Marketing federations and cooperatives play a very important role in agribusiness and value chain management of various agricultural commodities including milk. The major activities undertaken by these institutions are procurement of agricultural commodities, aggregation, storage & value addition and marketing.

Activities under the agricultural sector are seasonal, leading to seasonal demand for credit, inputs etc. Thus, the operations performed by these federations and cooperatives require seasonal short-term credit facility (12 months) for supporting their day-to-day operations.

Eligible Institutions

The following institutions will be eligible for funding under Credit Facility to Federations (CFF)

I. State/Central Govt. Agricultural Marketing Federations, Corporations
II. Dairy Co-operatives/Federations
III. Agriculture Marketing Co-operatives/Federations
IV. Registered Companies

Eligibility Criteria

Broad eligibility criteria for borrower entity for availing funding under CFF is as under:

I. State/Central Govt. Agricultural Marketing Federations, Corporations

• It must have been established or constituted by or under any Central Act, or State Acts and major share of the paid up capital is held or controlled by the Central / State Government
• Earned profit during the last three years and not having accumulated losses
• Entities with poor financials will be considered based on the merit of the proposal and if backed with Government Guarantee
• Regular audit of accounts

II. Dairy and Agriculture Co-operatives and Federations

• It must be a registered body under Co-operative Societies Act / other relevant Act
• Earned profit during the last three years and not having accumulated losses
• Professional Management and democratic setup
• Regular audit of accounts

III. Registered Companies

• It must be a registered body under Companies Act
• Earned profit during the last three years and not having accumulated losses
• Professional Management
• The minimum credit rating of the promoting company should be at 'AA' by CRISIL or CARE or SEBI approved rating agency
• Should not have a history of defaults in repayment of any type of financial assistance
• Regular audit of accounts.

Eligible Activities

• Procurement and marketing of agricultural commodities
• Processing and marketing of agricultural commodities
• Procurement, processing and marketing of milk
• Supply of Agricultural inputs including animal feed
• Other activities related to value addition and supply chain management of agriculture commodities

Quantum of Credit limit and Margin/ borrower contribution

Credit limit and Margin/Borrower's contribution will be as per the guidelines issued by RBI from time to time. The quantum of credit limit depends upon the type of beneficiary and requirement / purpose of credit limit.

Rate of interest

The rate of interest will be as per the rate decided by NABARD. Further, interest is dependent upon the type of borrower, type of security offered, availability of guarantee, type of project, credit rating of the entity and the prevailing market conditions.

Security for Credit limit

The security requirement will depend upon the rating of the borrowing entity, type of operations etc., and as per requirements/stipulations laid down by RBI from time to time. The primary security would be hypothecation of assets, stocks, receivables, and book debts. Additional collaterals in the form of unencumbered assets, fixed deposits, guarantees etc., may be required depending on the borrowing entity and purpose of limit.

Appraisal Fee / Upfront fee

Appraisal fee/upfront fee charged from the promoter will be specific to the proposal. The power to waive the fees rests with the sanctioning authority of the Bank.