Objectives

• Financing to the poultry units. (like Commercial layer, broiler, Poultry Breeding units and hatcheries).

Purpose

• For meeting any of the requirements as under;
• Construction of brooder/grower and layer sheds, feed Godown, labour quarters etc.
• Purchase of poultry equipment such as cages, feeders, waterers etc.
• Creating infrastructure items for supply of electricity, feed, water etc.
• Purchase of dayold chicks or ready to lay pullets.
• Meeting working capital requirement in respect of feed for maximum 120 days, medicines and veterinary aid etc. (All costs are embedded in assessment table -annexed)
• Any other innovative activity adopted by unit for increasing production or better management.
• Purchase of existing poultry units / Outright purchase.
• Hatchery units will require finance for egg rooms, fumigation room, egg cooling room, room for egg incubators, room for identification of male / female chicks as well as vaccination and packing room. Larger poultry units may also require finance for purchase of air conditioners, stand-by generator etc.
• It is an indicative list of activities to be financed and any other infrastructure / other requirements under commercial poultry farming can be considered.
• The activity may be undertaken by direct farming, contract farming or integration.

Eligibility

• Individual/ Joint individuals/Proprietor concern/Partnership firm /LLP /Private ltd Company/Public Limited Company experienced in the line of poultry farming and competent to run the business.
• The unit should be technically feasible and economically viable.
• Other constitutions such as group of individuals, Associations, Co-operatives, Federations, FPOs can also be financed for raising poultry.

Loan Limit

• No Minimum and No maximum loan. Any amount of loan can be sanctioned based on the project cost duly following the margins.

Nature of facilities

• Cash Credit Limit (CCL) or Term Loan (TL) or Composite loan and need based Non fund based limits.

Non fund based limits:

• Purpose: For purchase of feed materials / capital goods for high value / hi-tech projects.
• Margin under BG/LC: 25%
• Types of BG: Financial BG
• Types of BG LC : DA/DP
• Assessment: As per the bank guidelines.

Assessment Method/Quantum of Finance

I.For Layers, parent breeder birds and hatcheries:

Assessment of Term loan:

• Need based Term loan for purchase / establishment/ creation of infrastructure such as Construction of brooder/grower and layer sheds, feed Godown, feed plant, water source, overhead tank, labour quarters etc.
• Purchase of poultry equipment such as cages, feeders, waterers, automated feed mixing machine etc.
• Creating infrastructure items for supply of electricity, generator, feed, water etc.
• Any other components of poultry activity etc.
• Capitalized recurring expenditure up to point of commencing egg production in full scale such as cost of day old chicks, cost of feed, medicines, labour, other maintenance etc. In other words, costs incurred upto laying of eggs / attaining commercial production of the eggs in the farm.
• Borrower should own the land where unit is to be established and no loan is to be extended for purchase / acquiring land.

Note: Term loan be sanctioned for layers, broilers and parent birds in the form of composite or Project finance as a whole and no term loan should be sanctioned on standalone basis for layers, broilers and parent birds for purchase of DOC( i.e.,Day old Chicks) and feed as they are reckoned under working capital.

In other words, it is to be noted that only recurring costs (i.e., Purchase of DOCs- Day Old Chicks, feed ingredients) should not be financed as a standalone term loan as they are included in working capital assessment. However, all the above components can be included in the project / composite for financing in the form of term loan.

Assessment of Working capital:

Feed Consumption method is used for assessment of Working capital requirements for layer and parent breeder bird / hatcheries. (Calculation sheet annexed separately for Layers and Parent Birds. Separate working sheets are made available for

• Poultry Units having Term loan where bird costs are included in project.
• Poultry Units without Term loan where bird costs are not included in project.

The assessment of working capital is not based on the sales turn over. In view of seasonal availability of the feed ingredients, the assessment shall be made based on feed requirements of the poultry birds. However, branches shall calculate the turnover method as a routine and not to be considered for financing the working capital.

