow by way of term
Loan/ cash credit (clean) up to the limit of Rs……/- (Rupees ……………………………….only)
and the bank has opened ………………………..a/c (specify the kind of loan account)
No………………………………. of date…………………… in the name of the Borrower in its book
of Accounts.

2. In case the facility availed is cash credit the borrowers will operate the cash credit
account satisfactorily and within the limit and the borrower shall repay the outstanding
Liability in, the account inclusive of interest and other charges debited from time to
time on demand without demur.

3. In case the credit facility availed by the borrower is a term loan the same shall be
payable in installments in the manner specified in the repayment schedule. Besides,
the borrower will pay interest at the rates that may be payable as per the banks lending
rates that is in force for the time being and applicable to term loans.

4. That the bank shall be entitled to charge the interest at …….% above the Base rate with
a minimum of ……….% compounded monthly/quarterly/half yearly from the date of
grant of loan or at such other rates in consonance with RBI directives or determined by
the bank at its discretion from time to time by notice in writing and notice so received
by any of the borrowers shall be sufficient and binding on all of them individually and
jointly and each one of the borrowers hereby authorizes the other to receive such
notice for himself and to others.

5. It is clearly understood by and between the parties hereto that in the event of the
borrower's failure to utilize the proceeds of the credit facility for the purpose for which
the same has been made available by the Bank to the borrower, the borrower shall
repay immediately on demand without demur together with interest without prejudice
to Bank's right to initiate other legal action.

546
6. In case loan availed is Demand loan, without prejudice to the right of the Bank to
recall the loan on demand the borrower undertakes to repay the loan with interest and
other charges within the period stipulated in terms of sanction.

7. The borrower shall pay interest on the loans to be calculated on the daily balances in
the loan account and be debited thereto at monthly/quarterly/half yearly rests or as
the Bank may decide.

8. The borrower should utilize the proceeds of the credit facility for the purpose of
lending to its members to improve the socio-economic conditions of their members
and their families.

9. The borrower shall repay the credit facility availed together with interest payable as
per the Bank's lending rate that may be fixed by the bank from time to time as
applicable to the type of facility depending upon the size and/or purpose for which
the facility is sanctioned by the Bank and availed by the borrower/s. The borrowers
shall be liable to pay overdue interest at the rate of ….. % in the event of failure to
repay the facility availed in the stipulated manner and or failure to pay interest as
stipulated. The MCG members shall be jointly and severally liable for all the debts
contracted by the MCG.

10. The borrower shall be liable to repay the facility on demand together with the interest
and other charges payable by the borrower to the Bank in accordance with the rules of
the Bank. (Delete whichever is not applicable)

10-a In case of term loan permitted under (1) above, the loan will be repayable in …………..
installments of Rs……….. each with a start up period of …………. Months, with interest as
and when debited.

10-b That if the Borrower/s be more than one individual, each or any of them is authorized
and empowered by the other/s of them including the co-obligant/surety to admit and
acknowledge his/ her/their liability to the Bank by any payment into the account/s or
by way of express writing in any manner or other wise and any such admission and
acknowledgement of the liability by one or more of them including the co-obligant/
surety shall be construed to have been made on behalf of each of them and shall save
limitation against all of them jointly and /or severally for the purpose of law of
limitation.

10-c That any dispute among the members of MCG shall be resolved among themselves
without reference to Bank and bank will be in order in acting as per the instructions of
the authorized representatives of MCG and mandate with resolution

547
11-A I/ We understand that as a pre-condition relating to grant of the loans/ advances /
other fund based credit facilities to me/us, the Canara Bank requires my/our consent
for the disclosure by the Bank , any information and data relating to me/us, of the
credit facility availed of/to be availed, by me/us, obligations assumed/to be
assumed, by me/us, in relation thereto and default, if any committed by me/us, in
discharge thereof.

11-B Accordingly I/We, hereby agree and give consent for the disclosure by the Canara Bank
of all or any such:

i. Information and data relating to me / us

ii. The information or data relating to any credit facility availed of/to be availed, by
me/us, and
iii. Default, if any, committed by me/us, in discharge of my/our such obligation.

11-C I/We declare that the information and data furnished by me/us to the Canara Bank are
true and correct.

11-D I/We undertake that:

a) The Credit Information Bureau (India) Ltd and any other agency so authorised
may use, process the said information and data disclosed by the Bank in the
manner as deemed fit by them, and

b) The Credit Information Bureau (India) Ltd and any other agency so authorised
may furnish for consideration, the processed information and data or products
thereof prepared by them, to Banks/Financial Institutions and other credit
granters or registered users, as may be specified by the Reserve Bank in this
behalf.

Further, I/We hereby confirm that I/We shall not raise any dispute in whatsoever
manner regarding information/details furnished to CIBIL/other authorities and
same is binding on me/us.

12. In order to monitor the usage of the funds borrowed under this agreement, I/we agree
and authorize the Bank, access to my/our auditors.

As per the authorization given by me/us to the Bank, the Bank at its desire and
requirement, at any point during the subsistence of this agreement call for from my/
our auditors, directly or through me/us, any specific certification/details regarding
the usage of the funds borrowed under this agreement, so as to verify the end usage of
the funds.

548
 I/We agree to give suitable instruction to my/our auditors for complying the direction
of the Bank for obtaining the certificate within a reasonable time stipulated by the
Bank. In this connection, I/We agree to give full details of my/our auditors to the
Bank. If I/We change my/our auditors, then such changes shall be intimated to the
Bank immediately.

If there is any undue delay in submitting the information by me/us, or by my/our

auditors or if my/our auditors/myself/ourselves refuse to submit the required
certification/ details called for or if it is subsequently found that there is some
manipulation in the certificate/ details given by me/us or by my/our auditors, then I/
we agree that the bank has full discretion to recall the loan.

13. The Bank shall have the right to exercise discretion with respect to the following:

a) Allowing the borrower to withdraw the amount from the Loan account over and
above the limit sanctioned to it by the Bank.
b) Returning the cheques drawn on the loan account by the borrower in favour of
third parties as unpaid, if the Bank has reasons to believe that such cheques have
been issued by the borrower for purposes other than which the loan has been
sanctioned by the Bank.
c) Disallowing large cash withdrawals by the borrowers from the loan account, for
meeting the requirements of further growth and development of the business of
the borrower,
(i) If such withdrawals are over and above the limits sanctioned to the borrower
by the Bank,
(ii) if such over drawals have not been sanctioned by the Bank,
(iii)if the loan facilities sanctioned to the borrower have not been renewed for
any reason whatsoever, and
(iv) if the Bank has reason to believe that such withdrawals are being made for
purposes other than which the loan facility has been sanctioned by the Bank.
d) The Bank shall also have the discretion and right to refuse further withdrawals by
the borrower from the loan facilities granted to it for the following reasons:-

i. If the account of the borrower has been classified as a non performing asset
by the Bank in its books.

ii. If the borrower has not complied with the terms of his loan agreement
referred and the other terms which the Bank may specify from time to time
with respect to the loan facility granted by it to the borrower.

549
14. The discretion exercised by the Bank as stated above shall be absolute and
unconditional, and the borrower shall not question or raise any dispute about the same
at any point of time whatsoever".

REPAYMENT SCHEDULE (Please specify)

In witness whereof the parties hereto have affixed their signature on the date
and the month and year first herein above written.

For MICRO CREDIT GROUPs for Canara Bank

1)

2) Manager/Senior Manager

(Authorised Representatives)

550
 ANNEXURE-45

MCG Resolution dated ………………………..

We, the members of ……………………………. MCG formed as ……………. with its contact address at
………………………………………… Telephone No…………….. resolved as under:

1) We, the members of the group authorize the above representatives to apply for a total
loan of Rs…………….. (Rupees……………………………………………………..) for the group
members as indicated below :-

2) We authorize the following members amongst us to open SB Account with

Canara Bank…………………………………… branch for the purpose of availing loan to the group
members. The SB Account shall be operated under joint signature of any of the two of
the following authorized representatives.

a) ……………………………………………………….

b) ……………………………………………………..

c) ……………………………………………………..

3) We, the members of the group hereby duly elect and appoint:

Shri/Smt./Kum………………………………………… as …………………………..

Shri/Smt./Kum………………………………………… as …………………………..

Shri/Smt./Kum………………………………………… as …………………………..

(by whatsoever name designated) to look after and manage the day to day affairs of the
MCGs activities and also act in their name and on their behalf in all matters relating
thereto. We also authorize them to sign the documents on behalf of the MCG to avail
the Bank loan. The authorized representatives, may however, be removed at any time
by majority vote of the members and new representatives, elected.

4) We, the members of the group hereby agree to abide by and ratify all such acts, deeds
and things as the authorized representatives may do in the interest of the said
activities.

551
Sl. No. Name of the Member of the MCG Signature/Thumb Impression Photograph

10

552
 ANNEXURE 46
Rating Model for MFI/NGO/SHPT

FOR FINANCIAL INTERMEDIATION

Sl.No. Parameter Basis for Assessment Value Max
Marks
scored
MANAGEMENT 30 Marks
1 Experience in micro More than 5 years 5
finance 4 to 5 years 4
3 to 4 years 3
2 to 3 years 2
Less than two years 0
2 Representative nature NGO based and functioning in 4
of the NGO to the the area
local area/ community NGO based elsewhere but it is 3
working in the area
NGO Based elsewhere and new 2
to the area
Newly established NGO 1
3 Number of villages Above 50 4
covered under various 26 to 50 3
programmes 11 to 25 2
1 to 10 1
4 Interest evinced by the Meets frequently, 4 times or 2
governing Body / more than 4 times a year
Management Committee Meetings are well attended and 1
attendance more than 70 %
Meetings not conducted 0
frequently less than 2 times a
year
5 Management inspections Periodical checking of cash and 3
on money handling record maintenance
Occasional checking when 2
suspicion arises
No checking in place 0
6 Commitment for socio Strong focus on development of 1
economic development poor
Special thrust on women 1
Works predominantly in 2
backward /tribal areas

553
Sl.No. Parameter Basis for Assessment Value Max
Marks
scored
Empowerment as focus 2
7 Transparency in Submitted within 5 months from 6
operations – submission the closure of the account
of audited Balance Submitted within a period of >5 4
sheet and P & L months but < 8 months
account- financial data Delay of more than 8 months 1
in CMA forms
8 Management Fully computerized 4
Information system (MIS) Partly manual & partly 2
computerized
Only manual 0
II CAPACITY 10 Marks
1 Organisational capacity Availability of experienced and 1.5 (0-1.5)
and managerial professional staff
competence Adequacy of infrastructure 1.5 (0-1.5)
2 Trained manpower Adequacy of manpower trained 1( 0-1)
in financial intermediation
In-house training arrangements 1(0-1)
if any
Arrangements obtaining for 1(0-1)
training staff
Whether Agency is undertaking 1(0-1)
training of other NGOs/SHGs etc
3 Proficiency/ expertise 3 ( 0-3)
of CEO/Key managerial
staff in micro finance
III CORE COMPETENCY 5 Marks
1 Experience/Proficiency Whether the agency has 1 (0-1)
in group related savings adequate experience under
and credit activities savings and credit programmes
Experience in promotion and 1 (0-1)
nurturing of SHGs and in linking
with Banks
Experience in other innovative 1 (0-1)
credit delivery mechanisms
Various types of promotional 1 (0-1)
support provided by the agency

