Loan is provided for existing and new rice mill from State Bank of India under the SBI Rice Mill Plus loan scheme. The indian economy is agrarian in nature and major thrust is provided for financing food processing units through schemes like the FPTUFS scheme.
Through this specialized scheme, priority is given for financing of rice mills in India. State Bank of India has been playing a critical role in the overall growth and development of the SME sector. The bank has offers a wide array of products and services for the needs of the SME sector.
Rice mills having a credit rating of SB-9 (State Bank of India’s rating scale) or above are eligible for the Rice Mill plus scheme.
Funding provided under this scheme can be used by the business for acquisition of machinery, factory building or for modernisation or expansion of an existing premises. Further, funds can also be used for working capital purposes.
To be eligible for the Rice Mill plus scheme, the unit must be engaged in the activity of rice milling and profitable.
A 15% to 25% margin money requirement is applicable for term loan and a 15% to 40% margin money requirement is applicable for working capital facility. New rice mills are also eligible for financing under this scheme.
Amount of Loan
Loan can be sanctioned as a working capital facility (fund based or non-fund based) or term loan. The amount of loan would depend on the applicant, project cost and need based working capital requirement of the business. There is no upper ceiling on the amount of loan that can be sanctioned under this scheme.
Interest and Repayment
Rice mill plus loan is sanctioned with a floating interest rate, liked to the base rate. The interest rate would be determined based on the size of limit, value of collateral security provided and borrower risk profile.
Term loan sanctioned under this scheme typically have a repayment period of between 5 to 7 years excluding moratorium period of 12 months. Working capital facility would have a 12 month period, subject to renewal based on the satisfactory conduct of the account.
Loan of less than Rs.10 lakhs can be sanctioned under the CGTMSE scheme without any collateral security. Loan over Rs.10 lakhs must be secured by way of an equitable mortgage of property or tangible security belonging to the borrower or guarantor.
In addition to the collateral security, the bank would extend hypothecation or pledge over assets created out of bank’s finance. All assets created using bank loan must also be insured to the full value by the business.