Agro Industrial Cooperative Department

Agro Industrial Co-operative Department

Agro Industrial
Co-operative Department

The Agro Industrial Co-operatives (AIC) Department plays a critical role in supporting the financial needs of various agro-industrial and cooperative institutions. These include sugar factories, spinning mills, oil mills, marketing co-operatives, educational institutions, private industrial units, and others.

Key Functions and Scope

Apart from its traditional clientele, the department also extends credit support to major institutions such as:

Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL)
Maharashtra State Power Generation Co. Ltd. (MAHAGENCO)
Maharashtra State Tribal Development Corporation (MSTDC)
Food Corporation of India (FCI)

Interest subvention under DFPD Scheme:

The scheme is administered by the Department of Food & Public Distribution (DFPD), with NABARD as the nodal agency.
Under this scheme, the Central Government bears the interest subvention for a period of five years including one year moratorium.
The subvention is applicable on loans extended by eligible financial institutions (including banks, NCDC, IREDA, etc.) that are eligible for refinance from NABARD.
A key eligibility condition is that the sugar mill / distillery must be a standard account (i.e. not NPA) to receive the benefit.
The Bank offers interest subvention under the DFPD scheme, applying:
-an interest rate of 6%, or
- 50% of the rate of interest charged by the Bank (whichever is lower).

Loan Types Offered

The AIC Department provides a variety of financial products depending on the nature of the project and operational requirements:

Term Loans
- Medium-Term Loans
- Long-Term Loans
These are primarily for erection, expansion, and modernization of sugar factories and associated projects like co-generation and distilleries.
- Greenfield Projects (new units): Loans provided for a term of 7 to 9 years.
- Brownfield Projects (existing units): Support for modernization and expansion.
Working Capital Loans
- Hypothecation Cash Credit
- Ethanol Hypothecation Cash Credit
- Pledge Cash Credit
- Clean Cash Credit
- Short-Term Loans
- Short-Term Loans for Off-Seasonal Expenses
- Short-Term Loans for Co-gen Bill Discounting
- Bank Guarantees / Letters of Credit
- Pre-shipment & Post-shipment Finance
Special Loan Schemes
Atmanirbhar Loan Scheme – 2025
- Recently introduced to provide liquidity assistance to sugar factories affected by weather-related challenges during the last crushing season.
- This initiative ensures uninterrupted operations despite erratic climatic conditions and associated production shortfalls.
Salary Earner’s Society
The Bank provides financial assistance to salary earners’ societies against their NODC in the form of Cash Credit facilities. These Cash Credit limits are utilized by the societies to meet their short-term liquidity requirements.

Interest subvention under DFPD Scheme:

The scheme is administered by the Department of Food & Public Distribution (DFPD), with NABARD as the nodal agency.
Under this scheme, the Central Government bears the interest subvention for a period of five years including one year moratorium.
The subvention is applicable on loans extended by eligible financial institutions (including banks, NCDC, IREDA, etc.) that are eligible for refinance from NABARD.
A key eligibility condition is that the sugar mill / distillery must be a standard account (i.e. not NPA) to receive the benefit.
The Bank offers interest subvention under the DFPD scheme, applying:
– an interest rate of 6%, or
– 50% of the rate of interest charged by the Bank (whichever is lower).

Short-Term Loan Details

Purpose: To cover pre-seasonal expenses such as plant maintenance, harvesting, and transport (H&T) arrangements.
Repayment: Within 9 to 10 months (up to 30th June).
Security: Charge on movable and immovable assets of the sugar unit.

Security & Documentation

The department ensures thorough documentation:

Mortgage Deeds
Joint & Several Liability Bonds (Directors)
Creation of Charge on Assets

Legal support is taken from empanelled solicitors and advocates for:

Title search
Mortgage documentation
Asset valuation (via Government-approved & bank-empanelled valuers)

Credit Support Monitoring

Post-sanction review of disbursed loans
Preparation and execution of legal documents
Monitoring credit flow to institutional borrowers
Supporting statutory audits and inspections
Detailed scrutiny of proposals for approval in Hon. Administrator’s Loan Committee

Loan Specifics by Type

Limit : Based on peak-level stock valuation (preceding 3 months’ average or current market price — whichever is lower)

Security : Sugar stock

Tenure : 12 months (Jan 1 – Dec 31)

Margin :

Stock up to 1 year: 10%
Stock between 1–2 years: 15%
Stock between 2–3 years: 20%
More than 3 years: 100%

Limit :Against stores/spares/gunny bags: 120% of average utilization over the last 3 years or ₹2 Crore (whichever is lower)
For downstream units (e.g., distillery): 110% of last season’s utilization

Security : Hypothecation of stores, spares, and distillery stock

Tenure : 12 months

Margin : 40%

Purpose : Erection/expansion of sugar/distillery/co-generation units

Limit : 65% of project cost for co-operative/private units

Repayment Period : 9 years (including 2-year moratorium)

Security : Mortgage of assets; Joint & Several Liability Bonds from promoters/directors

Sugar Valuation

As per RBI Guidelines (01 July 1996):

Valuation is based on the lower of last 3-months’ average price or current price (daily rates from Sakhar Sangh)

Remaining amount is used for FRP payments to cane growers

Drawing Rate = Valuation - 10% Margin

₹550/bag tagged for loan recovery

₹250/bag tagged for H&T expenses

Key Highlights of the Department

Extensive support to sugar industry through diversified credit products

Proactive financial measures during crises (e.g., COVID-19)

Rigorous legal, valuation, and documentation processes

Transparent and policy-based loan approval and monitoring mechanisms

Maharashtra State
Co-operative Bank Ltd.