554
Sl.No. Parameter Basis for Assessment Value Max
Marks
scored
On time repayment 1 (0-1)
performance by members to the
groups/NGOs
IV CREDIT THRIFT MANAGEMENT 15 Marks
1 Financial management Whether agency is able to 1 (0-1)
mobilize adequate resources
Extent of involvement of 1 (0-1)
internal resources other than
institutional borrowings
Repayment obligations to Banks/ 1 (0-1)
FIs
Lower level overdue s to total 1 (0-1)
loans outstanding
Satisfactory book keeping 1 (0-1)
2 Sustainability of Already sustainable in its 5
operations operations
Sustainability expected in less 4
than 3 years
Sustainability expected in more 2
than 3 years
No possibility of achieving 0
sustainability
3 Grant support Extent of dependence on donors: 5 (0-5)
(dependence on donor’s High- 1
assistance for Medium-2
managerial /operational Average-3
expenses Low-4
None -5
V ASSET QUALITY 15 Marks
1 Gross NPA to gross < 2.50% 5
advance 2.5% to 5 % 3
>5% 2
>10% 0
2 Management of Less than 5% 5
overdue loans(Age of 5% to 7.50% 3
overdue loans for more 7.6% to 10 % 2
than 30 days < 60 days More than 10 % 0
overdue % to total loans)

555
 Sl.No. Parameter Basis for Assessment Value Max
Marks
scored
3 Repayment rate (based Having >95% recovery 5
on %age of recovery) >90% but less than 94% 4
Having 85 %to 93 % 3
Having 82% to 84% 2
Less than 80% recovery 0
VI OPERATIONAL EFFICIENCY 20 Marks
1 Based on coverage of Having more than 10000 20
end beneficiaries beneficiaries
Having more than 5000 but < 15
10000 beneficiaries
Having more than 1000 but less 10
than 5000 beneficiaries
Having more than 500 but less 5
than 1000 beneficiaries
Having less than 500 beneficiaries 0
VII RESOURCES & ASSET LIABILITY MANAGEMENT 5 MARKS
1 Portfolio in arrears Payment in arrearsValue of loans (0-5)
O/sThe figure indicates amount Decreasing
of loan payments past due. trend is
positive
Lowervalue
means lesser
risk

REMARKS :

Total appraisal would be done on a scale of 100.

The appraisal is supposed to be made as desk appraisal on the basis of information to be

furnished by an NGO and after sufficient local enquiry.

Values in the case of parameters II(1), (2), (3), (4); III (1); IV (1), (4) would be imputed based
on the assessment of strengths of NGO in relation to those parameters by the appraising
officer, whereas in the case of other parameters, absolute values as indicated against each
one of these would be given if the NGO is satisfying them.

556
• No NGO would be expected to achieve 100 out of 100. A good NGO would be able to
secure up to 75% of the total marks i.e. 75 and hence 75 marks would be presumed as full
marks for the purpose of assessment. In order to be eligible for collaboration/assistance
with Bank, an NGO will have to attain at least 50% of the highest achievable marks. In
other words, any NGO has to secure at least 37.5 say, 38 out of total 100 would
qualify for the assistance.

Scoring Status for selection

NGO/mFI with more Collaboration/assistance without reservation MFR 1
than 55 marks.
NGO/mFI with Collaboration/assistance with caution MFR 2
38-54 marks
NGO/mFI with less Collaboration/assistance not recommended MFR 3
than 38 marks.

The above norms/guidelines are illustrative in nature and would have to be viewed in totality
while considering the suitability of an agency for providing promotional/loan assistance
for financial intermediation. These norms/guidelines are intended to be more in the nature
of aid/guidance in the appraisal of the proposals received from NGOs for any micro credit

Programme requiring financial assistance. It is envisaged that a development and pragmatic

approach would be followed while dealing with such institutions.

Note : For bulk lending, NGOs should submit audited financial statements for the last
three years, business projections and project management details.

557
 ANNEXURE -47

QUARTERLY STATEMENT ON DETAILS OF LOAN AVAILED BY NGO/mFI FROM FINANCIAL

INSTITUTIONS
(To be submitted in duplicate as at June/Sept/Dec/March 20…….)

1. Name of the NGO/MFI and address

2. Name of the contact person and address

3. Details of SHG's promoted by NGO/MFI

During quarter cumulative

No of SHGs formed
No of SHGs credit linked

4.Limites availed
a) with Canara Bank

Sl.No. Loan No. Limit Liability Overdues

a) with other Financial Institutions:

Sl.No. Name of the FI Loan No Limit Liability Overdues

*indicate the age of overdues as under:

1-30 days past due 31-60 days past due -61-90 days past due
91-180 days past due >180 days past due

Date:
Place: SIGNATURE OF AUTHORISED
REPRESENTATIVE OF NGO/MFI

558
 ANNEXURE -48

APPLICATION TO BE SUBMITTED BY NGO/MFI/SHPI TO BRANCH WHILE APPLYING FOR LOAN

ASSISTANCE FOR ON-LENDING TO SHGs

Name of the Voluntary Agency/Self-Help Promoting Institution/NGO:

Address:

Formed/Established on: Registration no:

(furnish true copy of certificate of registration)

Type of activities undertaken:

To: Date:
The Branch Manager
Canara Bank
…………………Branch

Dear Sir,

Sir : Application for Loan

We hereby apply for a loan of Rs.___________________(Rupees ___________________________

only) required by us for the purpose of on-lending, to the Members of(no.) Self Help Groups
as per list enclosed.
2. Repayment Schedule:
We agree to repay the loan amount as per the repayment schedule which may be fixed
by the bank.
Particulars of loans extended to SHGs and existing liabilities from other financial
institutions/ agencies along with Audited Balance Sheet for the last three years is
enclosed.
4. We hereby declare that the particulars given above are true and correct to the best of
our knowledge and belief.
5. We hereby authorise the Bank to disclose all or any particulars or details or information
relating to our loan accounts with the Bank, to any other, financial institution including
NABARD, Government or any agency as may be considered necessary or desirable by
the Bank. It will be in order for the Bank to disqualify the SHG from receiving any credit
facilities from the Bank and / or recall the entire loan amount or any part thereof

559
 granted on this application, if any of the information pertaining to the Group, furnished
herewith is found incorrect and/ or containing misrepresentation of facts.

Yours faithfully,

(Secretary) (President)

Name of the VA/NGO/SELF-HELP Promoting Institution

Particulars of SHGs proposed to be assisted:

Name of the SHG Address Date of formation Number of members

Female Male
(1) (2) (3) (4a) (4b)
1.
2.
3.
4.

Total Savings Total lendings Outstanding Recovery Marks scored Remarks

against members per centage as per rating if any
(5) (6) (7) (8) (9)
1.
2.
3.
4.

Secretary President

* NGOs to use the same rating matrix used by the Bank for rating individual prospects.

560
 ANNEXURE - 49

(To be stamped as an Agreement)

ARTICLES OF AGREEMENT FOR USE WHILE FINANCING SELF HELP GROUPS THROUGH VOL-
UNTARY AGENCY / SHPI (SELF HELP PROMOTING INSTITUTION) (SOCIETY / CHARITABLE
TRUST) REGISTERED UNDER THE RESPECTIVE ACTS

The Articles of Agreement on this ________________ day of ______20___ at _____ by and

between M/s _____________________ a voluntary agency registered as a Society / a
Charitable Trust under the Societies Registration Act 1860/ ____________ Trusts Act, ________
having its office at ____________________ represented by its *President/ Trustee
Shri/Smt. ________________________ and its Secretary Shri/Smt.___________ who are duly
authorised and empowered under the Rules and by-laws to execute contracts on behalf of the
Society / Trust, hereinafter called the “borrower” which expression shall, unless repugnant
to the subject or context thereof mean and include their successors, and assigns of the one
part and (name of the Bank) a body corporate constituted under the Banking Companies
(acquisitions and transfer of undertaking) act of 1970, having its office at
________________________________________________ and at the branches interalia one at
_____________ hereinafter called “Bank” which expression shall, unless repugnant to the
subject or context thereof, mean and include its successors and assignees of the second
part.

Whereas, the borrower is a registered society / trust which has undertaken to promote and
help the self-help groups (SHGs) with a view to developing and ameliorate socio-economic
conditions of the members of the SHGs and their families.

*(Delete whichever is not applicable).

Whereas the Borrower has requested the Bank for grant of a loan /extending credit facility of
Rs.___________ /- upto the limit of Rs._________/- (Rupees ___________ only) for onlending
to the Self Help Groups (SHGs) for meeting the credit requirement of their members as per
the SHG’s request.

And whereas the Bank has agreed to extend credit facility to the borrower represented by its
President and Secretary as per the by-laws of society / trust on certain terms and conditions.

And whereas the Bank and the borrower have agreed to charge interest at different level /
rates as hereunder:

561
i) Bank to VA/SHPI
ii) VA.A/SHPI/TO SHG
iii) SHG to members – As decided by SHG

and/or as may be fixed from time to time by RBI/NABARD.

And whereas the Bank and the borrower are desirous of reducing the agreed terms into
writing.
Now, therefore, this agreement witnesseth as follows:

1. The Bank has agreed to grant and the borrower has agreed to borrow by way of term
loan / cash credit (clean) upto the limit of Rs. ________/- (Rupees ______________only)
and the bank has opened (specify the kind of loan account) A/c. No. _________ of date
_______ in the name of the borrower in its book of accounts.

2. In case the facility availed is cash credit the borrower will operate the cash credit
account satisfactorily and within the limit and the borrower shall repay the outstanding
liability in the account inclusive of interest and other charges debited from time to
time on demand without demur.

3. In case loan availed is Demand Loan, without prejudice to the right of the Bank to
recall the loan on demand the Borrower undertakes to repay the loan with interest and
other charges within the period stipulated in terms of sanction.

4. In case the credit facility availed by the borrower is a term loan the same shall be
repayable in instalments in the manner specified in the repayment schedule. Besides,
the borrower will pay interest at the rates that may be fixed from time to time by RBI/
NABARD for such lendings along with other costs / charges as may be levied by the
Bank.

