NABARD stands for National Bank for Agricultural and Rural Development. It is one of the preeminent banks in India that aims to provide financial support, credit, and other forms of assistance to all involved in the agricultural, cottage, handicrafts, and other small industries in the rural sector.
In order to promote various developmental activities and enhance the ecosystem in the agro-based industry, the institution has initiated and operates several direct finance schemes. Here is a quick synopsis of some of the most prominent NABARD schemes:
Loans for Food Processing Parks and Units
A special fund of ₹ 2,000 Crores was set up by the Government of India allowing NABARD scheme for enriching India’s food processing industry. Under this direct finance NABARD scheme, term loans are provided at affordable interest rates to Designated Food Parks (DFPs) and food processing units within the DFPs. The scheme offers loans of up to 95% to eligible projects for tenures of up to 7 years.
The scope of this NABARD scheme comprises:
- Construction and development of all necessary infrastructure required by the DFPs
- Infrastructure transformation, modernisation, and upgrading of the DFPs
- Process improvement, automation, increased quality and efficiency, and reduced costs in the processing units of DFPs
- Create employment opportunities in the agri-sector in rural areas
NABARD scheme term loan assistance under this scheme can be availed of by the following:
- State Governments and entities promoted or sponsored by State Governments
- Special Purpose Vehicles (SPVs) and Joint Ventures (JVs)
- Cooperatives
- Farmers’ Producer Organizations
- Corporates and Companies
- Individual Entrepreneurs or Venture Capitalists
Loans To Warehouses And Cold Storage Infrastructure
In a bid to improve the grain storage process and use scientific techniques for enhancing the nutritional content of food products, the Government has sanctioned a corpus of ₹ 5,000 Crores per annum.
The scope of the Warehouse Infrastructure Fund (WIF) includes:
- Boosting the existing agricultural warehousing infrastructure in the country
- Projects working towards the creation and enhancement of storage infrastructure for agriculture-associated products with a minimum total capacity of 5000 metric tons (MT). For Government sponsored projects there is no minimum limit.
- Upgradation of the infrastructure and facilities of the Agricultural Produce Marketing Committee (APMC)
Eligible borrowers for this NABARD scheme include:
- Private and public sector firms involved in the building or enhancement of the agricultural warehousing infrastructure in the country
- Independently operated warehouses and silos meeting the loan eligibility requirements
- Cooperatives, federations, and other Government-sponsored entities
- Farmers’ Producer Organizations
- Corporates and Companies
- Individual Entrepreneurs or Venture Capitalists
Rural Infrastructure Development Fund
With a cumulative allocation in excess of ₹4 Lakh Crores, the Rural Infrastructure Development Fund (RIFD) provides financing for a plethora of agriculture-related activities, with the official list comprising 39 different activities. The financing works on the basis of reimbursement on up to 90% of actual expenses with the provision of offering an advance of 30% to North Eastern & Hilly States and 20% for other states of India. The loan can be rapid within 7 years with a 1-year grace period.
Eligible institutions for this NABARD scheme include:
- State Governments and Union Territories
- Public Sector Undertakings (PSUs)
- Government-sponsored or promoted organisations
- Authorised NGOs, Panchayats, etc.
Irrigation Funds
A Micro Irrigation Fund (MIF) of ₹5000 Crores was set up at NABARD under the Ministry of Agriculture and Farmers Welfare with the intention of expanding the area falling under the coverage of micro irrigation. MIF offers loans at 3% below the cost of funds, with the delta being compensated by the Government of India. The Long Term Irrigation Fund (LTIF) is another NABARD scheme aimed at improving the irrigation infrastructure across the country and bringing more areas under viable irrigation techniques. The loans are extended to State Governments at the rate 6% per annum and the difference is made up by the Government of India.
Other Notable Direct Financing Schemes Offered by NABARD
- Pradhan Mantri Aawas Yojana – Grameen (PMAY-G)
- Swachh Bharat Mission-Gramin (SBM-G)
- Credit Facilities to Marketing Federations
- Direct Refinance to Cooperative Banks
- Supporting Producer Organisations
- Alternative Investment Funds
As a channel partner of the Government of India, several other Government sponsored NABARD schemes exist that provide direct financing and subsidy options to intermediary banks that directly fund the farmers and other associated entities.
- New Agricultural Marketing Infrastructure (AMI)
- Agri Clinics and Agri Business Centres Scheme (ACABC)
- Dairy Entrepreneurship Development Scheme (DEDS)
- National Project on Organic Farming (NPOF)
- Interest Subvention Scheme
- National Livestock Mission – Entrepreneurship Development & Employment Generation (NLM-EDEG)
In Conclusion
NABARD plays a vital role in the agricultural industry overall, and food produce-related sub-activities. Several NABARD schemes are created with the aim of uplifting the sector and bringing in social innovations across the country by being a touch point across the entire agri-value chain. If you are looking to benefit from one of the several NABARD schemes, then you should carefully read up on the objectives and eligibility of the scheme that fits you the best. Moreover, you can use a free online business loan EMI calculator to calculate your financing requirements before applying for it.