II.For Broiler Birds:

• Term loan to be assessed as per NABARD Unit cost. The components such as infrastructure, equipment / machineries and recurring cost to be included in term loan.
• Need based working capital limit is to be allowed for Broiler units since the proceeds are realized within short span (6 to 8 weeks).
• In case of contract farming/integration, day old chicks, feed and medicines are supplied by the integrator and borrower shall make arrangement for shed, labour, electricity and water facility etc. Hence, only term loans are to be sanctioned. Therefore, it is decided that working capital limits shall not be sanctioned to borrowers engaged in contract farming / integration as there will be no primary security creation as such.
• In order to meet the day to day requirements, recurring costs for the two cycles i.e., 8 weeks per cycle, can be considered. Calculation sheet is enclosed as Annexure.
• Borrower should own the land where unit is to be established and no loan is to be extended for purchase / acquiring them.

Trading activities:

• Trading activities such as sale of poultry birds, eggs, meat and poultry feed are not eligible under the scheme and to be categorized as MSME and sanctions to be made as per extant guidelines.

General guidelines on assessment of limits:

• As per NABARD project cost and guidelines subject to economic viability of the project Or
• Project based finance supported by cash flow (cost escalation up to 20% of NABARD project cost is permitted. The respective delegated authority is authorized to decide/consider ± 20% of the NABARD unit cost with proper justification.)
• Unit costs prescribed by NABARD are indicative in nature only. In case of commercial units or any cost escalations in the activity and to consider beyond 20% of NABARD unit cost, the proposal shall be dealt by RLCC and above committees with due justification and proper assessment on case to case basis.
• For areas where NABARD project cost is not available, project cost as per NABARD of nearby areas can be considered.
• Branches to ensure that the proposal is in compliance with NABARD project cost. For considering projects with higher cost’s i.e. upto a maximum 20% of NABARD project cost, it is to be properly assessed & justified and the same should be a part of appraisal/process note.
• Whenever there is a change in unit costs / any component of poultry approved by NABARD / state level banker’s committees (SLBCs) / Special committees of SLBCs/ State / Central Sponsored schemes etc shall be followed.
• Drawing power can be arrived by taking book debts which are not more than 90 days and shall be restricted to 50% of the limit. The said book debts/creditors statement duly certified by auditor to be submitted on quarterly basis.
• Wherever chick/birds are already considered as component under term loan, the chick/bird cost should not be taken for arriving at the Working Capital/ CC limit. Only feed cost to be financed in such cases.

Feed formula and feed Cost

Margin

• Term loan- 25%
• Working capital - 25%
• outright purchase of poultry farms: 40%
• Working capital under contract farming: 40%

Rate of Interest

Revised ROI under the scheme is as follows (Basis – as per IC No: 1974-2020 Dt: 27.03.2020 & IC no: 2365-2020 Dt: 28.12.2020 and modified as under):

• For limit upto Rs. 1.00Cr for both Term loan and cash credit (No minimum loan amount).

• For limits above Rs. 1.00Cr to Rs. 25.00Cr for both Term loan and cash credit is as under:

Internal Rating	Applicable ROI upto Rs 20 Crs	Applicable ROI Rs 20 Crs to Rs 25 Crs	Revised ROI under the scheme
CR/UBC-1	MCLR+0.70%	MCLR+2.65%	MCLR+0.10
CR/UBC-2	MCLR+0.75%	MCLR+2.90%	MCLR+0.25%
CR/UBC-3	MCLR+0.80%	MCLR+3.20%	MCLR+0.35%
CR/UBC-4	MCLR+0.95%	MCLR+3.70%	MCLR+0.45%
CR/UBC-5	MCLR+4.15%	MCLR+4.30%	MCLR+1.00%

For limits above Rs. 25.00Cr for both Term loan and cash credit is as under:

