First-ever credit guarantee scheme for livestock sector launched

The government has launched the first-ever “Credit Guarantee Scheme” for the Livestock Sector for rebooting the rural economy by leveraging Micro, Small & Medium Enterprises (MSMEs).

For operationalising the scheme, the Department of Animal Husbandry & Dairying (DAHD) has established a Credit Guarantee Fund Trust of Rs 750 crore, which will provide credit guarantee coverage up to 25 per cent of the credit facilities extended to the MSMEs by the eligible lending institutions.

The credit guarantee scheme facilitates access to finance for the un-served and under-served livestock sector, making availability of financial assistance from lenders to mainly first-generation entrepreneurs and under-privileged sections of society, who lack collateral security for supporting their ventures.

The main objective of the scheme is to ensure that the lender gives importance to project viability and secures the credit facility purely on the basis of primary security of the assets financed.

The establishment of credit guarantee fund trust was approved under the Prime Minister’s AtmaNirbhar Bharat Abhiyan stimulus package of Rs.15000 crores“ Animal Husbandry Infrastructure Development Fund” (AHIDF) for incentivising investments by individual entrepreneurs, private companies, MSMEs, Farmers Producers Organizations (FPOs) and Section 8 companies to establish (i) the dairy processing and value addition infrastructure, (ii) meat processing and value addition infrastructure, (iii) Animal Feed Plant, (iv) Breed Improvement technology and Breed Multiplication Farm (v) Animal Waste to Wealth Management (Agri Waste Management) and (vi) Setting up of Veterinary Vaccine and Drugs Manufacturing facilities.

The DAHD has formed a trust with NABSanrakshan Trustee Company Private Limited, a wholly owned subsidiary of NABARD for the establishment of a Credit Guarantee Fund Trust for extending the credit guarantee to Micro, Small & Medium Enterprises under the AHIDF scheme. This fund trust established in March 2021  is the nation’s first ever fund trust under the credit guarantee scheme of AHIDF in the agriculture and Animal Husbandry sector and is a path-breaking initiative taken by DAHD which would exponentially increase the number of MSME units getting benefits of the AHIDF scheme and strengthen the ecosystem for the collateral-free credit from the banks.

The credit guarantee portal has been developed as a rule based B2B portal and implemented the enrollment of eligible lending institutions under Credit Guarantee Scheme, issuance/renewal of Credit Guarantee Cover and Settlement of Claims.

Notably, the initiative of credit guarantee scheme taken by DAHD is expected to greatly increase the participation of MSMEs engaged in livestock sector leading to increased flow of credit to the sector and strengthen the MSMEs to boost the overall rural economy through strengthening the Livestock sector which is of one of the most potential sector seeking development.