Equity Grant Fund Scheme

The Small Farmers Agribusiness Consortium (SFAC) was set up by the Ministry of Agriculture, Government of India. The SFAC was mainly developed to increase the income of small and marginal farmers through the development of agribusiness. Under SFAC, various schemes like equity grant scheme and credit guarantee fund scheme were launched to improve the working capital and development of business activities. In this article, we look at the Equity Grant Fund Scheme in detail.

Equity Grant Fund Scheme

The Equity Grant Fund (EGF) Scheme intends to support Farmer Producer Companies (FPC) by providing an amount equivalent to the equity contribution done by the members in the FPCs. The scheme will be addressed by the SFAC which affords the maximum amount of Rs. 10 lakhs per FPC in two payments. The emerging FPC capital should not be above Rs. 30 lakhs on the date of application of the scheme.

Objectives of the Scheme

The objectives of the Equity Grant Fund are explained as below.

To improve the viability and sustainability of Farmer Producer Companies (FPC).
To increase the creditworthiness of Farmer Producer Companies (FPC).
To enhance the shareholding of members to increase their ownership and participation in their Farmer Producer Companies (FPC).

Eligibility Criteria

The following are the eligibility criteria of the Equity Grant Fund Scheme.

The FPC should be duly registered under the Indian Companies Act, 1956.
The FPC should have raised equity from its members as per association/bye-laws.
The FPC should contain the number of individual shareholders not less than 50 shareholders.
The paid-up equity does not exceed Rs. 30 Lakh.
The FPC should contain at least 33% of its shareholders such as small, marginal and landless tenant farmers as specified by the Agriculture Census carried out periodically by the Ministry of Agriculture, GOI.
The maximum shareholding of an institutional member should not be more than 10% of the total equity of the FPC.
The FPC should have duly elected Board of Directors (BOD) with five members, representation from member farmers and minimum one woman member.
The FPC should have a duly constituted Management Committee responsible for the business of the FPC.
The FPC should have a business plan and budget for the next 18 months which is based on a revenue model as determined by the Implementing Agency.
The FPC should have an Account with a Scheduled "Bank". FPC should hold a Statement of Accounts audited by a Charted Accountant (CA) for at least one full financial year.

Documents Required

The specified documents for applying for this scheme are mentioned below.

Application form of duly signed by two Board Members/Authorised Representative of FPC on each page.
Category wise allotment of shares of FPC and proposed computation of allotment of shares out of Equity Grant to be enclosed.
Resolution of the FPC Board or Governing Council to obtain Equity Grant, issue of shares to the shareholders against the Equity Grant and transfer of shares (issued against Equity Grant) in case of the exit of any shareholder from FPC to be enclosed.
The Resolution will be approved in the next AGM of the FPC may be submitted on the lines of Annexure-III.
Resolution for appointment of Chief Executive Officer of Company
Audited Financial Statements for the last financial year.
Copy of bank statement for last six months duly authenticated by the Branch Manager of the Bank.
KYC documents of only those Representatives/Directors authorised by the Board of FPC for executing and signing documents with SFAC.
Certificate of incorporation/commencement of business, Memorandum of Association/Articles of Association.
The business plan for 18 months.

Application Procedure for the Scheme

Step 1: The applicant has to visit the official portal of the SFAC Government of India.

Step 2: Click on “Equity Grant and Credit Guarantee Fund Scheme (EGCGF)” tab which is visible on the homepage of the portal.

Step 3: On the same page, select “Online application form for equity grant scheme” from the list of options to apply for the scheme through online mode.

Step 4: On the next page, the application form for the equity grant scheme will open up.

Step 5: Fill the application form with the required details.

Step 6: After filling the application form, you need to upload the documents required along with the form. Step 7: Then click “Submit” to complete the process. Note: The applicant will be provided with the reference number as the acknowledgement number for the confirmation of submission.

Sanctioning Authority

An Equity Grant Sanction Committee (EGSC) along with four members, the Managing Director SFAC, officers of the organisation chosen by MD, SFAC and an external sector expert, will evaluate or sanction applications received under this Scheme. The decision of the committee made will be the final. The equity grant can be a cash equivalent to the amount of shareholder equity in the FPC subject to an amount of Rs. 10 lakh per FPC. Equity Grant sanctioned will be directly transferred to the Bank account of the FPC. The FPC in forty-five days of the receipt of the Equity Grant, distribute additional shares to its shareholders, equivalent in value to the amount of the Grant received by it.

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Frequently Asked Questions

Common questions about Equity Grant Fund Scheme for Farmer Producer Companies.

The Equity Grant Fund Scheme is an initiative by the Small Farmers Agribusiness Consortium (SFAC) under the Ministry of Agriculture, Government of India. It aims to provide financial support to Farmer Producer Companies (FPCs) by granting an amount equivalent to the equity contribution made by the members in the FPCs. This scheme can provide a maximum of Rs. 10 lakhs per FPC in two installments.

The main objectives of the Equity Grant Fund Scheme are to improve the viability and sustainability of Farmer Producer Companies (FPCs), increase their creditworthiness, and enhance the shareholding of members to increase their ownership and participation in their respective FPCs.

Some of the key eligibility criteria are: the FPC should be registered under the Indian Companies Act, 1956; it should have raised equity from its members; it should have at least 50 individual shareholders; the paid-up equity should not exceed Rs. 30 lakhs; at least 33% of its shareholders should be small, marginal, or landless tenant farmers; and it should have an elected Board of Directors and a Management Committee.

The required documents include an application form signed by authorized representatives, details of share allotment, resolutions by the FPC Board/Governing Council, audited financial statements, bank statements, KYC documents of authorized representatives, incorporation/registration documents, and a business plan for 18 months.

An FPC can apply for the Equity Grant Fund Scheme through the online application form available on the SFAC website. The process involves filling out the application form, uploading the required documents, and submitting the application.

The applications received under the Equity Grant Fund Scheme are evaluated and sanctioned by an Equity Grant Sanction Committee (EGSC) comprising members from SFAC and an external sector expert. The decision of this committee is final.

The sanctioned Equity Grant is directly transferred to the bank account of the eligible FPC. The FPC is then required to distribute additional shares to its shareholders, equivalent in value to the amount of the Grant received, within 45 days of receiving the Grant.

The maximum amount that an FPC can receive under the Equity Grant Fund Scheme is Rs. 10 lakhs, which is disbursed in two installments.

No, one of the eligibility criteria for the Equity Grant Fund Scheme is that the paid-up equity of the FPC should not exceed Rs. 30 lakhs on the date of application.

The Equity Grant Fund Scheme aims to provide financial support to Farmer Producer Companies (FPCs) by contributing an amount equivalent to the equity raised by the members. This is intended to improve the viability, creditworthiness, and ownership participation of members in their respective FPCs, ultimately enhancing the income of small and marginal farmers through agribusiness development.