DRAFT GUIDELINES FOR ADMINISTERING SUBSIDY: DECISIONS BY THE FIRST MEETING OF EMPOWERED STEERING COMMITTEE ON AGRICLINICS AND AGRIBUSINESS CENTRE'S SCHEME HELD ON 03 OCTOBER 2006.

  1. Para 3.3 should be modified to emphasize that delivery of extension services shall be the main component of ACABC projects for availing of 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.
  2. The guidelines may include that States are encouraged to provide information on all government policies, programmes, schemes etc. to agripreneurs and also the use their services in implementation of extension activities funded by the Government.
  3. Para 8(ii) should be modified to clarify that advance subsidy placed with the participating  bank is required to be refunded to NABARD.
  4. Para 9(iii) - Insurance of assets created under the project would be mandatory if required statutorily. If beneficiary opts to buy insurance on these assets, even if the insurance is not required statutorily, such expenditure would be eligible component of ACABC project.
  5. It would be the responsibility of the participating bank to conduct verification at different stages of the project. Verification by the Joint Inspection Team was not necessary. Similar approach has been followed in respect of schemes of NHB with high success. DAC should also write letters to the participating banks and others in this regard on the pattern of letters written in respect of NHB scheme.
  6. The capital and interest subsidy would be admissible only if all repayments till date have been as per schedule.
  7. The contents of para 11.3 should be suitably included under para 3.

2. The Chairperson was authorized to approve the guidelines taken into account on above the above decisions.

List of the Empowered Steering Committee on ACABC Scheme:

1. Smt. Radha Singh                                    Chairperson

Secretary (Agri & Coop.)

Deptt. of Agriculture & Cooperation

Ministry of Agriculture, Govt of India

2. Shri AK Agarwal

Joint Secretary (Extn)

Deptt of Agriculture & Cooperation

Ministry of Agriculture, Govt of India

3. Shri KV Satyanarayana,

DG, MANAGE,

Rajendranagar, Hyderabad AP

4. Shri SS Mehta

Chief General Manager

NABARD, Plot No. C-24, G-Block,

Bandra-Kurla Complex, Mumbai-4100 051

5. Shri YR Meena

Addl. Commissioner (Extn.)

Deptt of Agriculture & Cooperation

Krishi Bhawan, New Delhi

6. Dr SRK Varshney

Director (Finance)

Deptt of Agriculture & Cooperation

Krishi Bhawan, New Delhi

7. Dr P. Das

Deputy Director General (Agril.  Extn)

Indian Council of Agricultural Research

Krshi Anusandhan Bhawan,Pusa, New Delhi

8. Shri VS Pangtey

Director (EM), DOE

9. Shri AK Banerjee,

Joint Director (Extn.), DOE

10. Dr RG Hatwar,

Extension Officer, DOE

GUIDELINES FOR ADMINISTERING SUBSIDY

UNDER AGRICLINIC AND AGRI-BUSINESS

CENTRES SCHEME (ACABCs)

 

Department of agriculture & cooperation

Ministry of Agriculture

Government of India

 

  1. Objectives of the scheme

·        To provide extension and other services to farmers on payment basis;

·        To support agriculture development and entrepreneurship;

·        To  promote self-employment

  1. Concept /Definition

2.1             Agri-Clinic – Agri-clinic are envisaged to provide expert advice and services to farmers on technology, cropping practices, protection form pests and diseases, market trends, price of various crops in the market and also clinical services for animal health, etc., which would enhance productivity of crops/ animals and increased income to farmers.

2.2             Agribusiness Centers : Agri-business centers are envisaged to provide from equipments on hire, sale of inputs and other services.

  1. Eligibility

3.1             The  scheme is open the agriculture graduates/ graduates in subjects allied to agriculture like horticulture, animal husbandry, forestry, dairy, veterinary, poultry farming and pisciculture.

3.2             The subsidy would be admissible only in respect of agricultural graduates trained under the ABABC scheme on or after 1st April,2004.

3.3             The agriculture graduates who ware trained on or 1st April,2004 and had availed of lone earlier for ACABC product, would also be eligible for subsidy for expansion / additional to existing units or for fresh investments, only if the earlier lone  is not closed prematurely.

3.4             the trained graduates could also undertake group products. If the group consists of a total of five or more persons, all expert 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.

3.5             Delivery of extension services shall be the main component of ACABC projects for availing of 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.

3.6             States are encouraged to provide information on all government policies, programmes, schemes, etc., to agri-preneurs and also use their services in implementation of extension activities funded by the government.

  1. Project Cost Ceiling

4.1             The ceiling of project cost for individual projects will be Rs. 10.00 Lakh per trained graduates, subject to an overall ceiling of Rs. 5.00 Lakh. In case of groups having five persons, which one is non- agriculture graduate, the ceiling of such group projects would also be Rs.50.00 lakh.

  1. Linkage with Credit

5.1             Assistance under the scheme would be purely credit Linked and subject to sanction rural banks based on economic viability and commercial considerations.