5. It is understood by and between the parties hereto that in the event of the borrower’s
failure to utilize the proceeds of the credit facility for the purpose for which the same
has been made available by the Bank to the borrower, the borrower shall repay
immediately on demand without demur together with interest without prejudice to
Bank’s right to initiate other legal action.

6. The borrower shall pay interest on the loans to be calculated on the daily balances in
the loan account and be debited thereto at quarterly rests or as the Bank may
decide.

562
7. The borrower should utilize the proceeds of the credit facility for the purpose of
onlending to SHGs to improve the socio-economic conditions of their members and
their families.

8. The borrower shall repay the credit facility availed of together with interest at the rate
that may be fixed by the RBI/NABARD from time to time for such lending. The
borrowers shall be liable to pay interest on overdue interest in the event of failure to
repay the facility availed in the stipulated manner.

9. The borrower shall be liable to repay the loan on demand together with the interest
and other charges payable by the borrower to the Bank, without any demur. The
borrower is not permitted / has no right to defer payment of the dues herein on the
ground that he has not been able to receive / realize the dues form its debtors for any
reason whatsoever.

10. That the Bank shall be entitled to charge interest at the rate of _____ % simple /
compounded quarterly / half yearly from the date of grant of loan or at such other
rates in consonance with RBI directives / guidelines as the bank may specify from time
to time by notice in writing and notice so received by any of the borrowers shall be
sufficient and binding on all of them individually and jointly and each one of the
borrowers hereby authorises the other to receive such notice for himself and for
others.

11. The Bank shall be entitled to vary / change the rate of interest from time to time and
charge of such rate as is applicable to the facility availed by the borrower within the
terms or directives of RBI or determined by the Bank at its discretion, without any
further reference or notice to the borrower and the rate that the bank may decide to
charge to the borrower shall be deemed to be agreed as the rate of interest for the
purpose of this articles of agreement.

REPAYMENT SCHEDULE (Please specify)

In witness whereof the parties hereto have affixed their signature on the _________ date and
the _________ month and _______ year first herein above written.

563
For (name of the Voluntary
Agency (VA) or self Help
Promoting Institute (SHPI)
a register Society / Trust FOR BANK
under Society’s Trust’s
Registration Act.

1. PRESIDENT

2. SECRETARY Manager

564
 ANNEXURE -50

APPLICATION TO BE SUBMITTED BY NGO/MFI/NBFC-MFI TO BRANCH WHILE APPLYING FOR

LOAN ASSISTANCE FOR ON-LENDING TO MCGs

Name of the Voluntary Agency/MFI /NGO/NBFC-MFI:

Address:

Formed/Established on: Registration no:

(furnish true copy of certificate of registration)

Type of activities undertaken:

To: Date:
The BranchManager
Canara Bank
…………………Branch

Dear Sir,

Sub : Application for Loan.

We hereby apply for a loan of Rs................... (Rupees ………………………………………………only)

required by us for the purpose of on-lending, to the Members of (no.) Micro Credit
Groups as per list enclosed.

2. Repayment Schedule:
We agree to repay the loan amount as per the repayment schedule which may be fixed
by the bank.
3. Particulars of loans extended to MCGs and existing liabilities from other financial
institutions/ agencies along with Audited Balance Sheet for the last three years is
enclosed.
1. We hereby declare that the particulars given above are true and correct to the
best of our knowledge and belief.
2. We hereby authorize the Bank to disclose all or any particulars or details or
information relating to our loan accounts with the Bank, to any other, financial
institution including NABARD, Government or any agency as may be considered
necessary or desirable by the Bank. It will be in order for the Bank to disqualify
the MCG from receiving any credit facilities from the Bank and / or recall the

565
 entire loan amount or any part thereof granted on this application, if any of the
information pertaining to the Group, furnished herewith is found incorrect and/
or containing misrepresentation of facts.

Yours faithfully,

(Secretary) (President)

Name of the VA/NGO/MFI/NBFC-MFI

Particulars of Address Date of Number of members

MCGs proposed formation Female Male
to be assisted:
Name of the
MCG
(1) (2) (3) (4a) (4b)
1.
2.
3.
4.

Total Savings Total lendings Recovery Marks scored Remarks if

Outstanding percentage as per rating any
against members
(5) (6) (7) (8) (9)
1.
2.
3.
4.

Secretary President
* NGOs to use the same rating matrix used by the Bank for rating individual prospects.

566
 ANNEXURE – 51

(To be stamped as an Agreement)

FORMAT OF ARTICLES OF AGREEMENT FOR USE WHILE FINANCING MICRO CREDIT GROUPS
THROUGH VOLUNTARY AGENCY/ NGO(SOCIETY/CHARITABLE TRUST)/ NBFC-MFI REGISTERED
UNDER THE RESPECTIVE ACTS.

The Articles of Agreement on this ____________________________day of____________20______

at ____________________________________ by and between M/s. ________________________
a voluntary agency registered as a Society/Charitable Trust under the Societies Registration
Act 1860 / Trusts Act, NBFC-MFI (Registered under Section 25 of Companies Act) having its
Office at ______________________________________ represented by its *President / Trustee
Shri/Smt.__________________________________________________ and its Secretary Shri/Smt.
______________________________________________________who are duly authorised and
empowered under the Rules and by-laws to execute contracts on behalf of the Society/Trust,
hereinafter called the "borrower" which expression shall, unless repugnant to the subject or
context thereof mean and include their successors, and assigns of the one part and Canara
Bank, a body corporate constituted under the Banking Companies (acquisitions and transfer
of undertaking) Act of 1970, having its Head Office at 112, J.C. Road, Bangalore and at the
branches interalia one at………………........….hereinafter called "Bank" which expression shall,
unless repugnant to the subject or context thereof, mean and include its successors and
assignees of the second part.

Whereas, the borrower is a registered Society/Trust/NBFC which has undertaken to promote

and help the Micro Credit Groups (MCGs) with a view to developing and ameliorate socio-
economic conditions of the members of the MCGs and their families.

*(Delete whichever is not applicable).

Whereas the Borrower has requested the Bank for grant of a loan/extending credit facility of
Rs.................................../- upto the limit of Rs.........................................../-
(Rupees..................................................only) for onlending to the Micro Credit Groups
(MCGs) for meeting the credit requirement of their members as per the MCG's request.

And whereas the Bank has agreed to extend credit facility to the borrower represented by its
President and Secretary as per the by-laws of Society/ Trust on certain terms and conditions.And
whereas the Bank and the Borrower have agreed to charge interest at different level/rates as
hereunder:

567
1. Bank to VA/NGO/NBFC

2. VA/NGO/NBFC to MCG

3. MCG to members : As decided by MCG and / or as may be fixed from time to time by
BANK/RBI/NABARD

And whereas the Bank and the borrower are desirous of reducing the agreed terms into
writing. Now therefore, this agreement witnesseth as follows:

1. The Bank has agreed to grant and the borrower has agreed to borrow by way of
term loan/ cash credit (clean) upto the limit of Rs……………… (Rupees…………………..
only) and the bank has opened (Specify the kind of loan account)
A/c. No……………………….….. of date………………….. in the name of the borrowers in
its book of accounts.

2. In case the facility availed is cash credit the borrower will operate the cash credit
account satisfactorily and within the limit and the borrower shall repay the
outstanding liability in the account inclusive of interest and other charges
debited from time to time on demand without demur.

3. In case loan availed is Demand Loan, without prejudice to the right of the Bank to
recall the loan on demand the Borrower undertakes to repay the loan with
interest and other charges within the period stipulated in terms of sanction.

4. In case the credit facility availed by the borrower is a term loan the same shall be
repayable in instalments in the manner specified in the repayment schedule.
Besides, the borrower will pay interest at the rates that may be fixed from time
to time by Bank/RBI/NABARD for such lendings along with other costs/charges as
may be levied by the Bank.

5. It is understood by and between the parties hereto that in the event of the
borrower's failure to utilise the proceeds of the credit facility for the purpose for
which the same has been made available by the Bank to the Borrower, the
borrower shall repay immediately on demand without demur together with
interest without prejudice to Bank's right to initiate other legal action.

6. The borrower shall pay interest on the loans to be calculated on the daily
balances in the loan account and be debited thereto at monthly/quarterly rests
or as the Bank may decide..

568
 7. The borrower should utilise the proceeds of the credit facility for the purpose of
on lending to MCGs to improve the socio-economic conditions of their members
and their families.

8. The borrower shall repay the credit facility availed of together with interest at
the rate that may be fixed by the BANK/RBI/NABARD from time to time for such
lending. The borrowers shall be liable to pay interest on overdue interest in the
event of failure to repay the facility availed in the stipulated manner.

9. The borrower shall be liable to repay the loan on demand together with the
interest and other charges payable by the borrower to the Bank, without any
demur. The borrower is not permitted/has no right to defer payment of the dues
herein on the ground that he has not been able to receive / realize the dues from
its debtors for any reason whatsoever.

10. That the bank shall be entitled to charge interest at the rate of …….% above Base
rate with a minimum of ____% compounded quarterly/half yearly from the date
of grant of loan or at such other rates in consonance with RBI directives/
guidelines as the bank may specify from time to time by notice in writing and
notice so received by any of the borrowers shall be sufficient and binding, on all
of them individually and jointly and each one of the borrowers hereby authorize
the other to receive such notice for himself and for others.

11. The bank shall be entitled to vary/change the rate of interest from time to time
and charge at such rate as is applicable to the facility availed by the borrower
within the terms of directives of RBI or determined by the bank at its discretion,
without any further reference or notice to the borrower and the rate that the
bank may decide to charge to the borrower shall be deemed to be agreed as the
rate of interest for the purpose of this articles of agreement.

REPAYMENT SCHEDULE (Please specify)

In witness whereof the parties hereto have affixed their signature on the day and the month
and year first herein above written.

