Banking Finance 2023, Banking Finance September 2023


In pursuance of announced Atma Nirbhar Bharat Abhiyan stimulus package, Cabinet approved setting up of Animal Husbandry Infrastructure Development Fund (AHIDF) amounting to Rs. 15000 crore. Government had earlier approved the Dairy Infrastructure Development Fund (DIDF) worth Rs. 10,000 crores for incentivizing investment by cooperative sector for development of dairy infrastructure. However, the MSMEs and Private companies also need to be promoted and incentivized for their participation in processing and value addition infrastructure in the animal husbandry sector.

There is huge potential waiting to be unlocked through private sector investment in animal husbandry sector. The AHIDF with the interest subvention scheme for private investors will ensure availability of capital to meet upfront investment required for these projects and also help enhance overall returns/ pay back for investors. Such investments in processing and value addition infrastructure by eligible beneficiaries would also promote exports.

Since almost 50-60% of the final value of dairy output in India flows back to farmers, the growth in this sector can have significant direct impact on farmer’s income. Size of dairy market and farmers’ realization from milk sales is closely linked with development of organized off-take by cooperative and private dairies.




Area of operation

The Animal Husbandry Infrastructure Development Fund (AHIDF) as detailed in the ensuing paragraphs is implemented in all the States and Union Territories of India.

Objectives of fund

  • To help increasing of milk and meat processing capacity and product diversification thereby providing greater access for unorganized rural milk and meat producers to organized milk and meat market
  • To make available increased price realization for the producer
  • To make available quality milk and meat products for the domestic consumer
  • To fulfil the objective of protein enriched quality food requirement of the growing population of the country and prevent malnutrition in one of the highest malnourished children population in the world
  • Develop entrepreneurship and generate employment
  • To promote exports and increase the export contribution in the milk and meat sector.
  • To make available quality concentrated animals feed to the cattle, buffalo, sheep, goat, pig and poultry to provide balanced ration at affordable prices.


Nodal loaning entities (NLEs)

  • National Bank for Agriculture and Rural Development (NABARD),
  • NCDC (National Cooperative Development Corporation)
  • All scheduled Banks


Nodal Implementing Agency (NIA)

Animal Husbandry Infrastructure Development Fund will be implemented by the Department of Animal Husbandry and Dairying govt. of India.


Eligible entities for support under AHIDF


  • Farmer Producer Organization (FPO)
  • Private companies
  • Individual entrepreneurs
  • Section 8 companies
  • Micro Small and Medium Enterprises


Eligible investment activities under AHIDF

  • Dairy Processing: under the Dairy Processing infrastructure the eligible Entity can avail benefit for establishment of the following activities.
  • Establishment of new units and Strengthening of existing dairy processing units with quality and hygienic milk processing facilities, packaging facilities or any other activities related to dairy processing.
  • Value added dairy product manufacturing: The Eligible Entity can also avail loan for establishment of new units and strengthening of existing manufacturing units for value addition of the following milk Products:
    • Ice Cream unit
  • Cheese manufacturing unit
  • Ultra High Temperature (UHT) Milk processing unit with tetra packaging facilities
  • Flavoured Milk manufacturing unit
  • Milk Powder manufacturing unit
  • Whey powder manufacturing unit
  • Any other milk products and value addition manufacturing unit.
  • Manufacture of any equipment and machinery required for dairy processing & value addition including the manufacturers for quality testing, adulterant and contaminants.
  • Meat processing and Value addition of facilities:Establishment of new meat processing unit and strengthening of existing meat processing facilities for sheep/goat/ poultry/pig/buffalo in rural, semi-urban and urban areas.