Note: *

• The above rate of interest is including the term premia.
• For advances above Rs. 1.00Cr only accounts with internal credit rating CR/UBC-5 and better will be considered. During renewal, if the rating is downgraded below the Hurdle rate (i.e., CR-5) for loans of Rs. 1.00Cr up to Rs. 25.00Cr and in respect of external rated accounts downgraded to below BB/A4 the account will become ineligible for concession rate under the scheme. For ineligible and unrated accounts, the applicable ROI is to be assigned as per Master Table A-1/B1 (Other than MSMEs) as per IC No 1974 dt 27.03.2020.
• No additional concessions in the ROI is to be entertained for the delegated authorities upto CAC III. Any additional concessions in the approved card rates can be granted by CAC-II and above within their respective delegation.
• In case account slips to NPA / Stress or is taken over by the other banks or FIs / Non compliance of the terms and conditions of sanction, concessional ROI as per the PAN India Scheme is to be withdrawn from retrospective effect i.e., date of extending concessional ROI. Accordingly, an undertaking is to be obtained. Further, branches to assign rate of interest as per IC No:1974-2020 dt: 27.03.2020, Table F19 and Master Table A1/B1 ( other than MSMEs).
• Accounts remaining in stress for more than 30 days in a quarter will also become ineligible for concessions and applicable ROI is to be assigned as per existing Master Table A-1 /B-1 (other than MSMEs) as per IC No: 1974-2020 Dt: 27.03.2020. The account will again qualify for concession in the next quarter after remaining standard (with out any overdue) throughout in the immediate preceding quarter.
• For eg., if the account comes under SMA -0 on 10.10.2022 ( i.e, SMA-1 on 09.11.2022), it must be get back to standard by 31.12.2022 and remain standard category for the entire subsequent quarter i.e., from 01.01.2023 to 31.03.2023 to be eligible for concession once again from 01.04.2023. In other words, accounts falling under SMA-1 category are ineligible for concessions. Branches to take special care of the accounts and avoid revenue leakage.

Clarifications:

• External credit ratings of AAA to BB & below are for long term loans (fund based limits like TLs and CCs) and ratings ranging from A1+ to A4 & below are for short term loans (Non fund based limits).
• In case of agri loans, credit rating is not linked to Rate of interest upto Rs 1.00 Cr. However, branches are advised to arrive credit rating for the loans above Rs 25 lakhs upto Rs 100 lakhs to reduce the risk provisioning for rated accounts.
• Financing to accounts with internal credit rating below CR/UBC-5, external credit rating below BB & unrated accounts will be done as per Loan Policy. Though these accounts can be covered under Pan India Scheme of poultry finance, ROI will be applicable as per IC 1974-2020 dated 27.03.2020 or such other applicable guidelines issued from time to time.

Service Charges

• Processing charges: as applicable
• Documentation charges –as applicable
• Inspection charges –as applicable
• Other service charges –as applicable

(As per IC no: 03454-2022 dated: 25.07.2022 and circulars issued from time to time)

Credit rating

Internal Rating :

• For advances up to Rs.5.00 crores: UBI models shall be used for doing credit rating in respect of borrowers with aggregate exposure up to Rs.5.00 Crs.
• For advances above Rs.5.00 crores: In case of borrowers with aggregate credit exposure of above Rs.5 Crs or average turnover of Rs.25 Crs in the last three years or three years average projected turnover of above Rs.25 crores, respective CRISIL RAM model is to be followed for internal rating of accounts and hurdle rating of borrowers under CRISIL RAM rating models will be CR5/UBC5 for new borrowers and CR4/UBC4 for take over accounts.
• Hurdle rating for existing accounts is CR/UBC-5.Accounts with rating below CR/UBC- 5 will not be considered for ROI concessions under the scheme. Hurdle ratings under CRISIL RAM model is CR5/UBC5 for new borrowers and CR4/UBC4 for take over accounts.

External Rating:

• As per the latest credit policy, all accounts enjoying Fund based and non-fund based limits above Rs.25 crores (exposure from banking system) are to be rated by the external credit rating agencies accredited by RBI. Hurdle rate for new / existing accounts is BB and for take over accounts the same is BBB. Rating below BB or unrated accounts shall not be considered under the scheme.

Take-over norms

As per extant Loan policy.

Primary Security

• Cash Credits / Working capital limits: Hypothecation of assets created out of Bank Finance, Hypothecation of feed stock, birds, medicines, Feed ingredients, eggs, book debts and charge on other current assets etc,
• Term Loans: Mortgage of land and buildings, sheds, civil constructions and other logistics etc and hypothecation of plant and machinery, equipment, and Assets created out of bank funds.
• While calculating drawing power in the working capital limits, bird’s value also to be considered where there is no term loan outstanding / no bird cost is taken in the project. A detailed week wise bird value chart is placed in Annexure.

