Frequently Asked Questions (FAQ)

- Interest subvention on Working Capital Loan under SDC&FPO scheme

• What are the benefits of the Scheme

Eligible organizations can avail back ended subsidy of 2% p.a. by way of interest subvention on the secured/unsecured working capital loan availed from a Financing Institution (FI) such as Commercial Banks/RRBs/Cooperative Banks/Financial Institutions. For prompt and timely repayment of loan installments / servicing of interest, additional 2% interest subvention will be provided at the end of the loan repayment period.

• Which organisations can apply for interest subvention under the scheme?

Producers Owned Institutions such as Milk Federations, Milk Unions, and Farmer Owned Milk producer Companies, will be considered for providing assistance under the scheme. They are termed as Participating Agencies (PA).

• What is the meaning of FI under the scheme?

FI means Financing Institution such as Commercial Banks/RRBs/Cooperative Banks/Financial Institutions from whom Participating Agency (PA) can avail Working Capital loan so as to become eligible to get the benefit under the scheme.

• Which types of loans are eligible for interest subvention?

Working capital loans (including cash credit) availed against the stocks of four conserved commodities viz. Skimmed Milk Powder, Whole Milk Powder, White Butter, and Ghee are eligible under the scheme.

• What is the time period for which interest subvention will be provided?

The Scheme originally announced for the year 2020-21 has been extended for the period from 2021-22 to 2025-26. Presently, administrative approval for continuation of the scheme has been issued for the year 2023-24.

• When can the Participating Agency (PA) apply for interest subvention?

- Within 45 days of first release of the Working capital loan by FI to PA.

• What is the procedure for applying the Interest subvention on Working Capital Loan?

The Participating Agencies (PA) (i.e. Milk Federations, Milk Unions, and Farmer Owned Milk producer Companies) should go through the operational guideline of the scheme and can download application form from the NDDB website (www.nddb.coop). PA has to fill the required information in the application form and submit the application form along with the working capital loan sanction letter to NDDB. The application may be addressed to - Group Head (Finance), National Dairy Development Board, Anand – 388001 (Gujarat).

• What are the documents required along with the application form?

PA should submit the latest working capital loan sanction letter along with the terms & conditions, copy of loan agreement along with the filled-in application form to NDDB.

• What is the process of approval of an application?

NDDB will screen the applications submitted by PAs based on the eligibility criteria prescribed in the operational guideline. Application of the eligible PAs shall be forwarded to respective Bank/FI for verification. After verification of the details by the Bank/FI, NDDB will approve the proposals for interest subvention.

• What are the documents required after the approval of interest subvention?

- Monthly Progress Reports
- Interest Certificate from the Bank, Bank Statements
- Any other information as desired by NDDB, including stock statement for commodities

• When will PA get the interest subvention after sanction of the proposal by NDDB?

NDDB will release interest subvention on back ended basis every month to the Financing Institution for onward transfer to the working capital loan account of the PA.

Participating Agency (PA) is required to submit the filled -in “Request for Release of Interest Subvention” form (available in the NDDB website- www.nddb.coop) to NDDB. It may be addressed to - Group Head (Finance), National Dairy Development Board, Anand -388001(Gujarat).

• What is the role of the Bank in the scheme?

- Verify proposal (application) submitted by the Participating Agency (PA) to NDDB
- Ensure the release of interest subvention to the working capital account of PA
- Reconcile outstanding loan with the stock of approved conserved commodities available with the Participating Agency (PA) and Furnish progress reports in the prescribed format on periodic basis to NDDB
- Report non-compliant cases / default by the Participating Agency (PA)

• When does the Participating Agency (PA) qualify to get additional 2% interest subvention?

For prompt and timely repayment/interest servicing, additional 2% interest subvention will be provided at the end of the loan repayment period. However, payment of additional 2% interest subvention is subject to availability of fund under the scheme and approval by the competent authority.