Canara Bank partners SFAC to extend credit to FPOs

Canara Bank has tied up with the Small Farmers’ Agribusiness Consortium (SFAC) to provide collateral free lending to farmer producer organisations (FPOs).

Loans will be extended by Canara Bank to FPOs under SFAC’s Credit Guarantee Fund Scheme. SFAC is a society formed to promote agri-business by encouraging institutional and private sector investments and linkages to ensure the empowerment of all farmers in the country.

New targets “We are targeting to extend finance to at least 100 FPOs in the current financial year,” said SS Bhat, General Manager, Priority Credit and Financial Inclusion Wing, Canara Bank.

While the bank can extend a loan of up to ₹1 crore, under the Credit Guarantee Fund Scheme, Bhat expects the FPOs to avail around ₹50 lakh on an average to meet their working capital requirement. The bank has been working with about five to six FPOs.

Canara Bank is the first bank to partner with SFAC for extending finance to FPOs under the credit guarantee scheme.

According to SFAC, close to 400 FPOs have been operating across the country. In recent years, the Government has been trying to encourage the creation of FPOs by organising farmers into collectives — either as co-operatives or companies. FPOs are emerging as major aggregators of farm produce and are seen as a link between the farmers, the market and the retail chains.

Presently, the creation of FPOs is largely confined to high value farm products such as dairy, fisheries, vegetables, fruits, pulses and spices among others.