BCC/BR/104/313 Date:30.08.

2012

CIRCULAR TO ALL THE BRANCHES/OFFICES IN INDIA

ISSUED BY RURAL & AGRI BANKING DEPARTMENT

SUB FILE ADV-1

Re:Modification in the Agriculture Finance Scheme No VII “Financing

construction of farm buildings and structures” for covering construction
of farm house cum dwelling unit under the scheme.

Our Bank is having various schemes for meeting the diverse credit needs of
farmers, from expenses of crop cultivation to various farm investment needs as
well as personal/consumption needs. We have been receiving feed back from the
operating units that there is no specific scheme for construction of farm House cum
dwelling unit on the farm for the farmers. The farming community has to reside on
their own farms owing to the need for continuous and close supervision of the farm
operations as they deal with the live assets like plants and livestock, requiring
round the clock vigil. This also helps in minimizing their costs and time on
transportation and commutation from the nearby town.

Besides serving as dwelling unit, the farm house can also be used for storage of
farm produce during harvesting season and for sorting, grading of the produce
before sending it to the market as separate structures for each of these activities
are not feasible and viable on the farm land as it will result in wastage of the
productive land area.

Owing to the above need of the farming community, it has been decided to modify
our existing scheme AFD Scheme No VII, to include the loans granted to farmers
for construction of farm house cum dwelling unit, in addition to the existing
activities i.e. construction of various farm structures like bullock shed, implement-
shed, tractor and truck shed, farm store, godowns and farm silos, dutch barn,
water trough for farm animals etc. on their Agricultural land.

The farm house constructed on the farm, along with the other structures as stated
above, is thus a necessity and will serve as a utility house for farmer’s residence
as well for his other farming related activities. This will also help to meet the
housing requirement of farmers.

Even though the farmers can avail the loan for construction of house under the
general housing loan scheme, there are no specific provision in the scheme for
construction of house on the farm. Further it is difficult to produce income evidence
acceptable to the Bank as there are no IT returns filed by the farmers and also the

म  
   ,   , 6    - ,  ि "# $%&', "  ( 400 051, -.
Rural & Agri Banking Department, Baroda Sun Tower, 6th floor,G-Block, Bandra Kurla Complex, Mumbai 400 051, India.
/0 / Ph : 91 22 67592581 /2' / Fax :91 22 67592565 ( & / E Mail :ps.bcc@bankofbaroda.com

& / Web : www.bankofbaroda.com

Government officials are issuing the income certificates based on traditional
farming models.

The modified Agriculture Finance Scheme No.VII will overcome these difficulties
and will help the branches to meet the requirement of farmers and also increase
our Direct Agricultural lending.

All the branches/Regions should take efforts to give vide publicity to the scheme to
create awareness amongst the farmers so as to ensure that maximum number of
farmers avail loans under the scheme.

The details of the scheme are attached in the annexure.

(04 56)
56) (Mohar Singh)
4ू 9 / General Manager
(म :
  ;) (Rural & Agri Banking).

म  
   ,   , 6    - ,  ि "# $%&', "  ( 400 051, -.
Rural & Agri Banking Department, Baroda Sun Tower, 6th floor,G-Block, Bandra Kurla Complex, Mumbai 400 051, India.
/0 / Ph : 91 22 67592581 /2' / Fax :91 22 67592565 ( & / E Mail :ps.bcc@bankofbaroda.com

& / Web : www.bankofbaroda.com

 Annexure to circular No.BCC/BR/104/313 dated 30.08.2012.

Modified Agriculture Finance Scheme No VII “FINANCING CONSTRUCTION OF

FARM BUILDINGS AND STRUCTURES” covering construction of farm house cum
dwelling unit under the scheme.

Sr. Parameter Existing Proposed norms

No
1 Type of Facility Term Loan
2 Purpose For construction of
“farm structures viz;
bullock shed,
implement shed,
tractor and truck shed,
farm store, godowns
and farm silos, dutch
barn, water trough for
farm animals,
threshing yard, “gur”
making shed and
fencing. Proposal for
specific buildings such
as dairy shed, poultry
shed, pig house, cattle
shed, dairy buildings,
cold storage plants”.
Term Loan
• For construction of “farm structures viz; bullock
shed, implement shed, tractor and truck shed,
farm store, godowns and farm silos, dutch barn,
water trough for farm animals, threshing yard,
“gur” making shed and fencing
• For construction of farm house cum dwelling
unit (with one or more farm structures as
above) on own farm.
• For reimbursement of expenses incurred for
farm house cum dwelling unit constructed
recently from own sources to good clients
selectively, subject to additional terms and
conditions mentioned in the scheme at sr. no.10.

3 Eligibility/ All persons engaged • All persons engaged in cultivation of crops as

Beneficiary in cultivation of crops owners of land or as permanent tenants or as
as owners of land or lease-holders (for a reasonably long period)
as permanent and who have adequate productive utility of
tenants or as lease- proposed construction.
holders (for a
reasonably long • For construction of farmhouse cum
period) and who dwelling unit: All farmers having own land
have adequate having sufficient income to repay the
productive utility of instalments.
proposed
construction.