Collateral Security

• Mortgage of immovable properties, Land & Building.
• Mortgage of land or any other collateral security acceptable to bank (accepted value of land or other collateral security should be more than 110% of the loan amount.)
• The residual value/spill over (after deducting 150% of exposure or approved margin for sanction of term loan whichever is higher) of the primary security of a term loan can be extended. In other words, accepting of residual primary security (land and building alone) as collateral security for other credit facility in excess of 150% of existing loan outstanding. Only land (owned by borrower) and building is to be considered for collateral coverage not other assets such as machineries, cages etc.
• However, Value of the Land (already owned by the borrower which is SARFAESI compliant) can be considered for collateral coverage.
• For new / take over/ enhancements of limits, Open plots (i.e., SARFAESI enforceable properties) can be considered as collateral security at next higher authority upto RLCC. In case of ZLCC and above, respective committees can consider proposals at their delegation. In case renewal of limits at existing level, the existing properties of open plots shall be continued without out referring the proposal to higher authorities for sanction. It is to be noted that Open plot property is clearly demarcated and should not be land locked.
• As per Govt of Andhra Pradesh act No 16 of 2012 to amend Agricultural land Act 2006 (conversion for Non Agricultural purposes) dt 14.05.2012 permission for conversion of agri land to Non Agri purposes is not required for the lands used for aquaculture, dairy and poultry. Accordingly, NALA (Non Agri land conversion) certificate is not required for Andhra Pradesh and Telangana states. Incase any state govt issues such notification, it can be considered for waiver of land conversion certificate (NALA) or follow as per state acts. Branches / sanctioning authorities to explore the possibilities to get the NALA certificate to enforce SARFAESI in future for any default.
• Wherever the primary security is not SARFAESIA compliant or Conversion of land usage certificate not necessary / required as per state laws, then collateral security of minimum value of 150% of loan amount to be obtained.
• Further, Existing securities should not be released as matter of routine. Only substitution of existing securities with SARFAESI Compatible properties can be allowed with same or higher value.
• In case of request received from borrowers for release of existing securities, such proposals / requests shall be placed to one level higher authority duly ensuring minimum 150% of collateral coverage for all the limits. Further, ZLCC and above committees can approve at their respective delegation duly incorporating the proper justification with minimum 150% of collateral security.
• Coverage under CGFMU/CGTMSE: loan sanctioned to allied activities such as poultries can be covered under CGFMU / CGTMSE as per scheme guidelines issued from time to time. Further, all the terms and conditions / guidelines of credit guarantee scheme are to be followed. (Reference IC No: 3805-2017 dt 16.05.2017- Ministry guidelines on coverage of allied activities under PMMY).
• Credit guarantee fees are to be borne by the borrower.
• Hybrid security is permitted under the scheme over and above the limits covered under credit guarantee and collateral security norms to be followed as mentioned in the circular.
• Incase over and above credit guarantee limits of Rs 200 lakhs, hybrid security / applicable collateral security norms to be obtained.

Financing to poultry units established on leased lands

Loans to Poultry and other activities in leased sheds/lands shall be extended based on merits. Field level staff are advised to ensure the following while dealing with such proposals.

• Obtain legal opinion about the terms of lease, its compliance to our norms, title of the lessor on the property leased etc. Further, it should be ensured to keep the registered lease deed in force as per law till the loan is liquidated, in view of the safety of advance.
• Ascertain and satisfy about the reasons for leasing out the sheds/units by the lessor.
• Ensure that there are no other loans/encumbrances against such property from any banks/financial institutions.
• Explore the possibility of lessor to join as co-obligant or Guarantor.
• In case of loans given for poultry on leased lands, 150% of collateral securities to be obtained which are SARFAESI compliant.