For (name of the Voluntary agency (VA) For Canara Bank

Registered Society / Trust under Society's
Trust's Registration Act./NBFC-MFI MANAGER

President Secretary

569
 ANNEXURE-52

MONTHLY STATEMENT INDICATING THE DETAILS OF THE GROUPS LINKED FOR EACH
SANCTION

Name of the NGO/mFI :………………(To be certified by Chartered Accountant)

Sl. Name of the Name of Date of on Amount on Activity Address of

No. member the Group lending lent for which the member
loan is
sanctioned
1

570
 ANNEXURE-53

QUARTERLY STATEMENT INDICATING THE DETAILS OF AMOUNT ON LENT, TOTAL DEMAND,

COLLECTION, OVERDUES AND RECOVERY % FOR EACH SANCTION:

Name of the NGO/MFI:……………….(To be certified by Chartered Accountant)

Sl. Name of the Name of Date Amount Demand Collection Overdue Recovery
No. Member the group of on on lent 6-7 %7/6
lent
1 2 3 4 5 6 7 8 9
1
2
3
4

571
 ANNEXURE - 54

Agriclinic and Agribusiness Centres:

List of ventures for setting up of Agriclinic and Agribusiness Centres

v Soil and water quality cum inputs testing laboratories (with Atomic Absorption
Spectrophotometers)
v Pest surveillance, diagnostic and control services.
v Maintenance, repairs and custom hiring of agricultural implements and machinery
including micro irrigation systems (sprinkler and drip).
v Agri Service Centres including the three activities mentioned above (Group Activity).
v Seed Processing Units.
v Micro-propagation through Plant Tissue Culture Labs and Hardening Units.
v Setting up of Vermiculture units, production of bio-fertilizers, bio-pesticides,
bio-control agents.
v Setting up of Apiaries (bee-keeping) and honey & bee products’ processing units.
v Provision of Extension Consultancy Services.
v Facilitation and agency of agricultural insurance services.
v Hatcheries and production of fish finger-lings for aquaculture
v Provision of livestock health cover, setting up veterinary dispensaries & services
including frozen semen banks and liquid nitrogen supply.
v Setting up of Information Technology Kiosks in rural areas for access to various
agriculture related portals.
v Feed Processing and testing units.
v Value Addition Centres.
v Setting up of Cool Chain from the farm level onwards (Group Activity).
v Post Harvest Management Centres for sorting, grading, standardization, storage
and packaging.
v Setting up of Metallic / Non-Metallic Storage Structures (Group Activity)
v Retail marketing outlets for processed agri-products.
v Rural marketing dealerships of farm inputs and outputs.

Any combination of two or more of the above viable activities alongwith any other economi-
cally viable activity selected by the Graduates, which is acceptable to the Branch.

572
 ANNEXURE -55

Agriclinic and Agribusiness Centres:

List of Project Profiles for Agriclinic and Agribusiness Centres

1. Soil, Water Quality and Input Testing Laborites Service Centre

2. Plant Protection Service Centre

3. Vermi-composting Unit

4. Horticulture Clinic and Business Centre

5. Agroservice Centre-Farm Machinery

6. Agroservice Centre-Farm Machinery and Primary Processing

7. Private Veterinary Clinic

8. Private Veterinary Clinic with Retail Outlet for Feed & Medicine

9. Private Veterinary Clinic with Small Dairy Unit

10. Private Artificial Insemination Centre

11. Eco-hatchery for Carp seed Production and Extension Services

Note :Detailed Project profile of Item No. 1 is annexed to this circular and Items Nos. 2 to 11
are made available at RO/CO. Branches may obtain the same from RO/CO whenever
such proposals are received.

PROJECT PROFILE
SOIL, WATER QUALITY AND INPUT TESTING
LABORATORY SERVICES CENTRE.

Objectives :-

? To undertake soil testing at reasonable costs.

? To undertake irrigation water quality testing.

573
? To undertake testing of some of the inputs.

? To provide recommendation on fertilizer application and fertility management.

? To arrange for suitable inputs like bio-fertilizers.

? To provide guidance for soil reclamation and related technical areas.

? To train/demonstrate/educate farmers in the technical areas of soil fertility

development integrated input use, improved compost making, etc.

2. Location and Area of Operation :

In order to have close interaction with the farmers and facilitate frequent field visits
the unit should be located in rural area like taluka head quarters or an upcoming major
panchayat head quarters. It is considered that a lab with a capacity of 10,000 samples
will have scope to cover a taluka in areas having considerable saline/alkaline lands and
irrigated garden lands growing commercial crops and vegetables will have ample
potential for this kind of service.

3. Project Components :-

Laboratory Equipment (PH Meter, EC Meter, Photometer, etc.,), office equipment,

furniture etc.

4. Project Cost :- Rs.

A. Capital Cost

- Water and Electricity supply to the lab 25,000

- Wooden drawer with cabinet to keep samples (2 sets) 20,000

- Laboratory Equipment (such as pH Meter, EC Meter,

Photometer, Caloriemeter, glassware, laboratory, furniture, etc.,) 2,32,000

- Office equipment (such as furniture, motor cycle, computer,

telephone audiovisual aids, contingencies, etc.) 1,17,000
3,94,000

574
Capitalised Cost :

- Rent for ten months 25,000

- Stock of chemicals 20,000

- Six months’ operational cost 84,500

Total 5,23,500

B. Recurring cost :-

It varies from Rs. 1,33,200/- to Rs. 1,54,800/-

5. Margin (15%) : Rs. 92000

6. Bank loan : Rs. 431500

7. Rate of Interest : 14% p.a.

8. Repayment period : 6 years including grace period of one year

9. Income :

i) Though it is possible to test 10,000 – 12,000 samples in a year, the installed

capacity is taken conservatively as 8,000 per year for working out the economics.

Capacity utilization is considered as follows :

First year Second year Third year 4th year onwards

35% 50% 75% 80%

ii) The major income will accrue from soil and water testing. An income of Rs. 50 per
sample of soil/water is considered as reasonable. Return from the input testing is
not taken into the cash flow, through some income is possible from this.
Considerable amount of returns is also expected from the extension service
rendered like land reclamation etc. However, highly conservative charges of
Rs. 250 per acre for this service are assumed in the project due to lack of field
experience as of now.

iii) From Soil and Water samples testing and Technical advice/services like land
reclamation, the income varies from 1,40,000/- to Rs. 3,38,750/-
575
11. Other Information :

Apart from the soil testing services, the unit can also widen its scope slowly by adding
small capacities for organic manure production (for which land is needed) and
bio-fertilizers. Small quantities of bio-fertilizers like Azatobacter, Azospirillum can be
multiplied for local clients with the same infrastructure.

NOTE :-

• Margin is 15% is assumed, but the actual margin will be as per the guidelines
• Interest rate of 14% is assumed, however, the actual rate will be as per the
guidelines
• Similarly the other economic/financial parameters such as the repayment period,
DSCR, IRR, etc., may also vary depending upon the margin, interest rate, etc.,
taken into account by the bank.

576
 ANNEXURE -56

SCREEN SHOT OF ALM35 INDICATING STEPS INVOLVED

The procedure which has to be adopted for effecting modifications in ALM35 is also furnished
below:

Step 1: ALM 35

Step 2: Select modify option

Step 3: Account number and the enter.

Step 4: Select “Crop Attributes” The screen appears as follows

577
Step 5: Select Crop Loan

Step 6: Type of crop - Select Crop from the drawdown menu

Step 7: Select the AC Plan code – Select the appropriate plan from the drawdown menu

578
IMPORTANT:

PLEASE DO NOT SELECT/ALTER THE FIELDS VIZ., 1.SEASON, 2.REVIEW PERIOD (IN MONTHS),
3.REVIEW DATE.

579
 ANNEXURE - 57

FORMAT FOR REVIEW OF COMPLETED AGRICULTURAL PROJECTS OTHER THAN REC SPA
SCHEMES

CANARA BANK
REVIEW REPORT

BRANCH :

I Profile of borrower

1. Name of the borrower :

2. Line of business :

3. Constitution :

4. Standing :

5. Banking with us since :

6. Names of Directors/Partners/Proprietor : Outside Worth

1.
2.
3.
4.
5.
6.

7. Whether the borrower/partners/

directors are assessees of IT/
WT, if so give details of latest
Assessment :

8. Particulars of Group, allied/

associate concern :

580
 Name of the concern Limits enjoyed with us
1.
2.
3.
4.

9. Limits enjoyed by the borrower with other banks/financial institutions :

________________________________________________________________________________
Sl. Name of the Bank/FI Nature of Amount Security
NO. limit
_______________________________________________________________________________
1 2 3 4 5
________________________________________________________________________________
1.
2.
3.
4.
5.
________________________________________________________________________________
II. Limits and Liabilities with us :
__________________________________________________________________________________________
Nature Limit Date of Liability Overdues Value of Date of Whether
of loan as on if any security last insurance
limit papers ........... as inspection cover is
AOD ........... of security is adequate
__________________________________________________________________________________________
1 2 3 4 5 6 7 8
__________________________________________________________________________________________
Fund Based :

a) Term loans :
1.
2.
3.
4.
b) Working
Capital :
1.
2.
3.
4.

581
Non-fund based :
1.
2.
3.
4.

III Feed Back from the borrower & observations on conduct of A/C.

1. i) Whether financial statement are YES/NO

submitted in time :

ii) Period of latest financial statement

available (audited/provisional) enclose
Review :

iii) Period of latest ITAO of the firm :

2. i) Whether Income & Expenditure YES/NO

Statement are submitted :

ii) Periodicity of submission of I & E

Statement :

iii) Period for which latest I and E

Statement received (Enclose copy) :

iv) Whether Income & Expenditure compare

well with the projections :

v) If not, reasons for variation :

vi) Production & Sales Statement (Enclose

Copy) (Per unit production also is to
be given) :

vii) Any deviation in cropping pattern :

3. The following details may be furnished in case

of all term loans (1) (2) (3) (4)

a) Date of sanction :

582
 b) Date by which loan is supposed
to be cleared :

c) Date of starting repayment :

d) Periodicity of instalments
(Monthly/Quarterly/Half Yearly/Yearly) :

e) Amount of instalment :

f) Demand till date

(inclusive of interest) :

g) Overdues :

h) Reasons for overdues :

i) Steps taken for recovery :

4. Working Capital Limits

a. i) Submission of stock statements : Prompt/Delayed

ii) Maintenance of stock register :

iii) Frequency of submission of

stock statements :

iv) Movement of goods : Satisfactory/ Not satisfactory

v) Value of old stock included

out of stocks reported
under ii (6) :

b. i) No. of discounted bills dishonoured

during the year :

ii) Percentage of bills dishonoured out of

the bills discounted to the party during
the year :

583
5. i) Meeting commitments under Guarantee/
LCs issued : Prompt/Not prompt

ii) Details of invoked/Guarantees :

________________________________________________________________________________
Guarantee No. Name of Amount of Due date
and Date Beneficiary Guarantee
________________________________________________________________________________
1 2 3 4
________________________________________________________________________________

_______________________________________________________________________________
Date of invoking Date of settling Whether amount
the Guarantee the claim is recovered Remarks
from the borrower
________________________________________________________________________________
5 6 7 8
________________________________________________________________________________

________________________________________________________________________________

6. No. of cheques dishonoured during the year :

Comments on :

1. Terms and conditions of sanction yet to be

fulfilled :

2. Availability of DICGC or any other guarantee

cover :

3. Availment of NABARD Refinance :

4. RBI Inspection/Branch Inspection comments

and its present position :

584
5. Deviations in implementation of the project
formulated :

Value of the Account :

a) Interest/Commission earned during the year :

b) Details of deposit support :

c) Other business benefits :