म  
   ,   , 6    - ,  ि "# $%&', "  ( 400 051, -.
Rural & Agri Banking Department, Baroda Sun Tower, 6th floor,G-Block, Bandra Kurla Complex, Mumbai 400 051, India.
/0 / Ph : 91 22 67592581 /2' / Fax :91 22 67592565 ( & / E Mail :ps.bcc@bankofbaroda.com

& / Web : www.bankofbaroda.com

Sr. Parameter Existing Proposed norms
No
4 Maximum loan No ceiling. Depending up on the cost of project and subject to
Amount assessment as under BKCC as below:
1 Farm 6 times of net annual income
Income
OR
3 times of total annual farm
receipts/value of crops
(anticipated from the farm,
taking into consideration type
of crops, area under
cultivation, etc.)
PLUS
Other 3 times of net anticipated
income annual income/profit from
/incom economic activities/allied
e from activities (existing and
allied proposed to be undertaken)
activiti /salary income if any.
es.
OR
2 75% of value of land mortgaged as
collateral security and 100% of value of
other securities like assignment of LIC
Policy (surrender value), pledge of
KVPs/NSCs/Bank’s TDR/Gold
Ornaments etc.
Whichever is lower amongst 1. Income
and 2. Value of Security
Total investment credit availed should not
exceed the above ceilings
5
Margin 15% 15%(25% for reimbursement)
6 Rate of Interest As applicable to Direct For Farm house cum dwelling unit
Agricultural advances In order to make the product competitive with other
based on the limit Banks, the ROI for farm house cum dwelling unit will
sanctioned. be the same as applicable for housing loan scheme
of our Bank.
Other investment credit limits of the borrower will not
be clubbed for arriving at applicable rate of interest.
For other activities:
As applicable to Direct Agricultural advances based
on the aggregate limit.

म  
   ,   , 6    - ,  ि "# $%&', "  ( 400 051, -.
Rural & Agri Banking Department, Baroda Sun Tower, 6th floor,G-Block, Bandra Kurla Complex, Mumbai 400 051, India.
/0 / Ph : 91 22 67592581 /2' / Fax :91 22 67592565 ( & / E Mail :ps.bcc@bankofbaroda.com

& / Web : www.bankofbaroda.com

Sr. Parameter Existing Proposed norms
No
7 Repayment Maximum -7-Years For Farmhouse cum dwelling unit Maximum
•
15 years.
• For others maximum 7-10 years depending
upon the project undertaken.
• Loan repayment will be synchronized with the
income generation from the farm activities.
• The due dates to be fixed taking in to account
the time taken for receipt of sale proceeds of
the crop.
• The instalments may be fixed on half yearly/
yearly basis based on cropping pattern.
8 Security/ As applicable to • D.P. Note.
Documentation Agricultural advances • General form of Guarantee, if stipulated.
from time to time. • Mortgage of land and house/ Declaration as
per Talwar committee norms as applicable.
• Insurance Comprehensive insurance of the
house with Bank’s clause.
9 Classification Direct Agriculture advance under Agril. Lending
Direct Agriculture scheme No.VII code LAA 407.
10 Other terms & Buildings and • KYC norms to be strictly complied with.
conditions structures • Search report from empanelled advocate to
constructed with be obtained wherever necessary.
Bank finance should • Disbursement to be done in stages after
be adequately verifying the work done and keeping the
insured against fire reports on record.
and SRCC risk with • Security norms will be applicable as
Bank clause. applicable to Direct Agricultural advances.
Plans should be • State specific norms of construction of farm
approved by the cum dwelling units on farm lands to be
competent authority. complied with.
• The farm house cum dwelling unit will
necessarily be for farmers residence which
will also serve as storing/sorting/grading of
farm produce during the harvesting season
and may also comprise of cattle sheds, tractor
sheds etc.
• Insurance of the farm house to be obtained.

Additional conditions for reimbursement of

expenses incurred for farm house
• It should have been constructed / purchased
recently (not prior to 24 months)
• Minimum Margin: 25%
म  
   ,   , 6    - ,  ि "# $%&', "  ( 400 051, -.
Rural & Agri Banking Department, Baroda Sun Tower, 6th floor,G-Block, Bandra Kurla Complex, Mumbai 400 051, India.
/0 / Ph : 91 22 67592581 /2' / Fax :91 22 67592565 ( & / E Mail :ps.bcc@bankofbaroda.com

& / Web : www.bankofbaroda.com

 • Valuation Report to be obtained from
approved valuer of the Bank.
• Branch to satisfy that there are no institutional
/ external borrowings against the house and
the amount already spent on the construction
has come from own sources.
• The construction expenses only to be
considered for reimbursement excluding
margin.
• For takeover of existing Loans availed from
other Banks/FIs by our existing customers
with good track record.

म  
   ,   , 6    - ,  ि "# $%&', "  ( 400 051, -.
Rural & Agri Banking Department, Baroda Sun Tower, 6th floor,G-Block, Bandra Kurla Complex, Mumbai 400 051, India.
/0 / Ph : 91 22 67592581 /2' / Fax :91 22 67592565 ( & / E Mail :ps.bcc@bankofbaroda.com

& / Web : www.bankofbaroda.com