Background

Department of Animal Husbandry, Dairying and Fisheries, (DAHD&F) GoI during the year 2005-06 launched a pilot scheme titled “Venture Capital Scheme for Dairy and Poultry”. The main objective of the scheme was to extend assistance for setting up small dairy farms and other components to bring structural changes in the dairy sector. Assistance under the scheme is extended in the form of Interest Free Loan (IFL) to individuals, SHGs, NGOs, Cooperatives, companies for selected components. As on 31 March 2010, 15368 units were extended IFL assistance of Rs 146.91 crore throughout the country.
An evaluation of the scheme revealed that the scheme had created a major impact in the area of financing of milch animals in some States and the farmers at ground level derived benefit from the scheme. The study has recommended removing the restrictive clause on financing of milch animals in Operation Flood areas. Further, there are requests from many quarters including farmers, State Animal Husbandry Departments and banks to convert the mode of implementation of the scheme from IFL to capital subsidy mode.

After detailed discussions with all the stakeholders, it has been decided by DAHD&F, the nodal department to change the mode of implementation, revise the existing unit costs and bring some more components for assistance under the purview of the scheme. As the scheme aims at promoting entrepreneurial qualities, the revised scheme has been named as “Dairy Entrepreneurship Development Scheme”(DEDS.)

Objectives of the scheme

• To promote setting up of modern dairy farms for production of clean milk
• To encourage heifer calf rearing thereby conserve good breeding stock
• To bring structural changes in the unorganized sector so that initial processing of milk can be taken up at the village level itself.
• To bring about upgradation of quality and traditional technology to handle milk on a commercial scale
• To generate self employment and provide infrastructure mainly for unorganized sector

Implementing period and Area of operation
The scheme will be implemented during the remaining XI plan period throughout the country without restrictions applicable to Operation Flood areas for financing of milch 2 animals. The scheme will come into effect from 1 September 2010 i.e. proposals sanctioned and disbursed by the banks on or after 1 September 2010 shall be covered under the revised scheme i.e. DEDS and sanctions under the old scheme (DVCF) will not be entertained thereafter.

Eligibility

• Farmers, individual entrepreneurs, NGOs, companies , groups of unorgainsed and organized sector etc. Groups of organized sector include self help groups, dairy cooperative societies, milk unions, milk federations etc.
• An individual will be eligible to avail assistance for all the components under the scheme but only once for each component
• More than one member of a family can be assisted under the scheme provided they set up separate units with separate infrastructure at different locations. The distance between the boundaries of two such farms should be at least 500m.

Subsidy.
Components that can be financed, indicative unit cost and pattern of assistance are given below

Funding pattern

• Entrepreneur contribution ( margin) – 10 % of the outlay ( minimum).
• Back ended capital subsidy - as indicated above.
• Effective Bank Loan - Balance portion, Minimum of 40% of the outlay.

Linkage with credit
 Assistance under the scheme would be purely credit linked and subject to sanction of the project by eligible financial institutions

Eligible financial institutions
a. Commercial Banks
b. Regional Rural Banks
c. State Cooperative Banks
d. State Cooperative Agriculture and Rural Development Banks: and
e. Such other institutions, which are eligible for refinance from NABARD

Sanction by banks
The entrepreneurs shall apply to their banks for sanction of the project. The bank shall appraise the project as per their norms and if found eligible, sanction the total outlay excluding the margin, as the bank loan. The loan amount is then disbursed in suitable installments depending on the progress of the unit. After the disbursement of first installment of the loan, the bank shall apply to the concerned Regional Office of NABARD for sanction and release of subsidy

Project Sanctioning Committee( PSC)
 As in the earlier Dairy Venture Capital Fund Scheme, the existing PSC of NABARD Regional Office shall examine the proposals placed before it and sanction the subsidy in case of eligible proposals

Release of subsidy

• After sanction of the subsidy by the PSC, the Regional Office of NABARD shall release the subsidy amount after confirming the availability of funds from NABARD Head Office. The subsidy shall be released on first come first serve basis subject to availability of funds.
• Immediately after receipt of subsidy amount from NABARD, the implementing bank branch should credit the subsidy to the reserve fund of the borrower. A Utilization Certificate shall be submitted by the participating bank to NABARD to the effect that the amount of subsidy received by them has been fully utilized and adjusted in the books of account within the overall guidelines of the scheme.

