How to Avail Easy Bank Finance through the Agriculture Infrastructure Fund

Hello, Businessman. Welcome to KIP!

Today, we are going to guide you through a valuable scheme from the Central Government specifically designed for the agriculture sector—the Agriculture Infrastructure Fund (AIF). If you’re engaged in or planning to start an agri-infrastructure or post-harvest management project, this scheme could be a great fit for you.

What is the Agriculture Infrastructure Fund (AIF)?

Launched in 2020, the AIF is a Central Government scheme implemented by the Ministry of Agriculture, specifically by the Department of Agriculture and Farmers Welfare. With a total budget outlay of ₹1 lakh crore, this scheme aims to bolster the agriculture sector by improving infrastructure and post-harvest management. To date, over ₹62,000 crore has been disbursed to businesses under this scheme.

Key Features and Benefits:

1. Credit-Linked Subsidy:

The AIF provides a 3% interest subsidy on term loans up to ₹2 crore for up to 7 years.
Example: If you take a ₹2 crore loan at a 9% interest rate, you will benefit from a 3% subsidy, lowering your effective interest rate to 6%.

2. Broad Scope of Coverage:

Post-Harvest Management Projects: Cold storage, warehouses, sorting and grading units.
Biomass Energy Projects: Biomass briquettes, pellets, compressed biogas.
Primary Processing Units: For rice, cotton, sugarcane, bamboo, jute, fruits, and vegetables.
Other Agri-Based Businesses: Vermicompost, honey processing, tissue cultures, nurseries.

3. Eligibility and Application:

Eligible Entities: Individual entrepreneurs, proprietorship firms, partnership firms, companies, LLPs, self-help groups, and more.
Application Process:
1. Prepare a Project Report: Align it with the AIF scheme criteria.
2. Discuss with Bank: Ensure your project qualifies for priority sector lending.
3. Apply to the Ministry of Agriculture: Submit the project details for AIF approval.

4. Fast Processing:

Banks must make decisions within 60 days of receiving project details from AIF.
If a bank rejects a loan application, they must provide reasons.

5. Additional Benefits:

Collateral Security Relaxation: Government credit guarantee cover reduces the need for additional collateral.
Credit Guarantee Coverage: Provided by the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE).
Fees Refund: Refund of CGTMSE cover fees is available.

6. Maximizing Benefits:

You can cover up to 25 projects under this scheme. Each project can have a term loan of up to ₹2 crore, allowing you to potentially benefit from up to ₹6 crore if projects are in different locations.

Steps to Avail the Benefits:

Contact AIF: Obtain approval for your project first.
Bank Coordination: Inform your banker about the AIF scheme and request priority sector lending.
Project Report Submission: Submit your project details and report to the Ministry of Agriculture.
Loan Disbursement: Ensure your loan is processed and disbursed by the bank.
Interest Subsidy Claims: Banks handle quarterly claims for interest subsidies and credit guarantee cover fees.

Additional Tips:

Follow the AIF Route: For a smoother process and to benefit from subsidies, get AIF approval before approaching banks.
Combine with Other Subsidies: The AIF scheme does not restrict you from availing other central or state subsidies.

Need Assistance?

If you need help with the AIF scheme, from project report preparation to liaising with banks, our team at KIP is here to assist. We offer comprehensive consultancy services, including business subsidy planning and banking support.

Since 2008, KIP has been aiding businesses with subsidy applications and financial planning. If you face difficulties or need guidance, reach out to us to make the most of the AIF scheme and other related opportunities.

For more detailed assistance or to get started, contact us today!

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