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SUB RULES FOR GRANTING CASH CREDIT ACCOMMODATION FOR STARTING ALLIED ACTIVITIES OF AGRICULTURE ON THE SECURITY OF GOLD ORNAMENTS THROUGH PACS IN KASARAGOD DISTRICT

These sub rules are called the sub rules of Kasaragod District Cooperative Bank for granting cash credit to farmers. This scheme intends to provide finance to establish/start allied activities or to meet the working capital requirement of existing activity under agriculture on the security of gold ornaments, through PACS in Kasaragod District

Objective of the scheme

Objective of the scheme is to finance farmers for establishing/starting any allied activity under agriculture viz: mini dairy unit, goat rearing, poultry rearing, purchase of pump sets, rubber rollers, fishing boats, fishing nets, construction of rain water harvesting structures etc: or to meet the working capital requirement of existing allied activity under agriculture with an aim to support additional finance requirement so as to achieve sustainability of farming community and ensuring reasonable price for their agriculture produce

Area of operation

The scheme will be implemented in Kasaragod, Hosdurg, Vellarikkundu and Manjeswaram taluks of Kasaragod District

Implementing Agency

The scheme shall be implemented through potential Service Cooperative Banks of Kasaragod District

Beneficiaries

Farmers permanently residing in Kasaragod District, having a minimum 5 cents of land in his/her name; who are members of concerned Service Cooperative Banks of their area are eligible to be covered under the scheme.

Scheme- Peculiarities

  • Lease land farming/tenant farming is eligible to be covered under the scheme
  • Assets created out of the loan amount shall be insured (wherever applicable) and the original insurance policy has to be lodged with the financing PACS.
  • Beneficiary should be engaged in agricultural activity continuously for a period of not less than one year.
  • Assets proposed in the activity have to be created/established within 20 days of availing loan from the bank
  • Beneficiary shouldn’t be a defaulter to any Bank/ financial institution.
  • Beneficiary should not have availed loan for the same activity from any other Bank/ financial institution
  • Access to market and transportation facility are necessary
  • Beneficiary will have the option of changing the ornaments pledged with the bank twice during the loan period (at the end of first and second year) subject to the condition that required weight of ornaments are maintained by supplementing with other ornaments duly appraised by the PACS.
  • Beneficiary is eligible to take back the gold ornaments pledged with the bank in proportionate to the principal amount repaid. However cash credit limit would be reduced to that extent.
  • Beneficiary shall undergo various training programmes related to agriculture and allied activities prescribed by the PACS/KDCB or farmers’ club affiliated to the PACS.

Limit

The maximum amount of cash credit limit that can be sanctioned to an individual shall be Rs. 3, 00,000/- Based on IMBP; the Board of Directors of PACS can fix the Maximum Permissible Limit (MPL) that can be availed by the beneficiaries.

Calculation of Maximum Permissible Limit (MPL)

Technical feasibility and economic viability of the unit shall be ensured by scientific appraisal. Site visit, interview with the borrower etc. shall be conducted for the same. Based on the purpose of loan and existing market rate of proposed loan components, financial outlay of each activity can be estimated. The MPL will be fixed after deducting 10% of financial outlay of the proposed activity. PACS have the discretion to fix the limit based on the indicative unit cost given as annexure I. In the case of assets to be acquired, a maximum 90% of the quotation amount (wherever applicable) can be considered for financing. Yearly sublimit will be fixed (for second and third year) after deducting 1/3rd of MPL amount each year. However upon the request of the borrower; sanctioned limit can be modified during the course of loan subject to the maximum limit prescribed.

Margin money

Minimum 10% of the project cost/estimated expenditure of the proposed activity will be considered as margin money.

Mode of lending

The implementing PACS shall obtain loan application from individual member along with quotation for the assets to be purchased/constructed. The following documents shall be produced to the concerned branch of the Kasaragod District Cooperative Bank for onward submission to head office for sanction.

  • Loan application in the prescribed format (annexure II) 
  • Board resolution
  • Balance sheet as on 31st march of the preceding financial year

Beneficiary details (Annexure IV) shall be produced by PACS along with drawal file to the concerned branch at the time of availing loan

Documents to be produced by the beneficiary for availing cash credit facility

Along with cash credit application, beneficiary has to produce the following documents for availing cash credit facility

  • Copy of tax receipt of the current financial year
  • Possession certificate
  • Lease agreement(original) in the case of lease land farming

Insurance

PACS should ensure that animals financed under the scheme are insured after the purchase for the full value and the documents should be assigned in favour of the bank. Wherever possible, assets procured/created out of the loan amount also should be insured and the original policy documents should be lodged with the Bank

Subsidy

Subsidy if any; offered by Agriculture Dept. or any other institutions will be administered back end. Loan amount sanctioned will include subsidy amount also. On receipt of subsidy, interest will be charged to the loan portion after deducting subsidy component from it. Subsidy amount obtained will be kept in subsidy reserve fund and no interest will be paid to the beneficiary for this amount.