6. Brief History of the Account :

OFFICER MANAGER/SENIOR MANAGER

Views of the Circle Office

Asset sub-classification code allotted

AGM/DGM
Asset sub-classification code Confirmed

DGM/ GM

585
 CANARA BANK
HEAD OFFICE : BANGALORE 2

ANALYSIS OF FINANCIAL RESULTS

(For the past 3 Years)

PROFIT & LOSS ACCOUNT

_________________________________________________________________________________
EXPENSES INCOME
_______________________________________________________________________________
As on As on As on As on As on As on
Opening Stock Sales
Purchase Closing stock
Other expenses Other receipts
Depreciation Net loss
Net Profit
_______________________________________________________________________________
Total Total
________________________________________________________________________________

586
 CANARA BANK
Head Office : Bangalore 2

ANALYSIS OF FINANCIAL RESULTS

(For the past 3 Years)

BALANCE SHEET
__________________________________________________________________________________________
LIABILITIES ASSETS
__________________________________________________________________________________________
As on As on As on As on As on As on

1. Capital 1. Net Block

2. Term Current Assets

Liabilities
a) Stock-in-trade
3. Current
Liabilities b) Debtors

a) Bank Borrowings c) Cash & Bank

Balance
b) Borrowings from
others d) Loans, Advances
and deposits
c) Other current
Liabilities e) Other current
assets

3. Accumulated losses
and Expenditure
__________________________________________________________________________________________
TOTAL TOTAL
__________________________________________________________________________________________

587
 ANNEXURE - 58

FORMAT FOR REVIEW OF AGRICULTURAL ACCOUNTS PROJECTS

UNDER IMPLEMENTATION

I. PROFILE OF THE BORROWER

1. Name of the borrower :
2. Line of business :
3. Constitution :
4. Date of establishment :
5. Particulars of group,
allied/associate concerns :

Name of the concern Limits enjoyed with us

1.
2.
3.
4.
5.
6. Limits enjoyed by the borrower with
other banks/financial institutions :
________________________________________________________________________________
Sl. Name of the Nature Amount Security
No. party of limit
1 2 3 4 5
1.
2.
3.
4.
5.

II. LIMITS & LIABILITIS WITH US:

Nature of Amount Date of Liabilities Overdues Due date

Limits loan as on if any of 1
papers/ instalment
AOD

588
III. PHYSICAL & FINANCIAL PROGRESS AS AT MARCH/SEPTEMBER:

A) PHYSICAL PROGRESS:
Details of Targetted Stage upto If there is delay
work as per date of which com- in implementation
project re- completion pleted as list out reasons
port/scheme on March/ for the same &
September probable date of
completing the project.

_______________________________________________________________________________
B) FINANCIAL PROGRESS:

Details of Cost Amount incurred Is there cost

work as per estimate out of: escalation? if
project report/ bank other so, how party
scheme finance sources propose to meet
the overun.

_______________________________________________________________________________
IV. LIST OF TERMS & CONDITIONS OF SANCTION YET TO BE FULFILLED, IF ANY, WITH
REASONS.

V. POSITION WITH REGARD TO AVAILMENT OF NABARD REFINANCE.

VI. REMARKS BASED ON THE LATEST INSPECTION OF THE UNIT (DATE OF INSPECTION: )

Signature
MANAGER/DIVISIONAL MANAGER

VIEWS OF CIRCLE OFFICE

ASSET SUB-CLASSIFICATION CODE ALLOTTED

Signature
AGM/DGM
ASSET SUB-CLASSIFICATION CODE CONFIRMED
Signature
DGM/GM

589
 ANNEXURE – 59

DRAFT LETTER OF UNDERTAKING FROM THE BORROWER/CO-OBLIGANT FOR CONVER-

SION OF CROPS LOAN INTO TERM LOAN

To Date: ________________
The Branch Manager Place: _______________
Canara Bank
_______________ Branch

Dear Sir,

Sub: My/our crop loan No.____________ with you.

Ref: ____________ * dated __________ for Rs. ________

In respect of subject crop loan to the extent of Rs. ___________ availed by me/us and
secured, inter alia, by the Co-obligation/guarantee of Shri. ______________________,
Shri. ________________________ etc, and/or by the hypothecation agreement/ mortgage
deed/statutory declaration dated __________ respectively, a sum of Rs. ________________
exclusive of interest from _______________ (date) is remaining outstanding and overdue.

In this connection, at my/our request you have agreed for conversion of the subject
crop loan into term loan.

Hence, I/we hereby undertake to repay the above debt together with interest at ________ %
per annum or any other rate of interest to be stipulated from time to time, in instalments
and on the dates listed hereunder, against the continuance of the above securities and on
the conditions contained in the aforesaid deed of hypothecation/mortgage deed/
statutory declaration.

(here give details of the Instalments)

_________________________________________________________________________________
Sl. No. Instalments Date
Amount
_________________________________________________________________+_______________

_________________________________________________________________________________

Borrower(s)/Co-obligant(s)

590
I/we agree to the above arrangement

____________________
Guarantor(s)
* (Herein mention the documents obtained)

591
 ANNEXURE - 60

DRAFT LETTER OF UNDERTAKING FROM THE BORROWER/CO-OBLIGANT FOR RE-

SCHEDULING OF TERM LOAN

TO Date:
The Branch Manager Place:
Canara Bank
___________________ Branch

Dear Sir,

Sub: Restructuring of repayment schedule - My/our loan No.________________ with you.

Ref: _________________ * dated _________________ for Rs. ___________________.

With reference to the financial assistance granted to me/us in the shape of term loan
for Rs._______________ against hypothecation/mortgage of ______________ in resepct
of which I/we have executed ________________________ (herein mention the title of the
document executed by the Borrower(s)/co-obligants(s)) on __________ (date) wherein I/
we had/have agreed to repay the amount of the loan with interest ______ % per annum to the
bank by equal monthly/ quarterly/half yearly/yearly instalments of Rs. ____________
each including interest, the first of such instalment was to be paid on ______________ day of
___________ in the year _______ and subsequent instalments were to be paid on or before
the ________________ day of each month/three months/six months/year and there after as
the case may be.

That due to financial stringencies I/we am/are not in a position to pay the aforesaid instalments
with interest thereon and as requested by me/us you had agreed for restructuring the
repayment schedule of the subject loan.

Hence, I/We hereby undertake to pay the remaining instalments of the subject loan
including interest at ________ % per annum or any other rate of interest to be stipulated
from time to time in the following manner.
(here give details of mode of fresh repayment)

Instalment Amount (Rs.) Payable on (date)

First
Second
Third
...........

592
Shri.__________________________ the Guarantor(s) for the aforesaid financial assistance
granted to me/us has/have agreed to give his/their consent to the re-shaping of the
repayment schedule as requested by me/us.

Yours faithfully,

________________________
Borrower(s) /Co-obligant(s)

I/We __________________________ the Guarantor(s) for the aforesaid financial assistance

granted to the above named borrower(s) in token of my/our acceptance do hereby give
my/our consent to the restructuring of the repayment schedule of the aforesaid term loan
including interest at the aforesaid rate with stipulation that such change(s) in mode of
repayment schedule shall not be construed as variation(s) in the terms of the agreement
of guarantee executed by me/us.

Date: ________________

Place:_________________

____________________
Guarantor(s)

* (Herein mention the documents obtained)

593
 ANNNEXURE -61

LETTER TO BE ADDRESSED TO BORROWERS FOR REPHASEMENT OF OVERDUE LOANS

CANARA BANK
(a Government of India Undertaking)
(H.O : BANGALORE)
……………………………. Branch Date:- ………………..

TO:
SRI. / SMT.________________________________
_________________________________________
__________________________________________

Dear Sir,

SUB: YOUR LIABILITY UNDER LOAN A/C NO:……………………. WITH US.

------------------------
Please refer to the loan papers executed by you in respect of the limits referred to in the
subject. The liability in the above said account as on________ is Rs. ……………………

We propose to restructure your agricultural loan on account of natural calamities/ pest/

disease/ illness, etc. We hereby permit you to repay as follows:

You shall in the meantime pay interest @ ________% per annum or any other rate of interest
to be stipulated from time to time in terms of the loan papers already obtained. The other
terms and conditions of the loan shall remain unaffected in so far as rights of the Bank and
the obligations of you are concerned.

Please note that if no objection is raised by you regarding the restructuring of your
agricultural loan within a period 15 days from the date of receipt of this letter, it shall be
deemed by the Bank that you have given your free consent to us for having restructured the
loan as above.

Yours faithfully,

SENIOR MANAGER/ MANAGER

594
 ANNEXURE – 62

LIST OF HEAD OFFICE CIRCULARS ISSUED FROM 1.6.2007 TILL 31.12.2013 WHEREIN POLICY
CHANGES/MODIFICAITONS ARE ADVISED:

Sl. CIRCULAR DATE OF SUBJECT

No NUMBER ISSUE
1 210/2007 04/08/2007 Scheme for Financing Joint Liability Groups (JLGs) of
Tenant Farmers and Oral lessees.
2 254/2007 14/09/2007 Approved list of Tractors, Power tillers and combine
Harvestors.
3 256/2007 18/09/2007 a) Obtention of No due certificates for agricultural
loans - obtention of Self declaration on dues with
other institutions for Agricultural Loans
b) Financing landless laborers, share croppers and
oral lessees -acceptance of certificate of local
administration/Panchayat Raj institutions.
4 38/2008 12/02/2008 Approved list of Tractors, Power tillers and combine
Harvestors.
5 100/2008 19/04/2008 Differential Rate of Interest (DRI) Scheme – Revised
guideliens.
6 147/2008 20/06/2008 Debt Swapping –Modification in the Schemes for
i) Redemption of debts of farmers from Non-
Institutional sources
ii) Prepayment of debts of Urban poor from Non-
Institutional sources.
7 146/2008 27/06/2008 Krishi Mitra Card Scheme-Modifications.
8 252/2008 08/09/2008 Reiteration of simplification of procedure of extending
agriculture loans
9 363/2008 29/12/2008 Farm Machinery finance – Revised guidelines.
10 369/2008 31/12/2008 Closure/Withdrawal of Schemes under agriculture credit
– ALOD, FBS, SPAC, OCC for horticultural nurseries,
FGCS, ALDPN and Canproduce Scheme under MOU with
M/s NCMSL.
11 93/2009 18/03/2009 Classification of loan accounts under agriculture – Loans
to farmers for purchase of vehicles and loans for
construction of farm houses.
12 177/2009 23/05/2009 Waiver of Insurance for fish crops and bund structure
for Inland fisheries projects-In respect of Working
capital limits
13 255/2010 23/07/2010 Revised margin and Security norms for agricultural loans

