Scheme for Financing under Agriculture Infrastructure Fund

Agriculture Infrastructure Fund (AIF)

Indian Government has recently launched a new Scheme of financing facility under the Agriculture Infrastructure Fund (AIF) of Rs. 1 Lakh Crore. The Agriculture Infrastructure Fund is a medium – long term debt financing facility for investment in projects for post-harvest management infrastructure and community farming assets through interest subvention and credit guarantee. The scheme will support Agri-entrepreneurs, Farmer Producer Organization (FPO), and Primary Agricultural Credit Society (PACS). Under the scheme, bank and the financial institution will provide Rs. 1 Lakh Crore as loans with interest subvention of 3% per annum and credit guarantee coverage under CGTMSE scheme for loans up to Rs. 2 Crore. The present article briefs the Agriculture Infrastructure Fund (AIF) scheme.

Objectives of AIF

The key objective of the Agriculture Infrastructure Fund (AIF) is to provide financial support for agriculture entrepreneurs to improve agriculture infrastructure in the country.

Benefits of the AIF
The beneficiaries of the AIF scheme will include:

• Farmers
• SHG – a self-help group
• Agri-entrepreneurs
• Startups
• Primary Agricultural Credit Society (PACS)
• Marketing Cooperative Societies
• Farmer Producer Organization (FPO
• Joint Liability Groups (JLG)
• Multipurpose Cooperative Societies
• Central/State agency or local Body sponsored Public-Private Partnership Projects

Benefits of Agriculture Infrastructure Fund

This financing facility will have numerous benefits for all the stakeholders in the agriculture eco-system:

Benefits to Farmers FPOs, PACS & Marketing Cooperative Societies

• AIF will improve the overall income of farmers
• The Improved marketing infrastructure will farmers to sell directly to a larger base of consumers and hence, increase value realization for the farmers
• AIF will make farmers independent and improve access to market
• Farmers can be able to decide when to sell in the market and improve realization using
• the modern packaging and cold storage system access
• Benefits to Agri entrepreneurs and start-ups
• With a dedicated source of funding, entrepreneurs will push for innovation in the agriculture sector by leveraging new-age technologies including IoT (internet of things), AI (artificial intelligence), etc.
• AIF will improve avenues for collaboration between entrepreneurs and farmers.

Duration of the scheme

The duration of the Agriculture Infrastructure Fund scheme shall be from the current financial year to the Financial year 2029 (10 years).

Financial Assistance under Agriculture Infrastructure Fund (AIF)

Under the scheme, banks and financial institutions will provide Rs. 1 Lakh Crore as loans with interest subvention of 3% per annum and credit guarantee coverage under CGTMSE scheme for loans up to Rs. 2 Crore.

Interest Subvention Cost

All loans under AIF will have an interest subvention of 3% per annum up to a limit of Rs. 2 crores.
This subvention will be available for a maximum period of 7 years. In the case of loans beyond Rs.2 crore, then interest subvention will be limited up to 2 crores.
The loans will be disbursed in four years starting with the sanction of Rs. 10,000 crores in the current financial year and Rs. 30,000 crore each in the next three fiscal years.
The extent and percentage of funding to private entrepreneurs out of the total financing facility may be fixed by the National Monitoring Committee
Credit Guarantee Cost
Credit guarantee coverage will be available for eligible borrowers from the Agriculture Infrastructure Fund (AIF) under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme for a loan up to Rs. 2 crores. The Government will pay the fee for AIF coverage.
Moratorium for Repayment
The moratorium for repayment under this AIF may vary subject to a minimum of 6 months and a maximum of 2 years.

Eligible Projects

The scheme will facilitate setting up and modernization of key elements of the following projects:

•  Post-Harvest Management Projects
•  Viable projects for building community farming assets

Criteria for selection of Eligible Borrower

Lending institutions will decide criteria for selection of eligible borrower in consultation with National Bank for Agriculture & Rural Development and monitoring committees:
All scheduled commercial banks scheduled cooperative banks, Regional Rural Banks (RRBs), Small Finance Banks, Non-Banking Financial Companies (NBFCs), and National Cooperative Development Corporation (NCDC) will provide this financing facility, after signing of Memorandum of Understanding (MoU) with NABARD.

AIF specific focus

As part of this scheme, the Government will give specific focus to SC/ST entrepreneurs and women entrepreneurs. 24% of total grants – in – aid under the scheme should be utilized for SC/ST entrepreneurs (16% for SC and 8% for ST). Besides this, lending institutions will ensure adequate coverage of entrepreneurs belonging to women and other weaker segments of society. It has to be ensured that the benefits of the scheme are inclusive and accrue to the intended beneficiaries.

Management of AIF

Agri Infra fund will be managed and monitored through an online Management Information System (MIS) platform. Using this portal, all qualified entities can apply for loans under the fund. The platform will provide benefits such as transparency of interest rates offered by multiple banks, scheme details including interest subvention and credit guarantee offered, minimum documentation, faster approval process as also integration with other scheme benefits.

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Authors Bio:-

Sudheer Varma Vegesna