Page 179 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes

Notes Indirect finance denotes to finance provided by banks to farmers indirectly, i.e.,
through other agencies. Sub-target for indirect agriculture advances is 4.5% of NBC.

9.2 Other types of Indirect Finance to Agriculture

1. Finance for hire-purchase schemes for distribution of agriculture machinery and
implements.
2. Loans for constructions and running of storage facilities (warehouse, market yards,
godowns and silos) including cold storage units designed to store agriculture produce/
products, irrespective of their location. If the storage unit are registered as SSI unit, the
loans granted to such units may be classified under advances to SSI, provided the investment
in P&M is within the stipulated ceiling.
3. Advances to custom-service units managed by individuals, institutions, or organizations
who maintain a fleet of tractors, bulldozers, well-boring equipments, thrashers, combines,
etc., and undertake work from farmers on contract basis.
4. Loan to individuals, institutions that undertake spraying operations.

5. Loans to cooperative marketing societies, cooperative banks for re-lending to cooperative
marketing societies (provided a certificate from the State Cooperative Bank in favour of
such loans is produced) for disposing the produce of the members.
6. Loans to cooperative banks of produces (e.g. Aarey Milk Colony Cooperative Bank,
consisting of licensed cattle owners).
7. Financing of farmers indirectly through cooperative system (otherwise by subscription to
bonds and debenture issues), provided a certificate from the State Cooperative Bank in
favour of such loans is produced.
8. Advances to State Sponsored Corporations advancing to weaker sections.
9. Finance extended to dealers in drip irrigation/sprinkler irrigation system/agricultural
machinery, irrespective of their location, subject to the following conditions:
(a) The dealer should be dealing exclusively in such items or if dealing in other products,
should be maintaining separate and distinct records in respect of such items.

(b) A ceiling of up to Rs. 30 lakhs per dealer should be observed.
10. Loans to National Cooperative Department Corporation (NCDC) for lending to the
cooperative sector for purposes coming under the priority Sector.

11. For loans to farmers for purchase of shares in Cooperative Sugar Mills and Sugar Mills set
up as joint stock companies and other agro based processing units (Maximum 6 shares of
Rs. 1000 each or 3 shares of Rs. 2000 each, i.e., Rs. 6000/- per eligible borrower irrespective
of their land holding).

12. Loans to Arthias (commission agents in rural/semi-urban areas) for meeting their working
capital requirements on account of credit extended to farmers for supply of inputs.
13. Lending to Non Banking Financial Companies (NBFCs) for on-lending to agriculture.

14. Investments by banks in securitised assets, which represent indirect advances to agriculture.

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