Farm Mechanization

RULES FOR MEDIUM TERM FARM MECHANISATION LOAN

What is Farm Mechanization?

Farm mechanization means the use of modern mechanical devices for different agricultural practices. It increases agricultural productivity and avoids human drudgery. Some of the implements for Farm mechanization are Tractor and its accessories, tower Tiller, Thrasher etc.

Financing new Tractors/ Power Tillers

Eligibility

1. Members of PACS’ (including LAMPS, FSCS etc.), PACS’ and Nominal members of the Bank (in exceptional cases) are eligible for such finance.
2. The borrower shall possess minimum 2.50 acres and 1.25 acres pf perennially irrigated land, with command area of 5.00 acres and 3.00 acres, for Tractors and Power Tillers respectively, unless financial viability is established otherwise.
3. Minimum use of Tractor/ Power Tiller:- The borrower should be in a position to utilize the tractor for at least 1000 hours per annum in his own farm or on hire (i.e., Custom service). For Power Tiller this requirement is 600 hours per annum.
4. Incremental income:-Not less than 50% of the incremental income should come from the borrower’s own use.

Margin

30% (thirty per cent) of the project cost shall be borne by the borrower. A member-society shall have to purchase requisite “C” Class Share for the loan

Security

1. Mortgage of landed property
2. 10% of loan as liquid collateral security and/ or third party guarantee in case of nominal member
3. Hypothecation of assets created out of loan.

Period of repayment

Loan shall be repayable in 3 to 7 years for Tractors and 3 to 5 years of Power Tillers, including moratorium for 3 months.

Rate of interest

As may be decided by the Bank from time to time.

Appraisal and Sanction

All loans of this type shall be appraised by the Branch Manager himself or any official authorized by him with reference to the Loan Manual of the Bank specifically recommended by the Branch Manager/ Manager of the Branch, processed at the Regional / Head Office level and then considered and sanctioned by the appropriate Committee of the Bank, duly authorized by the Board of Directors from time to time or by the Board of Directors itself.

Insurance

The borrower should arrange for insurance cover for the full value of the asset under comprehensive policy with Bank’s clause. The expiry of the policy should be diarised and the borrower shall arrange, at his own cost, for renewal of the policy well before the date of expiry.

Other conditions

1. Along with the application following documents should be obtained:- a) Quotation b) Land records like sale deed, parcha/ mutation certificate, tax receipt etc., and c) Search-cum-non-encumbrance certificate in respect of the land under possession and d) Project economics.
2. he Branch shall submit a report on inspection of the command area, verification the past loan repayment records of the borrower from the records of the PACS’ and other Financial Institutions of the area and the competence of the borrower.
3. The Brand of the Tractor /Power Tiller need be included in the test- certified list of the Government of India and should be acceptable to the Bank.
4. Tractors are to be registered with the Regional Transport Authority and hypothecation charge should be duly recorded in R.C. Book.

For more information the please contact with the loan department of the bank and its branches.