595
Sl. CIRCULAR DATE OF SUBJECT
No NUMBER ISSUE
14 261/2009 01/08/2009 Approved list of Tractors, Power tillers and combine
Harvestors.
15 266/2009 08/08/2009 Financing new farmers- Reporting
16 426/2009 07/12/2009 Approved list of Tractors, Power tillers and combine
Harvestors.
17 91/2010 10/03/2010 Approved list of Tractors, Power tillers and combine
Harvestors.
18 167/2010 12/05/2010 Approved list of Tractors, Power tillers and combine
Harvestors.
19 189/2010 27/05/2010 Canara Kisan OD Scheme - Modifications
20 249/2010 20/07/2010 National Fisheries Development Board (NFDB) - Subsidy
Schemes for Fisheries Development.
21 260/2010 27/07/2010 CISS for Construction/Renovation/Expansion of Rural
Godown – Revised guidelines of GOI.
22 401/2010 02/12/2010 Modified National Agricultural Insurance
Scheme(MNAIS)-Implementation
23 427/2010 27/12/2010 Canara Kisan OD Scheme - Modifications
24 43/2011 09/02/2011 Tractor loans and other term loans- Additional
safeguards.
25 90/2011 24/03/2011 Central Sector Scheme for Establishment of Agri-
Clinics & Agri-Business Centres (ACABC) - Revised
Scheme Guidelines
26 145/2011 16/05/2011 Approved list of Tractors, Power tillers and combine
Harvestors.
27 292/2011 30/09/2011 Approved list of Tractors, Power tillers and combine
Harvestors.
28 371/2011 17/12/2011 General Credit Card Scheme (GCC) – extending the
scheme to Rural and Semi Urban Households in the
service area / FI villages –norms under implementing
allotted to urban branches.
29 49/2012 14/02/2012 Crop Insurance Scheme – Implementation.
30 120/2012 25/04/2012 Cash Credit Limits to Self Help Groups( SHGs)
31 202/2012 11/07/2012 SHG-credit linkage-Due diligence of facilitating NGOs
32 232/2012 31/07/2012 Priority Sector Advances- Revision in guidelines.
33 236/2012 02/08/2012 Relief Measures in areas affected by natural
calamities.
34 237/2012 02/08/2012 Revised KCC Scheme –enabled with Debit(RuPay) Cards

596
Sl. CIRCULAR DATE OF SUBJECT
No NUMBER ISSUE
35 266/2012 05/09/2012 Revised KCC Scheme –enabled with Kisan Debit(RuPay)
Cards - Revision in certain guidelines and Reiteration
on coverage
36 280/2012 11/09/2012 Crop Insurance Schemes –Reiteration of Mandatory
coverage.
37 296/2012 21/09/2012 Approved list of Tractors, Power tillers and combine
Harvestors.
38 309/2012 03/10/2012 Interest subvention for short term Crop production loans
to farmers & loans against Negotiable Warehouse
receipts to KCCS borrowers(Small & Marginal farmers)
–Continuation of the Scheme 2012-13.
39 354/2012 10/11/2012 Priority Sector Advances- Modification & Additions in
guidelines
40 8/2013 09/01/2013 Approved list of Tractors, Power tillers and combine
Harvestors.
41 50/2013 07/02/2013 Cash Credit Limits to Self Help Groups( SHGs)
42 169/2013 10/04/2013 Modification in existing Agriculture loan Schemes-
Scheme for financing farmers for purchase of lands for
agricultural purposes. Estate Purchase Loans (Non-
Priority)
43 206/2013 07/05/2013 Micro Finance: Comprehensive policy Guidelines
44 208/2013 08/05/2013 Priority Sector Advances- Modification in guidelines
45 212/2013 10/05/2013 Crop Insurance Scheme – Continuation during Kharif
2013.
46 232/2013 31/07/2012 Priority Sector Advances – revision in guidelines
47 239/2013 03/08/2013 Priority Sector Classification - Need to ensure Priority
Sector classification as per extant guidelines-
Introduction of BO Report 280111.
48 263/2013 10/06/2013 Produce Loans to farmers Different models of lending
to farmers-Agriculture produce loans/Warehouse
receipt financing.
49 265/2013 11/06/2013 CISS for Construction/Renovation/Expansion of Rural
Godown – Multiple godown at the same Survey
numbers.
50 266/2013 11/06/2013 Central Sector Scheme for Establishment of Agri-
Clinics & Agri Business Centres (ACABC) by Agriculture
graduates – List of pending cases available in the website
www.agriclinicsnet.com.

597
Sl. CIRCULAR DATE OF SUBJECT
No NUMBER ISSUE
51 276/2013 15/06/2013 Kisan RuPay debit cards to KCCS loans-Joint borrowers
52 337/2013 11/07/2013 Service charges on Credit related transactions-
commission and other charges – Revision.
53 349/2013 24/07/2013 Approved list of Tractors, Power tillers and combine
Harvestors.
54 366/2013 06/08/2013 Kisan RuPay Debit cards to KCCS loans – Linking and
Delivery of Cards.
55 379/2013 12/08/2013 Relief Measures in areas affected by Natural
Calamities.
56 388/2013 14/08/2013 Priority Sector Lending- Targets and classification of
Bank loans to MFIs for onlending- Amendment in
income generation criteria
57 407/2013 22/08/2012 Revision in Rate of Interest (Base Rate) on Loans and
Advances to Agriculture and SHGs- Rating norm for
agriculture and SHG.
58 437/2013 30/08/2013 Security norms for agricultural loans –
(i) Modification in respect of revised KCC Scheme.
(ii) Rationalization of norms on loans involving back
ended subsidy.
59 468/2013 12/09/2013 Revision of Rate of Interest (Base Rate) on Loans and
Advances to Agriculture and SHG’s- CBS related issues.
60 469/2013 12/09/2013 Master Policy on Credit Risk Management – Domestic &
Branches overseas.
61 488/2013 19.9.2013 Interest Subvention for short term crop production loans
to farmers for half year Sept. 2013.
62 542/2013 23/10/2013 Mandatory Up gradation of fields in BAM83/BA020 /
CIM09
63 543/2013 23/10/2013 Solar pumpset for irrigation – New Agriculture Credit
Product.
64 544/2013 23/10/2013 Kisan all-purpose term loan – New Agriculture Credit
Product.
65 617/2013 2/12/2013 Interest Subvention Scheme on Short Term Crop Loans –
reiteration of guidelines on monitoring of end use of
Crop Loans.

598
 ANNEXURE – 63

LIST OF APPLICATION / APPRAISAL / DOCUMENTATION FORMS

NF 417 Application cum appraisal report for crop loans

NF 418 Renewal application cum appraisal report for crop loan
NF 419 Produce Loan
NF 422 Application cum appraisal report for mechanized fishing vessel finance.
NF 469 Application cum credit report for loans under DRI scheme.
NF 497 Request for loan on the security of gold jewellery
NF 499 Common application for AL short term/term loan
NF 500 Lien Notice to Central/State Warehousing Corporation
NF 507 Purchase of bullock & cart
NF 509 Purchase of milch cattle & other livestock (other than poultry)
NF 513 Poultry loan
NF 515 Tractor/Power tiller/Farm machinery
NF 517 Gobal gas plant
NF 519 Horticulture/Plantation
NF 521 Consumption purpose/Farmer Benefit Scheme
NF 522 Renewal application for AL loans.
NF 529 Application cum appraisal report for inland fisheries
NF 536 Application for finance under ALDPN scheme
NF 546 Specimen signature cards for Borrowal Account.
NF 589 Report on guarantor/co-obligant
NF 726 Application cum letter of undertaking for grant of assistance under FGCS
NF 767 Application cum appraisal report for Sericultural loans
NF 802 Link letter in respect of enhancement.
NF 803 Letter evidencing execution of documents.
NF 862 Application cum appraisal/sanction for ALLHVs under Agriculture.
NF 878 Comprehensive application cum appraisal report for minor irrigation/ farm
development/land development activities.
NF 910 Application cum appraisal report for Kisan Credit Card
NF 951 Application to be submitted by SHG while applying for loan assistance.
NF 952 Articles of agreement for financing Self Help Groups.
NF 953 Sponsorship letter from NGO / SHPI
NF 974 Simplified Annual Review Format under KCCS
NF 983 Simplified application cum appraisal form for all direct agriculture loans upto
Rs.2 lacs
NF 984 Application cum sanction for renewal and/ or enhancement under Kisan OD.
599
NF 986 Simplified application cum appraisal form for all direct agriculture loans above
Rs.2 lacs upto Rs.10 lacs
NF 987 Simplified application cum appraisal form for all Agricultural Loans upto
Rs.50000/- for individuals.

APPRAISAL REPORTS

NF 508 Purchase of Bullock & Cart

NF 510 Purchase of Milch cattle & other livestock (other than Poultry)
NF 514 Poultry loan
NF 516 Tractor/power tiller/farm machinery
NF 518 Biogas plant loan
NF 520 Horticulture/plantation
NF 634 Appraisal/sanction report for investment loans upto Rs.10000/-
NF 975 Kisan Credit Card Annual review format.

DOCUMENTS

NF 373 Particulars of livestock, vehicles, machinery & equipments.

NF 430 Produce Loan Agreement
NF 443 Boat loan agreement
NF 459 Memorandum of agreement for agricultural loan
NF 480 Pronote
NF 481 Pronote & take delivery letter
NF 494 Letter of undertaking/declartion/acknowledgement for AL loans.
NF 725 Receipt to be obtained against withdrawal under FGCS
NF 855 Agreement cum deed of hypothecation
NF 909 Agreement cum hypothecation deed for Kisan Credit Card
NF 950 Inter-se Agreement to be executed by the members of Self Help Groups.
NF 963 Simplified hypothecation agreement for agricultural loans (for parties having an
aggregate limit of Rs. 2 lacs)
NF 985 Agreement and deed for Kisan OD

OTHER FORMS

NF 367 Gold loan tickets

NF 368 Letter of request for waiving insurance for goods pledged.
NF 370 Guarantee letter
NF 371 Guarantee covering letter
NF 385 Loan account pass cards
NF 387 Gold loan final notice

600
NF 482 Certificate of loan papers obtained
NF 544 Letter to lawyer requesting him to issue legal notice
NF 575 Loan instalment/interest notice I
NF 576 Loan instalment/interest notice II
NF 577 Loan instalment/interest notice III
NF 594 Inspection report for loans connected to allied activities
NF 595 Inspection report for loans connected to land based activities
NF 606 Particulars of irregular accounts upto Rs.25000/-
NF 607 Particulars of irregular account above Rs.25000/-
NF 756 Report on issuance of legal notice
NF 760 Acknowledgement of debt/security by borrowers/co-obligant
NF 761 Acknowledgement of debt & security by legal heirs of borrowers/ legal heirs of
co-obligants.

