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Composite Cash Credit

Sanctioning Authority

As per delegation of powers.

Type of Facility

Demand Composite Cash Credit – Annual Review.

Rate of Interest

  • On Debit Balance : As advised by Head Office from time to time
  • On Credit Balance : Rate of interest payable will be as per Savings
  • Bank interest rate and follow the Savings Bank
  • Rules except opening a separate account.

Security

There will be common documentation though the sub-limits are maintained as separate accounts for the convenience of monitoring.

  • Upto Rs.50,000/= : D. P. Note
    Hypothecation of standing crops
  • Above Rs.50,000/= : D. P. Note
    Hypothecation of standing crops
    Mortgage of land / Collateral security

Note:

  • In case the value of land mortgaged is adequate, no other security should be obtained.
  • For finance against Government warehouse receipts, mortgage may be waived.
  • Waiver of mortgage of land in deserving cases may be considered as per security norms.
  • The RBI norms on security should be strictly adhered to.

Common Documents:

  • Demand Promissory Note.
  • Deed of Composite Hypothecation Agreement (CHA-1).
  • Letter of Authority (AG-15).
  • Charge on land as per Agricultural Credit Act or Equitable mortgage or Legal Mortgage of land (CHA-4).
  • Letter of Pledge (OD-159).
  • Pledge of Storage Receipt duly discharged.
  • Undertaking to repay the advance within 12 months or on sale of produce.
  • Bank’s lien to be notified to the storage unit.
  • Undertaking from the godown / cold storage owners not to deliver the goods without production of the pledged storage receipt.
  • L-515.
  • L-516 (if required).

Note:

  • Documents mentioned under (e) to (i) above are applicable only if sub-limit against storage receipt is sanctioned.
  • In case produce marketing limit is extended against the produce stored in the premises of the farmer, then hypothecation deed (CHA-1) should suffice to cover hypothecation charge on the produce stored.

Disbursement

  • Upto Rs.25,000/= may be disbursed in cash to the borrower.
  • Above Rs.25,000/= may be disbursed through input supplier/s or against bills / receipts or may be waived at the discretion of the manager / sanctioning authority. Short term working capital requirements may be disbursed in cash.
  • Portion of finance against storage receipts / produce marketing including domestic needs may be disbursed in cash directly to the farmer.

Supervision / Follow-Up

  • Proper care has to be exercised at the time of selection of the borrower. Pre-sanction inspections should be carried out in all cases. A minimum of one post-sanction inspection of seasonal crops and two in case of multi-season / annual crops should be carried out.
  • In case of finance against storage receipts / produce marketing, periodical inspections should be carried out to ascertain the condition of the stored produce and to see whether the unit is functioning smoothly.
  • Inspection at the time of harvesting / marketing of the crop would ensure timely repayment of the credit.

Repayment

  • Seasonal sub-limits should be adjusted after harvesting / marketing of crops.
  • While disbursing finance against storage receipts / produce marketing, seasonal sub-limits should be adjusted and only balance amount may be disbursed.

Crop Insurance

  • Crops financed should be insured as required by law or as covered under various schemes.
  • Crop Loan portion of the finance should be covered under the RashtriyaKrishi Bam Yojana (RKBY) of the Agriculture Insurance Company of India Ltd. (AIC).
  • Insurance premium should be debited to the relative loan account and claims if any be credited to the beneficiary’s account promptly.

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