Cent Dairy Scheme
Cent Dairy Scheme
The Cent Dairy Scheme (CDS) is a program introduced by the Central Bank of India to provide financial assistance to dairy units. One of the primary objectives of the CDS is to ensure that farmers make use of the latest innovations in the field of dairy farming. The CDS also aims to enhance the volume of milk production generated by the dairy units. The CDS is intended to benefit individuals, firms, non-governmental organisations (NGOs), and co-operative societies which pursue dairy farming as the prime objective. Dairy farming enhances the economic and employment prospects available in the country.
Dairy farming is a highly viable model of business since almost all regions across India are suitable for its establishment. The dairy farming methods recommended by the CDS are mostly eco-friendly. The dairy farming methods recommended by the CDS ensure an optimal yield from the same input resources. The CDS allows a farmer to market dairy products efficiently. Hence, the farmer need not concentrate on the advertising and promotional aspects of the business. Finance under the CDS is made available at a unit cost which is exclusive of Margin Money. The funding is disbursed as per the viability of the project and repaying potential of the borrower. The present article describes the details of the finance available under CDS.
Proposed Margin
The margin for finance available under this scheme depends on the quantum of finance obtained. The margin shall be the following:
- For loans up to INR 1 lakh – no margin
- For loans ranging between INR 1 lakh and INR 5 lakhs – 10%
- For loans ranging between INR 5 lakhs and INR 10 lakhs – 15%
- For loans above INR 10 lakhs – 20%
Rate of Interest
The following rates of interest are applicable for loan provisions under this scheme:
- For loans of up to INR 50,000 – Marginal Cost of Funds based Lending Rate (MCLR)+0.50
- For loans ranging between INR 50,000 and INR 25 lakhs – MCLR+1.00
- For loans ranging between INR 5 lakhs and INR 25 lakhs – MCLR+1.50
- For loans ranging above INR 25 lakhs – MCLR+2.00
Loans covered by the scheme are not burdened with processing charges.
Inspection Charges
The following are the inspection charges for obtaining finance under the scheme:
- For loans up to INR 2 lakhs – Nil
- For loans ranging between INR 2 lakhs and INR 5 lakhs – INR 200
- For loans ranging between INR 5 lakhs and INR 50 lakhs – INR 500
- For loans ranging above INR 50 lakhs – INR 1000
Security
The type of security to be given varies according to the quantum of loan. The required security shall be the following:
- For loans of up to INR 1 lakh – Hypothecation of Livestock and other assets created out of bank finance (requires no collateral).
- For loans above INR 1 lakh – Creation of Mortgage/Charge on land having a market value to the extent of 100% of the loan amount (as a minimum).
Period of Repayment
No specific requirement has been specified concerning the period of repayment. The tenure would be based on the cash flow, and generally varies between a period of 3-7 years.