  • Value Added Products: Establishment of new or strengthening of existing value addition facilities for meat products like Sausage, nuggets, ham, salami, bacon or any other meat products. These facilities could either be integral part of meat processing units or Standalone meat value addition unit.
  • Animal Feed manufacturing units and strengthening of existing Units/plant of the following categories:
  • Establishment of Mini, Medium and Large Animal Feed Plant
  • Total Mixed Ration Block Making Unit
  • By pass protein unit
  • Mineral Mixture Plant
  • Enrich Silage making unit
  • Breed Improvement Technology and Breed Multiplication Farm

Under this category, the following activities will be covered for taking benefit under AHIDF for Cattle / buffalo-

  • Establishment of IVF Centre – For rapid genetic upgradation
  • Civil works Laboratory / recipients shed/Donor Shed and other civil works including cattle chute, biogas plant
  • Training of professionals in IVF technology
  • Sheep &Goat Breeding Farm with technology upgradation (not the traditional farming system, Goat Frozen Semen Station and Sheep Semen Station and Artificial Insemination technology
  • Pig Breeding Farm with modern infrastructure
  • Fattening Farm with modern technology and integrated production system.
  • Semen Station for pig and Artificial Insemination Technology
  • Technologically assisted (modern technology based integrated/ advanced poultry farms) poultry farm including purchase of parent and grandparent stock
  • Setting up of Veterinary Vaccine and Drugs Production facilities
  • Animal Waste to Wealth Management (Agri-waste management)
  • Any other innovative projects/activities designed to enhance animal husbandry production/productivity/value


Quantum of Loan and margin money/beneficiary contribution


The project under the AHIDF shall be eligible for loan up to 90% of the estimated/ actual project cost from any Scheduled Bank, National Cooperative Development Corporation (NCDC),based on submission of viable projects by eligible beneficiaries. The beneficiary contribution in case of Micro and Small units as per MSME defined ceiling could be 10% while in case of Medium Enterprises as per defined MSME ceiling, beneficiary contribution could go up to 15%.The beneficiary contribution in other categories of enterprises could go up to 25%.




  • Interest subvention-Up to 3% per annum for all Eligible Entities for development of identified animal husbandry based infrastructure facilities.
  • Lending Rate of interest-The rate of interest to be fixed by scheduled banks or NCDC asper their existing system of interest rate calculation as per the RBI guidelines. However, the rate of interest should not exceed at 200 basis points plus External Benchmark Based Lending Rate(EBLR) or equivalent rates for the Eligible Entities whose project cost are falling within MSME defined ceilings. The Rate of interest to be fixed by scheduled banks/ lending institutions such as NCDC, for other projects could be based on commercial interest rate of Bank.


  • The Department of Animal Husbandry and Dairying will transfer the interest subvention amount directly to the Scheduled Bank. Initially the Department will pay interest subvention amount in advance upfront to the lending bank for the first year based on the request of Scheduled Bank. Interest subvention from the 2nd year onwards would be released based on the non- NPA borrowers entitlement claimed by the Scheduled Banks every year in advance.


  • Interest subvention will not be provided to such beneficiaries which are found to be defaulter at any point of time for repayment and also the bank is free to take any action as per its existing guidelines. No interest subvention will be provided for the duration an account is NPA even if the beneficiary returns to standard category.

Funding mechanism

  • The entire amount of AHIDF of Rs. 15000 cr. will be disbursed by the Scheduled Bank starting from 2020-21.
  • The Scheduled bank may utilize their available financial resources to lend the Eligible Entities.



  • A Credit Guarantee fund Trust of Rs. 750 cr. (Rupees Seven Hundred Fifty Crore) has been established which is managed by NABS anrakshan Trustee Co. Pvt. Ltd., a dedicated trust floated by NABARD for the purpose.
  • Department of Animal Husbandry and Dairying will pay Rs. 75 crore per year over 10 years towards Credit Guarantee at the beginning of each Financial Year.
  • The credit guarantee will be provided only for those projects which are viable and are covered under MSME defined ceilings and the guarantee coverage would be up to 25% of the credit facility available to the borrower.
  • The Credit Guarantee will not be provided to other beneficiaries who are not covered under MSME norms, however, those Eligible Entities will be eligible to get interest subvention.

