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BY- ASHUTOSH KUMAR RANJAN PRESENTATION ON CREDIT GUARANTEE SCHEME AND CROP INSURANCE.

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Presentation on theme: "BY- ASHUTOSH KUMAR RANJAN PRESENTATION ON CREDIT GUARANTEE SCHEME AND CROP INSURANCE."— Presentation transcript:

1 BY- ASHUTOSH KUMAR RANJAN PRESENTATION ON CREDIT GUARANTEE SCHEME AND CROP INSURANCE

2 CREDIT GUARANTEE A credit guarantee is a form of insurance that helps to protect the interests of a seller from the chance of non-payment by a buyer. This type of coverage is often utilized when goods are imported, affording the exporter a degree of protection that would be difficult to achieve otherwise. In some cases, this type of guarantee is extended through a governmental organization. At other times, the credit guarantee is made available through banks that manage import and export transactions.

3 CREDIT GUARANTEE SCHEME There are an estimated 26 million micro and small enterprises (MSEs) in the country. Problems faced by the MSEs, non-availability of timely and adequate credit at reasonable interest rate is one of the most important. The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE) was launched by the Government of India to make available collateral- free credit to the micro and small enterprise sector. Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises was formed.

4 OBJECTIVE OF CREDIT GUARANTEE Make available Collateral free Credit facility to SMEs To strengthen Credit delivery system To facilitate flow of Credit to SMEs Secure credit facility purely on primary security of assets financed MLI should endeavor to give composite credit to the borrowers

5 Eligible Lending Institutions Scheduled commercial banks (Public Sector Banks/Private Sector Banks/Foreign Banks) and select Regional Rural Banks National Small Industries Corporation Ltd. (NSIC), North Eastern Development Finance Corporation Ltd. (NEDFi) and SIDBI have also been made eligible institutions As on March 31, 2010, there were 112 eligible Lending Institutions registered as (MLIs) of the Trust,which includes- 27 Public Sector Banks, 16 Private Sector Banks, 61 Regional Rural Banks, 2 Foreign Bank and 6 other Institutions viz., NSIC, NEDFI, SIDBI and The Tamil Nadu Industrial Investment Corporation(TNIIC).

6 Eligible Credit Facility The credit facilities which are eligible to be covered under the scheme are both term loans and working capital facility up to Rs.100 lakh per borrowing unit, {extended without any collateral security or third party guarantee} Guarantee Cover: The guarantee cover available under the scheme is to the extent of 75 per cent of the sanctioned amount of the credit facility The extent of guarantee cover is 80 per cent for (i) micro enterprises for loans up to Rs.5 lakh; (ii) MSEs operated and/or owned by women; and (iii) all loans in the North-East Region

7 Fee for Guarantee The fee payable to the Trust under the scheme is one- time guarantee fee of 1.5% and annual service fee of 0.75% on the credit facilities sanctioned. For loans up to Rs.5 lakh, the one-time guarantee fee and annual service fee is 1% and 0.5% respectively. For loans in the North-East Region, the one-time guarantee fee is only 0.75%.

8 CROP INSURANCE The basic principle involving crop insurance is that loss incurred by a few is shared by many in the area.Also losses incurred in bad compensated by resources accumulated in the good years. In general the principle of crop insurance can be explained as follows: 1. The uncertainty faced by the individual farmers is transferred to the insurer through their participation in large numbers, for which benefit, the insured farmers pay a risk premium. 2. Total loss is shared by participating farmers over a wide area, i.e. horizontal spreading of risks over a wide area and vertical spreading of risks over many years.. The risk premium reflects the group risk assumed by the insurer an indemnity is liable to be paid to the farmer when the loss is incurred due to causes beyond his control, as long as he maintain the insurance contract valid by paying the premium without default.History of crop insurance in India :

9 Crop insurance companies in India: Agriculture Insurance Company of India Ltd. (AICI) Promoted by: 1. General Insurance Company (GIC) 2. National Bank for Agriculture and Rural Development (NABARD) Four other Insurance Subsidiaries are: 1) National Insurance Company Ltd. 2) New India Assurance Company Ltd. 3) Oriental Insurance Company Ltd 4) United India Insurance Company Ltd. ICICI Lombard in collaboration with BASIX – provided first ever Weather Insurance. Iffco Tokyo has recently entered into the weather insurance business.

10 NATIONAL AGRICULTURAL INSURANCE SCHEME (CROP INSURANCE ) The National Agricultural Insurance Scheme (NAIS) was introduced by the Government of India in the country from Rabi 1999 – In our state this scheme has been introduced from Kharif 2000 season onwards with involvement of Agriculture Department, Agricultural Insurance Company (Implementing Agency) and Directorate of Economics & Statistics. This scheme is being implemented in the state with the active participation and involvement of District Cooperative Central Banks, Rural Banks, Commercial Banks and Primary Agricultural Cooperative Societies.

11 OBJECTIVES 1. To provide a measure of financial support to the farmers in the event of crop failure as a result of drought, cyclone and incidence of pest & diseases etc. 2. To restore the credit eligibility of a farmer after a crop failure for the next season. 3. To encourage the farmers to adopt progressive farming practices, high value in-puts and higher technology in Agriculture. 4. To help stabilize farm incomes, particularly in disaster years.

12 CROPS COVERED:- During Kharif 2008; Twenty crops will be covered viz., 1. Rice 2. Jowar 3. Bajra 4. Maize 5. Blackgram 6. Greengram 7. Redgram 8. Soy abean 9.Groundnut (I) 10. Groundnut (UI) 11. Sunflower 12. Castor 13. Sugercane (P) 14. Sugarcane (R) 15. Cotton (I) 16. Cotton (UI) 17.Chillies (I) 18. Chillies (UI) 19. Banana, 20. Turmeric. During Rabi ; Eleven crops were covered viz., 1. Rice 2. Jowar (UI) 3. Maize 4. Greengram 5. Blackgram 6. Groundnut 7. Sunflower 8. Chillies 9. Onion 10. Mango 11. Bengalgram.

13 FARMERS COVERED:-Crop Insurance is compulsory for all Loanee Farmers and voluntary for Non-Loanee Farmers. RISKS COVERED & EXCLUSIONS: Comprehensive risk insurance will be provided to cover yield losses due to non preventable risks, viz.: a. Natural Fire and Lightning b. Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado etc. c. Flood, Inundation and Landslide d. Drought, Dry spells e. Pests/ Diseases etc. Note: Losses arising out of war & nuclear risks, malicious damage & other preventable risks shall be excluded.

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