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Annexure II |
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(Model Format)
Memorandum of Understanding
Between
Small Farmers' Agribusiness Consortium, New Delhi
(Department of Agriculture & Cooperation, Ministry of Agriculture)
and
The Bank
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This MOU is signed on the
day of
. Month
year at
.by Small Farmers' Agribusiness Consortium ( a Society Registered under Registration of Societies Act 1860) registered office at NCUI Auditorium Building, August Kranti Marg, Hauz Khas, New Delhi, which includes its successors / assigns etc., hereinafter called SFAC on the first part and
. Bank (hereinafter referred to as The Bank' which expression that unless repugnant to the context herein shall mean and include its assigns and successors) with registered office at
.. on the other part.
- SFAC's focus is to attract private investment for setting up of projects that will link farmers & producer groups to markets, thereby substantially enhancing the opportunities for growth through commercial business activity.
- The objective sought to be achieved by SFAC in discharging its duties are
.. Venture Capital Assistance and Project Development Assistance to Qualifying Project through participating Bank.
- This agreement for SFAC Venture Capital Assistance operations with participating Lending Bank will synergize their functions, competencies and projected sector development plans.
- Whereas The Bank, in furtherance of its desire to play an active role in participation and promotion of investments in Qualifying Agri-business Projects and to coordinate the related activities with SFAC, is prepared to make available term loans / working Capital to Qualifying Agri-business Projects and also facilitate extension of SFAC's Venture Capital assistance (VCA) and Project Development Assistance (PDA) through a single window approach.
- For the purpose of synergizing the efforts of SFAC for promoting Agri-business Project Development in the country with The Banks' expertise in extending loans to viable agri-projects, SFAC and The Bank do hereby agree to cooperate with each other, for the development of Agri-business sector and related areas and enter into this Memorandum of Understanding (MOU).
- Whereas SFAC and The Bank are desirous of establishing a formal operational framework to achieve the objectives of agri-business.
- Whereas SFAC, in order to achieve its objective desired to associate with The Bank for disbursement of VCA and PDA (for preparation of DPR by SFAC empanelled consultants) to Agri-Business projects and to attract private investment for setting up of projects that will link farmers and producers groups to markets, thereby substantially enhancing the opportunities for growth through commercial business activity which in turn will generate ample employment opportunities for rural unemployed and The Bank agreed to disburse the same and to provide term loans / working capital to such Qualified Agri-Business projects and serve as a single window facility on the following terms and conditions.
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The abbreviations and terms used in MOU:
Qualifying Project for VCA Project qualifying for Venture Capital Assistance (VCA) provided by SFAC would be one which (a) is dependent upon agricultural or allied produce (b) provides direct access to producers as assured markets (c) encourages farmers to diversify into high value crops aimed to increase farm incomes and (d) is accepted by The Bank for grant of project term loans after satisfactory techno-commercial feasibility.
Qualifying Project for PDF A project qualifying for assistance from the PDF will be qualifying project for VCA set up by producer groups / agri-business groups with minimum project cost of Rs. 50 lakhs (Rs. 25 lakhs in case of NE states and other hilly areas) and which has been accepted in principle for considering sanction of term loan by a bank on the basis of Pre-feasibility Report.
Project Development Facility (PDF) of SFAC maintains a pool of qualified / skilled consultants to render services at low cost to producer groups / agri-business groups.
Project Development assistance (PDA) is a scheme under which financial support is provided to producer groups / agri-business groups for preparation of DPR by SFAC.
Detailed Project Report (DPR) is the document providing all necessary details and projections relating to the project, which would enable banks to evaluate viability of the project.
Venture Capital Assistance (VCA) is the financial support provided by SFAC for qualifying projects to meet shortfall in the capital required for implementation of the project. VCA will be treated as part of equity during the currency of the bank loan and thereafter converted to a loan based on an agreement to be executed between sfac and borrower.
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