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ICIF representative handing over the report to SK Jain, executive advisor Small farmers Agri- Business Consortium (SFAC) at Ministry of Agriculture

By Staff Reporter, The Site

The Indian Centre for Islamic Finance (ICIF) has consulted the Ministry of Agriculture seeking steps to implement interest free venture capital assistance (VCA) to farmers. The ICIF delegation, according to an official statement, met SK Jain, executive advisor Small farmers Agri- Business Consortium (SFAC) at Ministry of Agriculture and handed over the study report prepared by NABARD Consultancy Services (NABCONS) on impact valuation of venture capital assistance scheme of small farmers' agri-business consortium.

SFAC scheme for agribusiness development provides interest-free VCA to set up agribusiness projects and project development facilities to assist individuals, producer groups and organisations for preparation of detailed project reports. The scheme envisages a single window approach for extending VCA along with bank term loan or working capital to the beneficiary. SFAC implements the Scheme in close association with nationalised banks, SBI and its subsidiaries including IDBI, SIDBI, NABARD, NCDC, NEDFi, Exim Bank, RRBs and state financial corporations.

It was reviewed that the initiatives under the scheme will improve farmers’ income and their engagement in the market.

Under the VCA scheme, SFAC provides equity support to qualifying projects on the recommendations of the bank financing the project. This equity capital is repayable to SFAC after the project has repaid the term loan to the financing bank as per the original repayment schedule or earlier. The quantum of SFAC’s VCA depends on the project cost and features the lowest of 10% of the total project cost assessed by the bank or 26% of the project equity or Rs.50.00 lakh.  

The ceiling of VCA differs and cap is more, provided the project is located in the Northeastern and hilly states. In such a case, the quantum of VCA could be the lowest of 25% of the total project cost assessed by the bank or 40% of the project equity or Rs. 50 lakh.

Apart from the above criteria, SFAC could also consider high VCA to deserving projects on merit and/or to projects that are located in remote and backward notified districts, Northeastern and hilly states recommended by the state agencies subject to maximum amount of Rs three crore.