Farmers Can Now Get Loans on Crop Guarantee: A New Government Scheme

Key Highlights

• Farmers can get loans by pledging crops stored in certified warehouses.
• Loans up to Rs 75 lakh for agricultural purposes.
• 85% loan guarantee for small farmers, women, and disadvantaged groups.
• Low guarantee fee: 0.4% per year for farmers.
• The scheme aims to improve crop storage and market pricing flexibility.

The government has introduced a new scheme to help farmers access loans against their crops Guarantee. This initiative called the Credit Guarantee Scheme for e-NWR Based Pledge Financing (CGS-NPF), will allow farmers to store their crops in certified warehouses and use them as collateral for loans. This will not only protect the crops but will also help farmers get fair prices by allowing them to sell their produce when the market conditions are better.

Also Read: Rajasthan Government Approves Construction of 35 Onion Storage Structures

How the Scheme Helps Farmers

Many farmers face challenges in getting a fair price for their crops because they have no place to store them. Without proper storage, crops can get damaged, forcing farmers to sell them quickly at lower prices. This new scheme addresses that issue by encouraging farmers to store their crops in safe, certified warehouses. Once stored, farmers can get a loan against their crop using an e-Negotiable Warehouse Receipt (e-NWR). This electronic document acts as proof that the crop is stored in a certified warehouse, and farmers can use it to secure a loan from a bank.

Key Features of the Scheme

1. Loan Amount: Farmers can get loans up to Rs 75 lakh for agricultural purposes and up to Rs 200 lakh for non-agricultural purposes.
2. Loan Guarantee: The government will provide a guarantee on these loans, making it easier for farmers to get approved. Small and marginal farmers, women, SC/ST, and Divyang farmers will receive a higher loan guarantee of up to 85% for loans up to Rs 3 lakh.
3. Low Loan Guarantee Fee: The scheme offers a low guarantee fee of 0.4% per year for farmers, while non-farmers will pay 1% per year.
4. Eligible Farmers: The scheme is mainly for small and marginal farmers, women, SC/ST, Divyang farmers, as well as Farmer Producer Organizations (FPOs), cooperatives, and small traders.

Also Read: New District Cooperative Banks to Open in India to Boost Agriculture Loan Facilities

Encouraging Warehousing Facilities

The scheme aims to boost the development of more certified warehouses near farms. These warehouses will provide safe storage for crops and help farmers avoid high transportation costs. This will give farmers the flexibility to sell their crops when prices are higher, increasing their chances of making a better profit.

How to Apply for the Loan

Farmers can apply for the loan through scheduled banks or cooperative banks. These banks are eligible to provide loans under the CGS-NPF scheme. Farmers can contact their nearest bank to learn more about the loan application process.

Support from the Government

The government has allocated Rs 1,000 crore for this scheme, which started on 16 December 2024. In addition to this, the government has also been encouraging the creation of more certified warehouses through the Warehousing Development and Regulatory Authority (WDRA). This will help to ensure that farmers have easy access to storage facilities close to their farms.

Related Support Schemes

This new crop loan scheme complements other government initiatives, such as the Kisan Credit Card (KCC), which offers farmers loans up to Rs 3 lakh at a subsidized interest rate. The Modified Interest Subsidy Scheme (MISS) also supports farmers by covering post-harvest loans for small farmers with KCC.

Also Read: Farmers to Get Increased Compensation for Land Acquired for Noida International Airport

CMV360 Says

The government's new scheme for loans against crop guarantees will provide much-needed financial support to farmers while protecting their crops. By making use of warehouses and loans, farmers can store their produce safely and also sell it at the right time, ensuring better prices and profits.