Financing for Construction of Farmer’s Godowns

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Financing for Construction of Farmer’s Godowns
Features

Purpose: To facilitate the farmers for storing their agricultural produce, food grains, oil seeds and inputs required for crop cultivation and allied activities.

Eligibility:
Farmers, group of farmers engaged in agricultural activities.

Applicable Area:
Applicable to all rural areas as per the definition of NABARD (i.e. having population up to 50,000) where sufficient production and potential is available.

Location:
The Godown should be constructed on borrower’s own land on well-drained site, not prone to flooding and away from a place likely to be affected by seepage of water.

Loan amount:

  1. Cost of construction should not exceed a maximum of `225/- per sft. (10% cost variation is permissible).The land cost should not be included in the project cost.85% of the cost of construction may be allowed as loan since this is our Bank’s own scheme.
  2. For the godowns of different sizes, the maximum permissible loan limits are indicated below:
    Size of the Godown(Sft.) Estimated Cost (` in lacs) Margin @15% (` in lacs) Bank Loan (` in lacs)
    650 1.46 0.22 1.24
    750 1.69 0.25 1.44
    1000 2.25 0.34 1.91
    1500 3.38 0.51 2.87
    2000 4.50 0.68 3.82
    2400 5.40 0.81 4.59

Viability of the scheme:
To assess viability of the scheme for different sizes of godowns, the farmer must hold a minimum land holding as detailed below:

Size of godown (Sft.) Minimum irrigated land required
  Hectares Acres
650 3.2 8.0
750 3.8 9.5
1000 4.8 12.0
1500 7.2 18.0
2000 9.6 24.0
2400 11.6 29.0

Repayment Schedule:
15 years, including a maximum grace period of 12 months.Normally construction of godown should be completed within 6 months from the first disbursement of the loan.Repayments are to be made in half-yearly instalment and yearly instalments, in case of long duration crop.

Rate of interest:

  1. Upto`2.00 lacs..@ 1.5% below PLR
  2. Above `200 lacs..@ PLR

Security:
Registered mortgage of the entire land holding of the borrower/borrowers including that on which godown is to be constructed along with the godown constructed thereon.

Insurance:
The godown building will be fully insured covering risk of flood, fire and earthquake.

Processing charges:

  1. Upto `25,000/-..NIL
  2. Over `25,000/- & upto `2.00 lacs..`250/-
  3. Over `2.00 lacs..`250/- per lac or part thereof

Inspection charges:

  1. Upto `25,000/-..NIL
  2. Over `25,000/- & upto `2.00 lacs..`200/- p.a.
  3. Over `2.00 lacs & upto `10.00 lacs..`500/- p.a.
  4. Over `10.00 lacs..`1000/- p.a.
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