5.2             The eligible financial institutions under the scheme are :

·        Commercial Banks

·        Regional Rural Banks

·        State cooperative Banks

·        State cooperative Agriculture and Rural Development Banks; and

·        Such other institutions, which will be eligible for refinance from NABARD

5.3             Term Loan

·        The term loan would be composite in nature and participating bank(s) would extend bank loan as per the project cost which would be inclusive of subsidy amount eligible, as capital subsidy is bank-ended, but exclusive of margin money as stipulated.

·        The repayment schedule will be drown on the total amount of the loan (including subsidy) in such a way that the subsidy amount is adjusted after liquidation of net bank loan (excluding subsidy).

·        Repayment period will depend on the nature of activity and will vary between 5 to 10  years. the repayment period may include a maximum grace period of two years (to be decided by the financing bank as per needs of individual projects).

·        Rate of interest on term loan shall be as per RBI guidelines and declared policy of the bank in this regard. interest would be chargeable on borrowers accounts as per procedure laid down by RBI for direct agriculture advances under priority sector guidelines.

·        The  financial institution may also provide working capital separately, if needed for the project.

  1. Margin Money

In case of loans to Rs.5.00 lakh, no margin money is required as per present norms. the margin money to be contributed by the general category entrepreneur will be as per prevailing norms.

 

However, concessions would be made in respect of SCs/STs, Woman and beneficiaries of North extern states Hill areas. in such cases, a maximum of 50 % of the margin money prescribed by 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 banks may, however, levy a service charge up to 2 % per annum from the borrowers.

 

  1. Security

The security for availing the loan will be as per guidelines issued by RBI from time to time. as most of the eligible activities pertain to agriculture input  supply and services and the cost of investment will be less than 25.00 lakh in most cases the security norms applicable to tiny industries as prescribed in RBI circular No. RPCD.PLNFS.BC.65/06.02.31/99-2000 dated 31.3.2000 would be made applicable to these loans can be secured against hypothecation of assets created and no further security would be necessary.

8. Time Limit for Completion of the Project

  1. Time limit for completion of the project would be as envisaged under the project, subject to a maximum of 6 months period from the date of disbursement of the first installment of loan by financial institution, which may be extended by a further 6 months, if reasons for delay are considered justified by the financial institution concerned.
  2. If the project is not completed within the stipulated period, benefit of subsidy shall not be available and advance subsidy with the participating bank, if any, will have to be refunded forthwith to NABARD.

9. Other Conditions

  1. Projects under the scheme may be treated as direct financing to agriculture.
  2. The participating banks will adhere to the norms of appraising the projects regarding technical feasibility and the commercial/financial viability.
  3. The participating banks should ensure insurance of the assets created under the project, wherever required statutorily. If the beneficiary opts to buy insurance on these assets, even if insurance is not required statutorily, such expenditure would be eligible component of ACABC project.
  4. A signboard displaying " Assisted under the Scheme of Agriclinics and Agribusiness Centres, Ministry of Agriculture, Governments of India" will be exhibited at the unit.
  5. Pre and Post completion inspection of the project shall be undertaken by the participating bank to verify physical, financial and operational progress as and when required.

10. Refinance Assistance from NABARD

    NABARD would provide refinance assistance to assistance to commercial banks, RRBs, SCBs, SCARDBs and other such eligible institutions at the rate of 100% of the amount financed by the banks as term loan. Rate of Interest on refinance will be as decided by NABARD from time to time.

11. Subsidy

11.1 Credit linked capital subsidy @ 25% of the capital cost of the project funded through bank loan would be eligible. This subsidy would be 33.33% in respect of candidates belonging to SC, ST, Women and other disadvantaged sections and those from North-Eastern and Hill States.

11.2 In addition, full interest subsidy would be eligible for the first two years of the project.

11.3 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.

11.4 The benefit of subsidy will be extended only once.

11.5 The capital subsidy will be back-ended with minimum 3 years lock-in period.

11.6 The interest subsidy would, however, be concurrent.

11.7 The capital and interest subsidy would be admissible only if all the repayments till date had been made as per schedule.

11.8 The capital subsidy will be adjusted against the last few installments of repayment of bank loan.

11.9 The Capital Subsidy admissible under the scheme will be kept in the "Subsidy Reserve Fund Account" (Borrower-wise) in the books of the financing bank. 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. The balance lying to the credit of the "Subsidy Reserve Fund Account" will not form part of Demand and Time Liabilities.

11.10 Interest Subsidy shall be provided for a period of first two year's of the bank loan sanctioned as per the net outstanding balance in the account.

11.11 The banks should levy interest on annual basis and claim interest subsidy accordingly during this period.

11.12 Banks should prescribe interest rates as per declared policy of the bank, at the time of sanction of loan amount.

12. Procedure for Release of Subsidy

12.1 The subsidy will be routed through NABARD  by the Department of Agriculture and Cooperation, Government of India and the amounts will be placed with NABARD in advance.

