Indian Government Introduces Innovative Credit Guarantee Scheme for Livestock Sector

Indian Government Introduces Innovative Credit Guarantee Scheme for Livestock Sector
Indian Government Introduces Innovative Credit Guarantee Scheme for Livestock Sector

In a pioneering move, the Indian government has introduced the “Credit Guarantee Scheme” exclusively for the Livestock Sector, designed to invigorate the rural economy and empower Micro, Small & Medium Enterprises (MSMEs). Spearheaded by the Department of Animal Husbandry & Dairying (DAHD), this scheme has set up a Credit Guarantee Fund Trust amounting to Rs 750 crore, providing credit guarantee coverage to eligible lending institutions and thereby facilitating improved financial access for the underserved livestock sector.

The significance of the Credit Guarantee Scheme for the livestock sector and rural economy is multi-faceted:

  1. Support for First-Generation Entrepreneurs and Underprivileged Sections: The scheme is aimed at assisting first-generation entrepreneurs and marginalized sections of society who lack collateral security for their livestock sector ventures, offering them vital financial aid and access to credit facilities.
  2. Encouraging Investment in Livestock Sector: By extending credit guarantee coverage, the scheme seeks to incentivize investments in key areas such as dairy and meat processing, animal feed plants, breed improvement technology, waste management, veterinary vaccine, and drug manufacturing facilities. These endeavors are expected to boost the productivity and overall growth of the livestock sector.
  3. Prioritizing Project Viability over Collateral Security: The primary objective of the scheme is to shift the focus from collateral security to project viability during the evaluation of credit facilities. This approach ensures that lenders assess the potential and sustainability of the assets financed, creating opportunities for the unserved and underserved segments of the livestock sector to access much-needed financial support.
  4. Encouraging MSME Participation: Through the provision of credit guarantee to MSMEs, the scheme actively encourages their involvement in the livestock sector, which significantly contributes to rural economic development.

The Credit Guarantee Fund Trust, valued at Rs 750 crore, has been established under the Prime Minister’s AtmaNirbhar Bharat Abhiyan stimulus package, specifically allocated for the Animal Husbandry Infrastructure Development Fund (AHIDF). The DAHD collaborated with NABSanrakshan Trustee Company Private Limited, a wholly owned subsidiary of NABARD, to establish this Credit Guarantee Fund Trust, extending credit guarantee to MSMEs under the AHIDF scheme.

To streamline the process, a rule-based B2B portal for the credit guarantee scheme has been developed, facilitating the enrollment of eligible lending institutions, issuance/renewal of credit guarantee cover, and efficient settlement of claims within the scheme’s ambit.