Personal Guarantee

Personal guarantee of the Partners, Promoters /Promoter Directors of the Firm/company having sufficient means and personal guarantee of all mortgagors of primary /collateral security to be obtained. In case of proprietor concern, personal guarantee of third party or any other family members to be obtained. Any waiver/deviation shall be dealt with as per loan policy of the bank.

Insurance

Assets financed to be insured as per bank’s loan policy for infrastructure, stock – feed, medicines, and birds, plant and machineries/ equipment etc.

Waiver of Insurance in case of live stock

• Waiver of bird insurance with the condition that the party undertakes to create risk mitigation fund (RMF) @Rs. 5/-per bird (broiler, layer and parent bird) per annum and maintain as a fixed deposit with auto renewal.
• However, respective sanctioning authorities may stipulate RMF above Rs 5 per bird depending on the risk involved.
• The corpus will be linked to full (maximum no. of layers) capacity of broiler, layer and parent bird in the farm. The RMF so created shall be adjusted only in case of eventuality or complete closure of all the limits. It can be adjusted with approval of the sanctioning authority.
• Incase, the collateral security coverage is more than 150%, RMF may be waived upon separate request from the borrower by the sanctioning authorities.

Delegation

As per extant policy on delegation of powers.

Due diligence

Due diligence to be undertaken as per extant guidelines;

• Assessment of Term Loan & working capital to be considered as per Bank norms in view of current cost scenario & as stipulated in the loan policy from time to time.
• Pre-sanction inspection should be carried out by Branch officials to verify technical feasibility and economic viability of unit on case to case basis
• Financial Benchmarks & other norms as per bank’s loan policy.
• CIBIL (consumer / Commercial) reports are to be generated and studied for credit history of the borrowers/ mortgagors.
• Technical inspection for the loans above Rs 1.00 Crs shall be carried out by technical officer to ensure that all the prerequisites are followed in the poultry.

Repayment

Working capital/Term Loan

• 12 months for Working Capital subject to renewal as per extant guidelines.
• Maximum 84 months for Term Loans (including moratorium of maximum 6 to12 months duly considering income generation / cash flows)

Additional Facility for seasonal requirement

• As per the scheme, seasonal limit up to 20% of total WC limit for existing poultry farm may be allowed for a maximum period of 2 months in a financial year. In addition to regular working capital limit, this limit can be allowed thrice during the financial year with a gap of 30 days, subject to adjustment of initial drawl.
• It can be sanctioned at the time of regular limit as a top up loan/ as and when required by the borrower during the harvesting period of the crops. A request letter for sanction of the seasonal limit to be obtained. In addition, an undertaking shall be obtained for adjustment of the additional limit in time.
• The facility shall be sanctioned only in genuine cases and not as a matter of routine since the eligibility has been made liberal.
• However, additional interest of 1% to be levied for such additional limits allowed. Further, penal interest of 2% is to be levied for any delay in adjusting the limit on the due date.
• Collateral security norms are to be complied even for the additional limits also.

Guidelines for Purchase of existing poultry units

Purchase of existing poultry units / Outright purchase:

• Branches can entertain the proposals related to purchase of existing poultry units in the form of outright purchase where in land, buildings, sheds, plant and machinery are to be considered. The values mentioned in registered sale deed/ Engineer value whichever is lower to be accepted for arriving the loan amount.
• In case of repairs / addition of infrastructure required for existing units can also be financed as per project cost / report.
• In case of purchase / outright purchase of existing established poultry units, 40% of margin to be insisted on the sale value / registered value / Engineer value, whichever is lower.
• However, latest engineer valuation report is to be obtained and kept on record.
• Based on the project, required moratorium shall be provided to the borrower.
• Repayment schedule should be drawn based on cash flows from the activity subject to maximum of 84 months including moratorium.
• Preferably age of the construction of the unit should be below 15 years. Incase of any deviation, one level higher authority to accept the proposal with justification on case to case basis.
• Basic amenities / logistics are to be ensured while purchasing the poultry units for rearing the birds.
• It is to be ensured that there are no loans outstanding against firm/poultry unit which is under sale/purchase.
• Agreement of sale has to be obtained from the seller.
• All other guidelines of financing to poultry units are to be followed.
• Delegation – As per extant policy on delegation powers.

