India’s food and consumer affairs minister Pralhad Joshi recently rolled out the Credit Guarantee Scheme for e-NWR-based pledge financing scheme (CGS-NPF) with a fund of Rs 1,000 crore. This scheme seeks to cut on distress selling by farmers by providing post-harvest finance using e-NWRs backed by pledged commodities whose storage is permitted by relevant warehouses. This encompasses small/marginal farmers such as women, farmer’s organizations/ SHGs-SC/ST/PwD farmers, MSMEs, traders, and FPOs. The scheme allows cubing of up to 85% in the case of farmers and up to 75% in other cases. Through this initiative, the lending fraternity has been encouraged to support farmers in post-harvesting capabilities with the resulting impact on farmers’ incomes and positive changes made to their perceptions of the banking system.
Key Highlights
Launch and Objective:
-
The Credit Guarantee Scheme for e-NWR-based Pledge Financing (CGS-NPF) was recently rolled out where to Union Minister Pralhad Joshi in the second week of December 2024.
-
Purpose: The scheme envisages alleviating distress selling by farmers through the post-harvest credit of one thousand crore against e-NWRs.
-
Target Audience: Small and Marginal Farmers, Women, SC/ ST Farmer, Disabled (PwD) Farmer, MSMEs, FPOs and Farmer Cooperatives.
Guarantee Coverage:
-
85% for loans up Rs 3 lakhs for small and marginal farmers, women SC/ST/PwD.
-
80% coverage for loans above Rs. 3 lakh but less than Rs. 75 lakh to the same above group.
-
50% guarantee for loans up to Rs. 200 lakh for other borrowers, which includes the MSMEs traders etc.
Features:
-
Total Corpus: Rs. 1,000 Crore.
-
Eligible Institutions: The two major classifications for bank are Scheduled Banks and Cooperative Banks.
-
Risks Covered: Credit risk associated with the receivables and risk associated with the warehouseman.
-
Guarantee Fee: 0.4% for farmers, 1% for non-farmers.
Financial Implications:
-
Initially, the 80-85 % guarantee will be provided on those loans that have been given up to Rs. 75 lakh to the farmers.
-
75 percent will be covered up to Rs.200 lakh for the loans given to MSMEs, traders and FPOs.
Government’s Commitment:
-
Minister Joshi said that this scheme is viable for food security and called for banks to become less conservative in funding farmers.
-
The scheme sits well with Prime Minister Mr. Modi’s agriculturist-friendly profile.
-
The platform called e-Kisan Upaj Nidhi works on bringing tailor-made lending methods targeting farmers without their frequent trips to the bankers.
Claims Settlement:
-
Loans up to Rs. 75 lakh: The first installment constitutes to 75% of the total sum of the contract while the second installment is only 25% of the total sum of the contract.
-
Loans above Rs. 75 lakh and up to Rs. 2 crore: One payment is equal to 60% of the cash and another payment corresponds to 40% of the cash.
Additional Goals:
-
Increase Warehouse Registration: It leads registered warehousing to 40,000 as the government initiates in the next 1-2 years.
-
Focus on Farmers’ Welfare: The plan is aimed at increasing working capital in post-harvest sectors, for the farmers and traders, and improving relations between the banks and the borrowers.
Conclusion
Credit Guarantee Scheme for e-NWR-based Pledge Financing is a critical initiative aimed at solving farmers’ post-harvest financial challenges. With ₹1,000 crore as corpus, it ensures accessible loans, reduces distress selling, and supports small/marginal farmers, MSMEs, and FPOs. This scheme strengthens warehousing infrastructure, builds trust in banks, and aligns with the government’s commitment to rural development and food security.