Sanctioning authority

The Executive Committee of the Bank will be the authority to sanction limit to each PACS upon request. PACS can sanction individual limit based on the loan application made by the beneficiary in the prescribed proforma (Annexure V) The Board of Directors of the bank shall have the right to alter, modify and change these rules subject to the prior approval of the Registrar and it shall be binding on the PACS as well as borrower from the date of such approval

Disbursement and mode of operation

The limit can be sanctioned for a period of 3 years subject to yearly renewal. The borrower can operate the account in cash credit mode ie any number of withdrawals and remittances can be made subject to the condition that maximum outstanding reached at any time during the currency of loan period should be less than or equal to sanctioned/revised limit. Beneficiary is eligible to foreclose the loan subject to the condition of payment of pre closure charge as decided by the bank from time to time

Interest

The rate of interest will be as prescribed by the bank from time to time in accordance with the rate fixed by RCS on medium term agriculture loans. At present interest rate is fixed as follows

DCB to PACS 10.5 % pa
PACS to beneficiaries 12.0 % pa

Additional rate of 2% over and above normal rate shall be charged on defaulted installments. The interest shall be charged on monthly rests.

Appraisal charge

Beneficiary is liable to pay the appraisal charge of gold ornaments offered as security as decided by the Board of Directors of the PACS from time to time. Whenever the ornaments are replaced during the course of loan period; appraisal charge for such portion of gold also will have to be borne by the beneficiary

Security

Gold ornaments valued to the extent of the limit sanctioned shall be pledged as security. 70% of the market value of gold ornaments offered will be considered for fixing the limit. The maximum amount that can be sanctioned as per market value will be fixed by the board of directors of PACS. The appraiser appointed by the PACS shall value and submit an estimate value of the gold ornaments offered as security for the loan. The actual gold contents alone will be taken into account ignoring the stone contents, dirt etc: while assessing the value. The borrower is liable to pledge additional gold on the request of the PACS, if the market value of the pledged gold will not be sufficient enough to cover the liability under the loan account.

Repayment

The entire limit sanctioned along with the interest has to be repaid by the beneficiary in three years. However interest shall be remitted on monthly basis. PACS will have to make onward remittance to KDCB from succeeding month onwards (on monthly basis).

Defaulted loan accounts

If the beneficiary fails to remit the interest for two consecutive quarters or does not close the cash credit limit on the due date, the board of directors of PACS can arrange the sale of the gold ornaments pledged to the bank in public auction after giving 14 days notice to the borrower by registered post. The PACS should also arrange to publish in a leading news paper at least 7 days prior to the date of auction with a clear mention about date and place of auction. The proceeds of the auction sale shall be adjusted against the dues payable by the borrower to the PACS and the surplus if any shall be kept in suspense account, in the name of borrower which will be refunded at his/her request. In case the amount released in the sale is not sufficient to clear the dues to the PACS, it shall be open to the PACS to recover the deficit amount from the borrower by legal means as contemplated under KCS act and rules, 1969.

Setting up of enterprise/ starting up the activity

The enterprise/ activity has to be established within 20 days of receipt of loan amount.

Monitoring and review

PACS should closely monitor the programme regularly at various levels and at regular intervals. Utilisation certificate in the prescribed format (annexure III) has to be submitted to the concerned Branch of KDCB by the PACS within one month of loan disbursement. The borrower shall agree to be bound by the arbitration proceedings for recovery of dues as prescribed in the Kerala State Cooperative Societies Act and Rules 1969 The Board of Directors of KDCB has the right to alter, modify and change these rules subject to the prior approval of the Registrar and it shall be binding on the PACS as well as the borrower from the date of approval.

ANNEXURE I

PROPOSED ACTIVITIES

Activity unit size Maximum loan amount (Rs in lakhs)
Mini dairy units 2 Nos 1.00
Goat/sheep units 5 Nos 1.00
Poultry (broiler/layer)- Deep litter and Cage system 50 Nos 1.00
Purchase of fishing boat 1 No. 90% of the quotation amount subject to a maximium of Rs.3 lac
Purchase of fishing nets 1 No. 90% of the quotation amount
Purchase of Rubber rollers 2 Nos. 90% of the quotation amount
Purchase of irrigation pumpsets 1 No. 90% of the quotation amount
Purchase of farm machineries NA 90% of the quotation amount
Establishment of mushroom units 1 No 90% of the quotation amount
Establishment of milk coolers 1 No 90% of the quotation amount subject to a maximum of Rs.3 lac
Establishment of vermi compost units 1 No 90% of the quotation amount subject to a maximum of Rs.3 lac
Purchase of vehicle (2/4 wheeler) for agriculture/marketing purpose 1 No 90% of the quotation amount subject to a maximum of Rs.3 lac
Establishment of infrastructure for animal husbandry aspects NA 90% of the quotation amount subject to a maximum of Rs.3 lac
Establishment of small food processing units 1 No 90% of the quotation amount subject to a maximum of Rs.3 lac

* Activities given above are only indicative. Any activity related to agriculture/allied sector where in the budget estimate does not exceed Rs.3 lakhs is eligible for financing under this scheme

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