Credit Guarantee cover by Credit Guarantee Fund Trust for Micro and Small


Enterprises (CGTMSE).


Eligible units may also avail credit guarantee cover from CGTMSE scheme for the loan amount up to Rs 2.00 crores with the guarantee cover of maximum extent of 85% of loan amount.


Maximum repayments Period are 8 years inclusive of moratorium of 2 years on principal amount.  The Scheduled Bank shall ensure that maximum re-payment period should not exceed 10 years from the date of first disbursement inclusive of moratorium of 2 years on repayment of principal. The interest subvention will be provided only for 8 years including two years of moratorium.  However, the Financing Bank, at their discretion, may curtail the repayment period depending on the project magnitude, size of the financial investment, repayment capacity of the project.

Availability of land, water bodies and statutory clearance

  • Loan under AHIDF shall not be provided for acquisition of land in any manner such as purchase, transfer, lease, accession/addition etc. required for implementation of the identified project activities.
  • The Eligible Entity are required to acquire necessary land (in case of non-availability of land with them) at their own cost and complete all processes associated with land acquisition, before submission of the proposal for finance under AHIDF.
  • The projects having land on long term lease (minimum 30 years) may also be considered for financing under AHIDF. However, the lease period/ agreement should be of sufficient duration to secure the loan. In case of lease requisite No Objection Certificate from the competent authority for mortgage to Bank may be obtained.
  • The Eligible Entities shall provide documentary evidence/certificate of availability of requisite land and water bodies free from all encroachment and encumbrances.
  • Confirmation with necessary documentary evidence on availability of land and water bodies and statutory clearances (wherever necessary) shall be clearly indicated in the DPR/Self Contained Proposal.

Formulation of detailed project report (DPR)


Concessional financing under the AHIIDF is based on Detailed Project Reports (DPRs) / Self Contained Proposals.  Detailed projects especially for infrastructure and large magnitude projects shall be formulated based on-

  • Identification of suitable site,
  • Necessary engineering and socio-economic investigations and surveys,
  • Planning and designing of the facilities and
  • Model studies wherever required etc.
  • The Eligible Entities shall submit the DPR/self-Contained Proposal in triplicate copies


Submission of the project proposal


  • The Eligible Entity will submit the proposal with Detailed Project Report through Portal developed by Small Industries Development Bank of India (SIDBI).
  • On the basis of eligibility as per the scheme guidelines, Dept. of Animal husbandry will mark the application eligible/ returned/ rejected. The eligible applications will move to respective banks as mentioned on the application form by the applicant. The Schedule Bank after due appraisal will upload the sanction of the project for approval of interest subvention through online mechanism.


  • The Project Management Agency set up in the Department of Animal Husbandry and Dairying shall scrutinize the application, evaluate and appraise the proposal sanctioned by the Scheduled Banks for approval of interest subvention under AHIDF by Project Approval Committee.
  • The Project Approval Committee will meet regularly and consider the proposals placed before it and accord approval to projects costing up to Rs. 50 cr. for grant of interest subvention.
  • The Project Approval Committee shall recommend the project above Rs. 50 cr. to the Project Sanctioning Committee (PSC) after screening and evaluation of the projects.
  • The Bank shall send a copy of loan sanction to Project Sanctioning Committee/ Project Approval Committee prior to such projects being considered for interest subvention under AHIDF.
  • The Project Approval Committee/ Project Sanctioning Committee will also recommend for Credit Guarantee on each project falling within the definition of MSME once the loan is sanctioned by the Bank.
  • All the projects will be assessed by the Committee based on the Eligibility criteria of the Eligible Activities proposed, Bank’s approval, geographical preferences, MSME certification, sectorial preferences, demand and economic viability.


Investment through AHIDF would not only leverage several times more private investment but would also motivate farmers to invest more on inputs thereby driving higher productivity leading to increase in farmers income. The measures approved today through AHIDF would also help in direct and indirect livelihood creation for about 35 lakh persons.

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