Refinance against Investment Credit

This is a long-term refinance facility. It is intended to create income generating assets in the following:

Agriculture and allied activities

Artisans, small scale industries, tiny sector, village and cottage industries, handicrafts, handlooms, powerlooms, etc.

Activities of voluntary agencies and self help groups working among the rural poor

The credit is normally provided for a period of 3 to 15 years.

Investment credit leads to capital formation through asset creation. It induces technological upgradation resulting in increased production, productivity and incremental income to farmers and entrepreneurs.

Eligible Institutions

SCARDBs, SCBs, RRBs, CBs, Scheduled Primary Urban Cooperative Banks, North East Development Finance Corporation Ltd. (NEDFI) and NBFCs are eligible from NABARD for their investment credit in the rural sector.

Eligible Purposes

Some of the major purposes covered under Investment credit are Minor Irrigation, farm mechanisation, plantation/ horticulture, animal husbandry, storage/market yards, fisheries, post-harvest management, food/agro processing, non-farm sector including rural industries, microfinance, purchase of land (for small/marginal Farmers, share croppers etc.), rural housing and disbursements under poverty alleviation programmes like SGSY and SC/ST Action Plan etc. Hi-tech projects and agri-export zones are identified as thrust areas and NABARD helps in techno-financial appraisal of such projects besides providing refinance.

In recent years, refinance support has been extended to new activities like financing of diesel generator sets in Madhya Pradesh and LPG kits to rural households all over the country.

Criteria

The technical feasibility of the project, financial viability and generation of incremental income to ultimate borrowers thereby enabling them to have a reasonable surplus after repayment of the loan installments are the necessary conditions to be satisfied for sanctioning investment credit. The period of loan ranges between 3 and 15 years depending on the purpose for which it is provided.

The beneficiaries of the programme are individuals / group of individuals, SHGs, proprietory / partnership concerns, companies, state-owned corporations or cooperative societies.

The refinance is usually 90% to 100% of the loan amount. The balance, wherever applicable, will be met by the banks or the concerned state governments or the Government of India in the case of SCARDBs. With a view to ensure credit flow to certain thrust areas, such as special category beneficiaries like SC/ST members, self help groups, etc., the quantum of refinance is enhanced to 100%.