12.2 For the present, NABARD shall not charge any service charge for handling subsidy under the scheme. If at a future date, Ministry of Finance approves payment of service charge to NABARD for handling subsidy under all the schemes similar to the Agriclinics and Agribusiness Scheme, the matter could be revisited. NABARD shall also not to be required to pay any interest on the amount of advance subsidy placed with them.

12.3 Capital Subsidy

  1. An interested agri-entrepreneur will submit the project proposal for term loan and subsidy to the bank on an application form as prescribed by the concerned bank along with the project report and other documents for appraisal and sanction of loan.
  2. Bank, after sanction of the project and disbursal of first installment of loan, will furnish a brief project profile-cum-claim form for advance subsidy in the prescribed format along with  copy of bank's sanction letter to RO, NABARD.
  3. NABARD, on receipt of project profile-cum-claim form from the participating bank will sanction and release 50% advance subsidy t the participating bank for keeping the same in the Subsidy Reserve Fund Account (Borrower-wise). The release of subsidy by NABARD will be subject to availability of funds from GOI.
  4. When the project is nearing completion, the agri-entrepreneur will inform the participating bank for conducting inspection.
  5. The participating bank would conduct inspection on the project site, within the overall scope of the operational guidelines of the scheme.
  6. After the inspection is conducted, the bank will submit the claim for final capital subsidy in the prescribed format to NABARD in triplicate. The inspection report and completion certificate should be enclosed with claim form for final subsidy.
  7. After crediting the final installment of subsidy in the reserve fund of the borrower, a Utilization Certificate in the prescribed format shall be submitted by the participating bank to the NABARD to the effect that the maount of subsidy received by them has been fully utilized and adjusted in the books of account under the sanctioned terms and conditions of the project within the overall guidelines of the scheme.
  8. NABARD shall release the final subsidy to the banks, which will be replenished by GOI or adjusted against the subsidy amount provided to NABARD in advance.
  9. NABARD would delegate adequate powers to Chief General Managers/General Managers/In-charges of Regional Offices of NABARD so as to facilitate expeditious sanction of projects and release of refinance/subsidy amount under the scheme

12.4         Interest Subsidy

i.                    Interest subsidy would be released to bank(s) after completion of one year for the first year and after completion of two years for second year, from the date of first disbursement, based on rate of interest actually charged by the bank, on balance outstanding in the account against principal amount of loan net of capital subsidy released

ii.                  The participating bank will claim interest subsidy annually from NABARD which was charged to the loanee account and upon receipt of interest subsidy from NABARD, the bank shall credit the borrower's account with the interest subsidy

iii.                The participating bank shall visit the unit on completion of one year/two years, as the case may be, and conduct inspection to satisfy that unit is physically, financially and operationally progressing well and submit its report in prescribed format recommending release of first/final installment of interest subsidy.

iv.                The participating bank(s) should prefer claim for interest subsidy within 90 days, after completion of one stipulated period together with the certificate/inspection report.   The claims for first/final installment of interest subsidy may be submitted by banks on quarterly basis, in the prescribed format.

v.                  After release of capital and interest subsidy to the borrower, the participating bank shall submit a final utilization certificate, in the prescribed format  to NABARD to the effect that the amount of subsidy received by them has been fully utilized and adjusted in the books of account under the sanctioned terms and conditions of the project within the overall guidelines of the scheme.

13.             Monitoring

13.1         The monitoring of each project shall be done by the participating bank. Review will be undertaken on  a monthly basis by participating bank/NABARD.

13.2         NABARD may prescribed suitable formats for submission of various reports by participating banks, taking into account reporting requirements of the DAC and subject to guidance of DAC/Empowered Steering Committee

13.3         The progress report of the scheme in the prescribed format shall be sent to the Department of Agriculture and Cooperation, Government of India by NABARD on monthly basis, with a copy to MANAGE.

13.4         The scheme of ACABC and the progress there under shall be reviewed invariably in all district level consultative committee and state level banker's committee meetings with a view to sorting out problems/issues emerging in smooth implementation thereof.


14.            General Awareness and Training Programme

14.1             General awareness, publicity and training programmes for eligible

candidates and hand holding support would be undertaken by MANAGE and Nodal training institution as per the scheme.

14.2        MANAGE will be responsible for providing training to elligible candidates, through its nodal institutes and motivating them for setting up of agri-clinics and agribusiness centers.

14.3        MANAGE will ensure sponsoring of sufficient number of cases to the participating banks for financing under the scheme and arrange to establish required number of units at ground level, as envisaged, to make the scheme a success.

15.            Empowering steering Committee

15.1        The following empowered steering committee would take all important decisions within the  framework of approved scheme, for its smooth implementation

i. Secretary (A&C) Chairman

ii. Additional Secretaty (Extn) Member

iii. AS & FA, DAC Member

iv DDG (Extn), ICAR Member

v. DG, MANAGE Member

vi. ED, NABARD Member

vii. JS (Extn) Member Secretary

 

16.             Another independent evaluation of the scheme should be organized two years after implementation of subsidy.

17.             Government's interpretations of these guidelines will be final.

18.             Government reserves the right to modify, add and delete any part of the guideline without assigning any reason there for.

 

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