601
 ANNEXURE - 64

LIST OF ABBREVIATIONS USED IN AGRICULTURAL FINANCE SCHEMES / CORRESPONDENCE

ABS : Audited Balance Sheet

ADB : Asian Development Bank
AEO : Agricultural Extension Officer
ALDPN : DPN loan granted under Agriculture
ALDRI : DRI loan granted under Agriculture
APEDA : Agricultural Processed Foods Export Development Authority
APMC : Agricultural Produce Marketing Committee
AAP : Annual Action Plan
APP : Agricultural Production Programme
ARCS : Assistant Registrar of Co-operative Societies
ASCC : Asset Sub-Classification Code.
BAIF : Bharathiya Agro Industries Foundation
BDO : Block Development Officer
BIS : Bureau of Indian Standards
BLBC : Block Level Bankers Committee
CAB : College of Agricultural Banking
CADA : Command Area Development Authority
CALCOB : Committee on Agricultural loans through Commercial Banks
CB : Commercial Bank
CB COW : Cross Breed Cow
CCB : Central Co-operative Bank
CCRI : Central Coffee Research Institute
CDL : Coffee Development Loan
CFTRI : Central Food Technology Research Institute
CHL : Coffee Hypothecation Loan
CIMAP : Central Institute of Medicinal & Aromatic Plants
CMS : Credit Monitoring Statement
CPCRI : Central Plantation Crops Research Institute
CRC : Coffee Registration Certificate
CSB : Central Silk Board
DCB : Demand Collection & Balance
DCC : District Consultative Committee
DCCB : District Central Co-operative Bank
DCP : District Credit Plan
DGFT : Director General of Foreign Trade
DIC : District Industries Centre

602
DICGC : Deposit Insurance & Credit Guarantee Corporation
DLRC : District Level Review Committee
DLRM : District Level Review Meeting
DOC : Day Old Chicks
DPAP : Drought Prone Area Programme
DRDA : District Rural Development Agency
DSCR : Debt Service Coverage Ratio
EC : Encumbrance Certificate
ED : Executive Director
EOU : Export Oriented Units
EPL : Estate Purchase Loan
FBS : Farmer Benefit Scheme
FCI : Food Corporation of India
FGCS : Farmers Green Card Scheme
FIPB : Foreign Investment Promotion Board
FSCS : Farmers Service Co-operative Society
FYM : Farm Yard Manure
GCCS : General Credit Card Scheme
GL : Gold Loan
HCV : Heavy Commercial vehicle
HP : Horse Power
IARI : Indian Agricultural Research Institute
ICAR : Indian Council of Agricultural Research
ICICI : Industrial Credit & Investment Corporation of India
ICRISAT : International Crop Research Institute for Semi-Arid Tropics
IDA : International Development Agency
IDBI : Industrial Development Bank of India
IIHR : Indian Institute of Horticultural Research
IRAC : Income Recognition and Asset Classification
IRR : Internal Rate of Return
ISB : Industries, Service & Business
LSR : Legal Scrutiny Report
JLGs : Joint Liability Groups
KACOMP ACT : Karnataka Agricultural Credit Operations & Miscellaneous Provision Act
KCCS : Kisan Credit Card Scheme
KMCCS : Krishi Mitra Credit Card Scheme
KVIC : Khadi, Village & Industries Commission
LAMPS : Large Sized Adivasi Multi Purpose Society
LBO : Lead Bank Officer
LDB : Land Development Bank

603
LDM : Lead District Manager
LDO : Lead District Officer
MAPP : Massive Agricultural Production Programme
MCV : Medium Commercial Vehicle
MCG : Micro Credit Group
MF/AL : Marginal Farmer / Agricultural Labourer
MFI : Micro Credit Institution
MFO : Micro Finance Organisation
ML : Mortgage Loan
MMD : Mercantile Marine Department
MNES : Ministry of Non-Conventional Energy Sources
MPBF : Maximum Permissible Bank Finance
MPCS : Milk Producers Co-operative Society
MPEDA : Marine Products Exports Development Authority
MS ACT : Merchant Shipping Act
MSOD : Monthly Statistical Operation Data
MTR : Mid Term Review
NABARD : National Bank for Agriculture & Rural Development
NCMSL : National Collateral Management Services
NDRI : National Dairy Research Institute
NGO : Non Governmental Organization
NBHC : National Bulk Handling Corporation Ltd.,
NIO : National Institute of Oceanography
NIRD : National Institute of Rural Development
NPBD : National Project for Bio-gas Development
NPBW DAY : Non-Public Business Working Day
NPK : Nitrogen, Phosphorous & Potassium
NPW : Net Present Worth
NRT : Net Registered Tonnage
NFDB : National Fisheries Development Board
NWR : Negotiable Warehouse Receipt
OD : Over Draft
PACS : Primary Agricultural Credit Societies
SHG : Self Help Group
SHPI : Self Help Promoting Institution
VA : Voluntary Association
WDRA : Warehousing Development and Regulatory Authority

604
 ANNEXURE - 65

AGRI LOAN PRODUCTS - BAM 83 FIELDS

PRODUCT NAME OF SECTOR SCHEME BSR CODE

CODE THE PRODUCT
783 LOAN FOR 33000 DIRECT 75500 FARM 1159 OTHER DIRECT
FARM HOUSE AGRICULTURE DEVELOPMENT FIN TO AGRI
784 AL DIR 33000 DIRECT 61900 DIR BRANCH TO CHOOSE
AGRICULTURE RELEVANT BSR CODE
785 CONS OF COLD 34000 INDIRECT 80200 LOAN TO BRANCH TO CHOOSE
STORAGE AGRICULTURE COLD STORAGE/ RELEVANT BSR CODE
RURAL GODOWN
790 LOAN FOR RURAL 34000 INDIRECT 80200 LOAN TO BRANCH TO CHOOSE
GODOWN AGRICULTURE COLD STORAGE/ RELEVANT BSR CODE
RURAL GODOWN
791 SETTING AGRICLINIC/ 34000 INDIRECT 77800 AGRIBUS/ 1182 INDIRECT AGR
BUSSINESS AGRICULTURE AGRI CLINIC
792 ESTATE PURCHASE 33000 DIRECT 77300 ESTATE 1159 OTHER DIRECT
LOAN AGRICULTURE PURCHASE LOAN FIN TO AGRI
793 AL VSL 33000 DIRECT 60700 VALUABLE 1159OTHER DIRECT
AGRICULTURE SECURITY FIN TO AGRI
795 DAIRY LOANS 33000 DIRECT 76000 DAIRY 1159 OTHER DIRECT
AGRICULTURE LOAN FIN TO AGRI
796 POULTRY / DUCK 33000 DIRECT 76200 POULTRY/ 1203 POULTRY
REARING AGRICULTURE DUCK REARING
797 FISHERIES MARINE / 33000 DIRECT 76500 FISH- 1159OTHER DIRECT
DEEP SEA AGRICULTURE MARINE FIN TO AGRI
798 KISAN SUVIDHA - 33000 DIRECT 63600 KISAN BRANCH TO CHOOSE
AGRICULTURE SUVIDHA RELEVANT BSR CODE
799 ALLHV 33000 DIRECT 77900 ALLHV 1152 FARM MACH
AGRICULTURE
800 AGRI-GOVT. 33000 DIRECT TO BE UPDATED 1159 OTHER DIRECT
SPONSORED SCHEME AGRICULTURE AT BRANCH LEVEL FIN TO AGRI
801 AGRI-SHG- MONTHLY 33000 DIRECT TO BE UPDATED AT BRANCH TO CHOOSE
INSTALMENTS AGRICULTURE BRANCH LEVEL RELEVANT BSR CODE
812 JLG OF TENANT 33000 DIRECT 75100 CROP BRANCH TO CHOOSE
FARMERS AGRICULTURE LOAN RELEVANT BSR CODE
817 LOANS THROUGH 34000 INDIRECT 80500LOANS BRANCH TO CHOOSE
PACS/FSS/LAMPS AGRICULTURE THROUGH PACS/ RELEVANT BSR CODE
FSS/LAMPS

605
PRODUCT NAME OF SECTOR SCHEME BSR CODE
CODE THE PRODUCT
819 SPECIAL COFFEE 33000 DIRECT 78100 OTHER BRANCH TO CHOOSE
TERM LOAN SCTL AGRICULTURE DIRECT LOAN TO RELEVANT BSR CODE
AGRICULTURE
838 TERM LOAN AGAINST 33000 DIRECT TO BE UPDATED BRANCH TO CHOOSE
GOLD ORNAMENTS AGRICULTURE AT BRANCH RELEVANT BSR CODE
LEVEL
839 KISAN ALL PURPOSE 33000 DIRECT TO BE UPDATED BRANCH TO CHOOSE
TERM LOAN AGRICULTURE AT BRANCH RELEVANT BSR CODE
LEVEL
840 KISAN CREDIT CARD 33000 DIRECT 77700 KISAN BRANCH TO CHOOSE
SCHEME AGRICULTURE CREDIT CARD RELEVANT BSR CODE
841 KISAN SUVIDHA 33000 DIRECT 63600 KISAN BRANCH TO CHOOSE
AGRICULTURE SUVIDHA RELEVANT BSR CODE
842 AL GOLD LOAN 33000 DIRECT 61000 GOLD BRANCH TO CHOOSE
AGRICULTURE LOANS RELEVANT BSR CODE
844 PRODUCE LOAN 33000 DIRECT 75300 PRODUCE BRANCH TO CHOOSE
AGRICULTURE LOAN RELEVANT BSR CODE
845 CROP LOANS 33000 DIRECT 75100 CROP BRANCH TO CHOOSE
AGRICULTURE LOAN RELEVANT BSR CODE
846 SCHEME FOR DEBT 33000 DIRECT 78100 OTHER 1159 OTHER DIRECT
REDEMPTION OF AGRICULTURE DIRECT LOAN TO FIN TO AGRI
FARMERS AGRICULTURE
847 CONVERTED CROP 33000 DIRECT 75100 CROP BRANCH TO CHOOSE
LOAN AGRICULTURE LOAN RELEVANT BSR CODE
851 AGRI SHG 33000 DIRECT TO BE UPDATED BRANCH TO CHOOSE
AGRICULTURE AT BRANCH LEVEL RELEVANT BSR CODE
855 PUMPSET/DRIP / 33000 DIRECT 75800 MINOR 1154 FARM
SPRINKLER LOANS AGRICULTURE IRRIGATION IRRIGATION
856 FARM MACHINERY 33000 DIRECT 75900 FARM 1151 FARM
LOAN AGRICULTURE MACHANISATION MACHANISATION
857 AL LHV 33000 DIRECT 77900 ALLHV 1152 FARM MACH
AGRICULTURE
858 KISAN TATKAL 33000 DIRECT 63800 KISAN 1159 OTHER DIRECT
AGRICULTURE TATKAL FIN TO AGRI
859 KISAN SUVIDHA- 33000 DIRECT 63600 KISAN 1159 OTHER DIRECT
Sub limit II AGRICULTURE SUVIDHA FIN TO AGRI
860 DAIRY LOAN 33000 DIRECT 76000 DAIRY 1201 DAIRY
AGRICULTURE LOAN

