Trust will provide credit guarantees for FPOs

The National Bank for Agriculture and Rural Development (Nabard) on Monday said a ₹ 1,000-crore dedicated fund for providing credit guarantees to 10,000 farmer produce organisations (FPOs) will be housed in “Credit Guarantee Fund Trust for FPOs” (CGFTFPO) under the trusteeship of NABSanrakshan Trustee Private Limited (NTPL).

The Trust has been registered at Mumbai and signed by officials of Ministry of Agriculture and Farmers Welfare, Government of India and NABSanrakshan, Nabard said in a statement. NTPL is a wholly-owned subsidiary of Nabard.

The Government had, in February 2021, launched a new Central sector scheme titled ‘Formation and promotion of 10,000 FPOs’ with a clear strategy and committed resources to promote 10,000 new FPOs in the country with budgetary provision of ₹6,865 crore.

The CGFTFPO is only the second such Trust formed in the agriculture and allied sector for providing credit guarantee, per the statement.

“It is expected that the credit guarantee offered through the Trust will enhance the credit worthiness of FPOs besides facilitating cost-effective production and productivity leading to higher net income to farmers who are members of FPOs,” Nabrd said.

According to the Ministry of Agriculture & Farmers Welfare, FPOs are to be developed in produce clusters, wherein agricultural and horticultural produces are grown / cultivated for leveraging economies of scale and improving market access for members.