Repayment

• Repayment Period will depend on the nature of activity and cash flow and will vary between 3- 7 years. Grace period may range from 3 to 6 months in case of dairy farms to 3 years for calf rearing units (to be decided by the financing bank as per needs of individual projects).

• The recovery of loan will be based on net loan amount only. i.e. not including subsidy, which will be adjusted by the concerned bank after effective bank loan and interest thereon has been repaid .i..e. The repayment schedules will be drawn on the total amount of the loan (including subsidy) in such a way that the subsidy amount is adjusted after liquidation of net bank loan (excluding subsidy).

Rate of Interest
Rate of interest on the loans shall be as per RBI guidelines and declared policy of the bank in this regard. The bank may charge interest on the entire loan amount till the subsidy is received and from the date of receipt of subsidy by the implementing branch, interest has to be charged only on the effective bank loan portion i.e. outlay excluding the margin and subsidy

Security
The security for availing the loan will be as per guidelines issued by RBI from time to time.

Time limit for Completion of the project.

• Time limit for completion of the project ( except for calf rearing units where disbursements are expected to continue till two years) would be as envisaged under the project, subject to maximum of 9 months period from the date of disbursement of the first installment of loan which may be extended by a further period of 3 months, if reasons for delay are considered justified by the financial institution concerned.
• If the project is not completed within the stipulated period, benefit of subsidy shall not be available and advance subsidy placed with the participating bank, if any, will have to be refunded forthwith to NABARD 16.Refinance Assistance from NABARD NABARD would provide refinance assistance to commercial banks, RRBs, SCBs SCARDBs and other such eligible institutions. Quantum and rate of interest on refinance will be as decided by NABARD from time to time.

 Adjustment of subsidy

• The capital subsidy will be back ended with minimum lock-in period of 3 years.
• The capital subsidy should be refunded one year after the account becoming NPA and remaining NPA as on date.
• The capital subsidy will be adjusted against the last few installments of repayment of bank loan.
• The capital subsidy admissible under the scheme will be kept in the “Subsidy Reserve Fund Account (Borrower-wise) in the books of the financing bank. No interest will be paid on this amount by the bank. In view of this, for the purposes of charging interest on the loan component, the subsidy amount should be excluded. The balance lying to the credit of the “Subsidy Reserve Fund Account” will not form part of Demand and Time Liabilities for calculation of CRR and SLR.

Monitoring

• Joint Monitoring Committee (JMC) consisting of representatives of NABARD, concerned banks and State Secretaries-in-charge of Animal Husbandry and Dairying under chairmanship of Joint Secretary (DD) will review implementation of the scheme at regular intervals.
• The PSC will review the progress on quarterly basis.
• The participating banks should conduct periodic inspections of the units and give a feedback to the PSC on a consolidated basis.
• The units set up under the scheme will be field monitored on a sample basis by NABARD and major observations will be put up to JMC for discussion.
• The discretion to modify the unit cost is vested with an Empowered Committee under the Chairmanship of Secretary (ADF).

Other Conditions

• The participating banks will adhere to the norms of appraising the projects regarding technical feasibility and commercial/financial viability.
• All possible care will be taken to avoid duplication of projects under the scheme with similar projects implemented by Directorate of Agricultural Marketing, Ministry of Agriculture in the same areas.
• The participating banks should ensure insurance of the assets created under the project, wherever required.
• A signboard displaying “Assisted by Department of Animal Husbandry Dairying and Fisheries, Ministry of Agriculture, Government of India through NABARD” will be exhibited at the unit.
• Pre and post completion inspection of the project shall be undertaken by the participating bank to verify physical, financial and operational progress as and when required.
• DAHD&F reserves the right to modify, add and delete any terms / conditions without assigning any reason
• DAHD&F’s interpretation of various terms will be final. o DAHD&F reserves the right to recall any amount given under the scheme without assigning any reason thereof.
• Pre and post inspection would be undertaken by DAHD&F/NABARD to find out the physical and financial progress as and when required. o Other operational instructions issued by DAHD&F / NABARD from time to time will be strictly followed.

Implementation of DEDS (Year wise targets and achievements)

Dairy Entrepreneurship Development Scheme (DEDS)

Continuation of Dairy Entrepreneurship Development Scheme during 2018-19

NABARD CIrculars

Department of Animal Husbandry, Dairy and Fishing

Bankwise Progress As of December 2019

Bankwise Progress As of March 2020