Credit a key challenge for Farmer Producer Organizations: GR Chintala, Chairman, Nabard

The National Bank for Agriculture and Rural Development (Nabard) plays an important role as the government has set a target of forming 10,000 FPOs by 2027-28.

The main challenge for Farmer Producer Organizations (FPOs) is inadequate access to institutional credit due to the low capital base, lack of credit history and unavailability of collateral. The National Bank for Agriculture and Rural Development (Nabard) plays an important role as the government has set a target of forming 10,000 FPOs by 2027-28. In an interview with Nanda Kasabe and Sandip Das, GR Chintala, Chairman, Nabard emphasizes that FPOs will play an important role in making Indian agriculture globally competitive and rewarding for farmers. fragments:

How does Nabard support FPOs and catalyze their spread?
In addition to providing financial support in the form of credits and grants, Nabard has also been involved in the FPO ecosystem by providing policy support, facilitating credit links and other development aid. In 2014-15, the government had set up a ‘PRODUCE Fund’ with us to promote new FPOs. Under this scheme itself, Nabard has so far promoted 2154 FPOs. In total, we have promoted more than 6,000 FPOs and granted grants of Rs 103.99 crore so far. We are also a large implementing organization within the framework of the Central Sector Regulations. We have prepared a guideline on the financing of FPOs by banks and established a credit guarantee fund to provide credit guarantees for loans provided by banks to the FPOs.

What challenges do FPOs face in obtaining credit from financial institutions?
The main challenges FPOs face in accessing finance include low capital base, lack of credit history, unavailability of collateral, insufficient capacity building of board members and CEO, and lack of professionalism. In addition, there are factors such as a low level of active member participation in business and meeting the various compliance requirements of the FPOs.

What would Nabard’s approach be to ensure that FPOs have access to cheaper credit under priority sector lending standards?
We provide grants for capacity building of FPOs. A grant of Rs 5 lakh per FPO is provided as starting money per FPO. Since FPOs are mainly made up of small and marginal farmers, they receive interest subsidies for crops and related activities under Kisan Credit Card. They also receive an interest subsidy from the Agri Infrastructure Fund.

How many FPOs have been funded by Nabard so far?
We do not provide direct credit to FPOs. Nabard facilitates credit links through banks, NBFCs and Nabard subsidiaries. About Rs 1,000 crore has been used by 1,600 FPOs as bank credit from financial institutions, the majority of FPO funding has been provided by NABKISAN Finance. As of date, NABKISAN has sanctioned a loan of Rs 278.8 crore to 926 FPOs.

Your take on the FPO ecosystem in the country?
FPOs will play a decisive role in shaping Indian agriculture in the coming years. The state governments should also support FPOs by creating basic infrastructure, common service centers, storage, etc. so that they are able to expand their business activities and generate sufficient income for their member dairy farmers. Sustainable development of FPOs requires an environment that can foster farmers, meet financial needs, alleviate constraints and spread awareness.

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