Proposal should be submitted for consideration of appropriate authority in whose delegation the sub-limit (Production Credit and Investment Credit) / aggregate limit falls, as per extant guidelines on Delegation of Powers.
Margin
For regular production line of credit limit, no specific margin is prescribed and limit is to be made available to the farmers as regular Cash Credit facility.
On investment credit, 15 to 25% margin of total cost/investment is to be contributed. In deserving cases, 10% margin may be allowed.
The RBI norms on margin should be strictly adhered to.
Technical Feasibility / Financial Viability
Since the limit is decided on the basis of value of security and projected average annual farm income, Branches should assess the farm income critically.
Once the overall limit vis-à-vis borrower’s repaying capacity is assessed, choice in priorities of investments based on the farmer’s own felt needs be allowed.
The Branches should extend needbased guidance to the farmers as and when sought for.
In case of investment project with larger financial outlays, borrowers may be advised to take prior clearance from the Branch for the same.
Security
Note:
Hypothecation of standing crops, already owned movable assets and assets to be created out of Bank’s finance.
Charge on land under Agricultural Credit Act/mortgage of land/collateral security or third party guarantee of adequate worth, if necessary.
The total value of security (existing + proposed) should be around 150% of the loan component including hypothecation of movable assets/standing crops, etc.
In case the value of land mortgaged is adequate, no other security should be insisted upon.
If alternate collateral security is available in the form of pledge of TDRs of our Bank/NSCs/KVPs, etc. or gold ornaments, the Zonal Manager may consider waiver of mortgage on merit of each case above the limit of collateral free loans stipulated by RBI.
The RBI norms on security should be strictly adhered to.
Documentation
D. P. Note for entire credit facility.
Deed of Composite Hypothecation Agreement (CHA-1 / CHA-2) for entire credit facilities.
Letter of Authority (AG-15).
Charge on land as per Agricultural Credit Act or Equitable mortgage or Legal Mortgage of land (CHA-4) for entire credit facilities.
Documents for pledge of TDRs/NSCs/KVPs/Gold ornaments.
