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NABARD to give loans to food processing sector at 7.5 to 9.25 per cent
Nov 14, 2014

To operationalise the fund of Rs 2,000 crore, which was earmarked by the finance ministry in this year’s budget, the National Bank for Agriculture and Rural Development (NABARD) would disburse the same as loans with interest rates ranging between 7.5 and 9.25 per cent to food processing industries to set up food units in the designated food parks. This was stated by a source in the bank.

NABARD is in the process of finalising the guidelines under which the loans would be disbursed to such units. They are expected to be out in a couple of days. A bank official said that state government projects would be offered loans at the rate of 7.5 per cent, while others, including individuals or private investors, would be given the same at the rate of 9.25 per cent (the bank’s prime lending rate). The bank would charge a risk premium and a tenor premium.

With the aim of developing the food map of the country and developing special clusters based on it, the funds could provide the food processing industry an impetus. The guidelines were discussed by NABARD, the Reserve Bank of India (RBI) and the ministries of food processing industries (MoFPI) and finance, and therefore, their release, which was scheduled for the end of October 2014, was delayed by almost two weeks.

Food processing industries minister Harsimrat Kaur Badal took keen interest in the fund operationalisation process. During her interaction with the press upon completion of the Modi cabinet’s 100 days in power, she mentioned that funds would be provided to set up agro processing units in the food parks and wanted to keep the rates as low as 7.5 per cent.

The success of the scheme, however, would depend upon the delivery system at the states. According to the ministry, five mega food parks has been approved in the states of Bihar, Maharashtra, Himachal Pradesh and Chhattisgarh under the new dispensation so far, while 83 proposals were received in respect of the expressions of interest received for setting up of new mega food parks in the country.

Meanwhile, the finance ministry allocated Rs 5,000 crore for warehousing infrastructure, of which cold chain infrastructure is also a part. According to the guidelines, the fund envisaged the extension of loans to public and private sector firms for the construction of warehouses, silos, cold storages and other cold chain infrastructure. It added that priority would be given to projects proposed in the eastern and north-eastern states and foodgrain-deficit states.

The funds would be allocated at a rate ranging between 9.25 per cent and 9.6 per cent, according to the eligibility criteria.