606
PRODUCT NAME OF SECTOR SCHEME BSR CODE
CODE THE PRODUCT
861 SHEEP REARING 33000 DIRECT 76100 SHEEP 1202 SHEEP/GOAT
AGRICULTURE REARING
862 POULTRY/DUCK 33000 DIRECT 76200 POULTRY/ 1203 POULTRY
REARING LOAN AGRICULTURE DUCK REARING
863 BULLOCK CART - 33000 DIRECT 78100 OTHER 1151 FARM MACHI/
CAMEL LOAN AGRICULTURE DIRECT LOAN TO IMPLEMENTS
AGRICULTURE
864 PIGGERY LOAN 33000 DIRECT 76300 1209 REARING OF PIG
AGRICULTURE PIGGERY
865 APICULTURE 33000 DIRECT 76400 API- 1159 OTHER DIRECT
AGRICULTURE CULTURE FIN TO AGRI
866 SERICULTURE 33000 DIRECT 76800 SERI- 1209 REARING OF
AGRICULTURE CULTURE PIG/RABBIT/SILK
WORM
867 FISHERIES LOAN - 33000 DIRECT 76600 FISHERY 1159 OTHER DIRECT
INLAND AGRICULTURE LOAN INLAND FIN TO AGRI
868 FISHERIES LOAN - 33000 DIRECT 76500 FISH- 1159 OTHER DIRECT
MARINE/DEEP SEA AGRICULTURE MARINE FIN TO AGRI
874 BIO-GAS PLANT LOAN 33000 DIRECT 77100 BIO GAS 1159 OTHER DIRECT
AGRICULTURE PLANT FIN TO AGRI
875 SETTING AGRI CLINICS 34000 INDIRECT 77800 AGRIBUS/ 1182 INDIRECT AGR
/BUSINESS CENTRES AGRICULTURE AGRI CLINIC
876 KRISHI MITRA CREDIT 33000 DIRECT 64000 TENANT 1159 OTHER DIRECT
CARD SCHEME AGRICULTURE FARMERS/ORAL FIN TO AGRI
LESSEE
881 MINOR IRRIGATION 33000 DIRECT 75800 MINOR 1154 FARM
AGRICULTURE IRRIGATION IRRIGATION
882 HORTICULTURE 33000 DIRECT 75600 PLANTA- BRANCH TO CHOOSE
PLANTATION LOAN AGRICULTURE TION RELEVANT BSR CODE
DEVELOPMENT
883 FARM DEVELOPMENT 33000 DIRECT 75500 FARM 1153 SOIL/FARM/
LOAN AGRICULTURE DEVELOPMENT LAND DEVELOPMENT
884 FARM FORESTRY LOAN 33000 DIRECT 78100 OTHER BRANCH TO CHOOSE
AGRICULTURE DIRECT LOAN TO RELEVANT BSR CODE
AGRICULTURE
885 CONSTRUCTION OF 33000 DIRECT 75500 FARM 1159 OTHER DIRECT
FARM HOUSE AGRICULTURE DEVELOPMENT FIN TO AGRI

607
PRODUCT NAME OF SECTOR SCHEME BSR CODE
CODE THE PRODUCT
886 CONSTRUCTION OF TO BE UPDATED 80200 LOAN TO BRANCH TO CHOOSE
COLD STORAGE AT BRANCH LEVEL COLD STORAGE/ RELEVANT BSR CODE
RURAL GODOWN
887 LOAN FOR RURAL TO BE UPDATED AT 80200 LOAN TO BRANCH TO CHOOSE
GODOWN BRANCH LEVEL COLD STORAGE/ RELEVANT BSR CODE
RURAL GODOWN
888 LOAN FOR PURCHASE 33000 DIRECT 77000 SCH TO 1159 OTHER DIRECT
OF AGRICULTURAL AGRICULTURE PURC TO AGR FIN TO AGRI
LANDS LAND
891 AGRICULTURE TERM 33000 DIRECT 78100 OTHER 1159 OTHER DIRECT
LOAN AGRICULTURE DIRECT LOAN TO FIN TO AGRI
AGRICULTURE
893 AGRI-GOVT 33000 DIRECT TO BE UPDATED 1159 OTHER DIRECT
SPONSORED SCHEMES AGRICULTURE AT BRANCH LEVEL FIN TO AGRI
895 KISAN CREDIT CARD 33000 DIRECT 77700 KISAN BRANCH TO CHOOSE
SCHEME-LONG AGRICULTURE CREDIT CARD RELEVANT BSR CODE
DURATION
896 KISAN SUVIDHA SUB- 33000 DIRECT 63600 KISAN BRANCH TO CHOOSE
LIMIT 1- LONG AGRICULTURE SUVIDHA RELEVANT BSR CODE
DURATION
897 CANARA KISAN OD 33000 DIRECT 63700 KISAN OD BRANCH TO CHOOSE
AGRICULTURE RELEVANT BSR CODE
898 GENERAL CREDIT 33000 DIRECT 63900 GENERAL BRANCH TO CHOOSE
CARD SCHEME AGRICULTURE CREDIT CARD RELEVANT BSR CODE
899 KRISHI MITRA CARD 33000 DIRECT 64000 TENANT 1159 OTHER DIRECT
SCHEME REVOLVING AGRICULTURE FARMERS/ORAL FIN TO AGRI
LESSEE
900 COLD STORAGE - 33000 DIRECT TO BE UPDATED BRANCH TO CHOOSE
RUNNING LIMIT AGRICULTURE AT BRANCH LEVEL RELEVANT BSR CODE

608
OTHER BAM 83 FIELDS FOR AGRICULTURAL LOANS:

Field Code
RBIPURP NOT APPLICABLE
BASELII 18000- OTHER REGULATORY RETAIL EXPOS
GUA COVER 100000106- NOT APPLICABLE
SSISUBSEC NOT APPLICABLE
STATUSIB 100000122-NORMAL
PRI/NPRI PRIORITY*
SPL-BENEF NOT APPLICABLE

* Note: Estate Purchase Loans are non-priority loans.

BSR CODES - AGRICULTURAL LOANS

1101 GROWING CEREALS

1102 GROWING PULSES
1103 GROWING OIL SEEDS
1104 GROWING SUGAR CANE/SUGAR BEET
1105 GROWING COTTON
1106 GROWING JUTE/FIBRE PLTS
1107 GROWING TOBACCO
1108 GROWING VEGETABLES
1109 GROWING FLOWERS
1111 GROWING MEDICAL PLANTS
1119 GROWING OTHER CROPS
1121 GROWING TEA / MATE LEAVES
1122 GROW OF TEA/MATE LEAVES
1123 GROWING COFFEE / COCOA BEANS
1124 GROWING RUBBER TREES
1125 GROWING FRUIT CROPS
1126 GROWING COCONUTS/EDIBLE NUTS
1127 GROWING SPICE CROPS
1129 GROWING OTHER PLANTATION CROPS
1151 FARM MACHINERY/IMPLEMENTS
1152 FARM VEHICLES /ACCESSORIES
1153 SOIL/FARM/LAND DEVELOPMENT
1154 FARM IRRIGATION/DUG/BORE/PUMP
1155 PUMPHOUSE/ANIMAL SHED
1156 STORE/MARKE AGRI PROD
1157 HARVESTING/RELATING ACTIVITIES

609
1159 OTHER DIRECT FINANCE TO AGRI
1181 STORAGE AND MARKET YARDS -LOAN
1182 INDIRECT FINANCE TO AGRI
1201 DAIRYING
1202 GOAT REARING
1203 POULTRY
1204 RAISING OF SILK WORMS-COCOONS
1209 REARING PIG-RABBIT-BEE KEEPING
1301 MIXED FARMING
1402 BIO TECHNOLOGY/TISSUE CULTURE
1409 AGRI. SERVICE UNITS
2001 FORESTRY/LOGGING/RELATED SERVI
5001 AQUACULTURE/FISHING
40105 SOLAR/ NON CONVEN ENERGY
51403 FERTILIZERS-PESTICIDES
51501 AGRI MACHINERY-EQUIPMENT
52301 RT SALE FERTI-PESTI
52302 RT SALE SEEDS
52303 RT SALE AGRI MACHINERY
63001 WAREHOUSING/STORAGE
63002 COLD STORAGE
65103 RRB - FOR AGR & ALLIED ACTIVI
65104 RRB - FOR OTHER PURPOSES
65901 PRIMARY AG CREDIT SOCITS(PACS
65902 FARMER SERVI SOCI. LAMPS(FSS)
65903 STATE CO-OPERATIVE BANKS
65904 STATE COOP AG& RURAL DEV BANK
65905 PRI CO-OP AG & RURAL DEV BANK
65906 DISTRICT CENTRAL CO OP BANK
65909 CO-OP MARKETING/PRODUCERS
65910 OTHER CO OP CREDIT INSTITUTU
65921 NBFC-FOR AGR & ALLIED ACTIVIT
65931 AGRICULTURE FINANCE CORP
65939 OTHER FIN INTERMEDIATION
67101 AGRO INDUSTRIES CORPNS
67201 ACTIVITIES OF SHG/MFI

610
LIST OF WEAKER SECTION CODES FOR CLASSIFICATION OF LOANS

SL. PARAMETERS /LOAN PRODUCTS WEAKER SECTION

NO. SECTOR CODES
1 SMALL FARMERS 100000022
2 MARGINAL FARMERS 100000023
3 LANDLESS LABOURERS 100000024
4 TENANT FARMERS 100000025
5 SHARE CROPPERS 100000026
6 ARTISANS-VILLAGE & COTTAGE INDUSTRIES 100000027
7 IRDP BENEFICIARIES 100000028
8 SCHEDULED CASTE 100000029
9 SCHEDULED TRIBE 100000030
10 BENEFICIARIES UNDER DRI 100000031
11 BENEFICIARIES UNDER SLRS/SLRM 100000033
12 BENEFICARIES UNDER SJSRY 100000034
13 BENEFICIARIES UNDER SGSY 100000035
14 NONE 100000036

611
 SHEET FOR NOTING ADDITIONS / AMENDMENTS

CIRCULAR ADDITIONS / AMENDMENTS

612
 SHEET FOR NOTING ADDITIONS / AMENDMENTS

CIRCULAR ADDITIONS / AMENDMENTS

613
 SHEET FOR NOTING ADDITIONS / AMENDMENTS

CIRCULAR ADDITIONS / AMENDMENTS

614
 SHEET FOR NOTING ADDITIONS / AMENDMENTS

CIRCULAR ADDITIONS / AMENDMENTS

615
 SHEET FOR NOTING ADDITIONS / AMENDMENTS

CIRCULAR ADDITIONS / AMENDMENTS

616