FPO SCHEME OVER VIEW AND STEPS FOR CREDIT GUARANTEE

FPO CREDIT GURANTEE

1. Credit Guarantee Scheme for
Farmer Producer
Organizations (FPOs) Financing
(Under the Central Sector Scheme for
Formation and Promotion of 10,000
FPOs)
15 February 2022
A wholly owned Subsidiary of NABARD

2. “Building Trust for Rural Prosperity”
Credit Guarantee Scheme: Objective
(A wholly owned subsidiary of NABARD)
Credit Guarantee Cover for loans to FPOs
Minimizing lending risks of Eligible Lending
Institutions (ELIs)
Encourage ELIs to provide collateral free credit to
FPOs.
Borrower
Lender
Guarantor

3. “Building Trust for Rural Prosperity”
Credit Guarantee Operations
(A wholly owned subsidiary of NABARD)
NABSanrakshan
Credit Guarantee Fund Trust for FPO Financing
Lending Institution
Borrower
Loan
CG Fee
CG Cover
Loan Default
CG Invocation
CG Claim
Managed by

4. “Building Trust for Rural Prosperity”
(A wholly owned subsidiary of NABARD)Eligible FPOs
•FPO incorporated/ registered
•either under Part IXA of Companies Act
•or under Co-operative Societies Act (including Mutually Aided or Self-reliant
Cooperative Societies Act ) of the concerned State
•Minimum No. of Members size
•300 Members -Plains
•100 Members -North-Eastern or Hilly areas (above 1000 mt. mean sea level)

5. “Building Trust for Rural Prosperity”
(A wholly owned subsidiary of NABARD)Eligible FPOs
•New andExisting FPOsare eligible under the Scheme
•If FPO hasalreadyavailed Credit Guarantee earlier under any otherScheme
•the connected Credit Facility should be closed
OR
•it should bedifferent from the one for which Credit Guarantee application is being
submittedby the ELI for availing Credit Guarantee under this Scheme.

6. “Building Trust for Rural Prosperity”
(A wholly owned subsidiary of NABARD)Eligible Credit Facility
•Type
•Term Loan
•Working Capital
•Without any collateral security or third-party guarantee (including personal
guarantee of Board of Directors/Governing Body Members).
•Eligible for lending as per the Lendability Assessment Tool
•NABARD’s Guidance Note on FPO financing or
•Other tools developed by NABARD/IBA or
•ELI’s approved assessment tool

7. “Building Trust for Rural Prosperity”
(A wholly owned subsidiary of NABARD)Eligible Credit Facility
•Amount
•Credit facility can be unlimited
•Guarantee Cover shall be limited to Rs. 1.50 crore
Not Eligible
•Any credit facilitywhich
•is overdue for repayment/ NPA taken over by the ELI from any other lender.
•is overdue for repayment.
•has been rescheduled or restructured on becoming overdue for repayment.
•Any other default converted into a creditfacility.

8. “Building Trust for Rural Prosperity”
(A wholly owned subsidiary of NABARD)Guarantee Cover
Item Description
Guarantee Cover
85% if sanctioned amountuptoRs. 1crore, maxRs. 85 lakh
75% if sanctioned amount beyondRs. 1crore, maxRs.
1.50crore
Eligible Claim Amount
85% or 75% (as applicable) of the Amount in Default subject to
the maximum cover
Application for Guarantee
Cover
Credit proposals sanctioned during any quarter prior to expiry
of the following quarter to be submitted by the ensuing quarter.
Eg. Application with respect to credit facility sanctioned in
April–June Quarter must be submitted by the ensuing quarter
end i.e., September 30th.

9. “Building Trust for Rural Prosperity”
(A wholly owned subsidiary of NABARD)Annual Guarantee Fee
Item Description
Annual GuaranteeFee
0.75% if sanctioned amountuptoRs. 1crore
0.85% if sanctioned amount beyondRs. 1crore
Periodicity Annually at the time of application or renewal of
Guarantee Cover

10. “Building Trust for Rural Prosperity”
THANK YOU
(A wholly owned subsidiary of NABARD)