Reporting

• All the sanctions shall be reported to the controlling office in M-27 on monthly basis.
• Account label “Poultry” shall be added or updated at the branch level for proper MIS reporting.

Other terms & conditions

• The scheme will be applicable to all new limits.
• Existing units which are not covered under the scheme may be covered under the scheme at the time of review/renewal.
• Comprehensive insurance of shed/building, other civil structures, machineries /equipment, feed, medicines to be obtained with Bank clause as per extant guidelines.
• The party to submit stock statement(including bird chart, feed, medicines, vaccines etc) & age wise book debt statements in the prescribed format on monthly basis together with list of creditors to arrive at position of paid stocks. (The statement of book debts and creditors to be certified by CA on Quarterly basis).
• The poultry unit to adopt all bio-security norms such as sanitary practices, timely vaccination etc, availability of services of veterinary doctor, to avoid contamination and disease problem.
• All the technical aspects of poultry farming issued by NABARD are to be followed. An indicative list is placed in Annexure -10.
• All other applicable terms and conditions as per extant guidelines.
• Review/Renewal-Account to be reviewed/renewed as per extant policy of the bank.
• Permissions / Approvals: Poultry farmers / entrepreneurs to submit the plan of approval for construction from competent authority, village /panchayat clearance for establishment of poultry unit, land conversion certificate (wherever applicable), GST certificate(as applicable), ensure veterinary services, arrangements for DOCs ( day old Chicks), electricity, water facility, forward and back ward linkages
• Branches should follow all the technical aspects for raising of poultries.

Clarification on Battery operated cages

• Field functionaries to follow IC no: 05116-2019 Dt: 07.11.2019 with respect to financing to Battery operated cages. A copy of the Govt of India’s draft rules on “Prevention of cruelty to Animals (Egg laying Hens) Rules 2019 dt 29.04.2019 are enclosed.
• These rules are applicable to farms where egg laying hens are housed in colony enclosures.
• According to draft rules, floor space per bird shall not be less than 550 Square Centimeter and each cage should accommodate preferably a minimum of 6 to 8 birds, thus ensuring reasonable space for laying hens for lying down, standing up, flapping wings, turning around and access to feed and water.
• Wherever state governments have enacted such act, branches are advised to get the registration certificate from the concern Department of Animal husbandry for establishment of poultry unit which is valid upto 5 years.
• Branches are advised to ensure the same while undertaking unit inspections.

Security Documents

• DP Note
• Hypothecation agreement - SD-07
• Deed of Guarantee - SD –08
• Declaration/Undertaking for Agriculture Advance-AD-01
• Interest rate agreement – SD 24- MCLR
• Mortgage deed– SD–12 (for SM) Or AD-13(for EM)
• Letter of Continuity – AD 09(M)
• Letter of General Lien and set off – AD 02(A)
• Undertaking from borrower/ Guarantor for disclosure to CIBIL
• Any other document stipulated in Sanction advice

Policy issues

Most of the policy parameters are addressed and incorporated in the Pan India Scheme for financing to poultry units. In case of any policy component / issue / parameter/ guideline/ deviation is not mentioned in pan India scheme, branches shall follow the loan policy of the bank.

Competent authority

General Manager/Chief General Manager, Agri Business vertical shall be the competent authority to provide clarifications on the scheme to field functionaries.

Classification

Priority sector Agriculture: Irrespective of loan amount to individual farmers and loans up to Rs.2 crores for corporate farmers, FPO of individual farmers, partnership firms and cooperative of farmers and loans to individual farmers are to be classified under Farm credit of Agri priority. Loans over and above Rs 2.00 Crs to corporate farmers to be classified as Agri Non-Priority. Accordingly, AGRPS/AGNPS to be mentioned clearly in the Appraisal note.

Finacle Codes

Branch to label the account opened under this scheme as “POULTRY” in Finacle. Accounts are to be opened in RA012, CCGEN/CCAHF scheme codes. Purpose of Advance (POA) should be fed in the finacle at MIS tab as 01203.

Validity of the Scheme

The Pan India scheme is valid upto 22.09.2024.