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Credit Guarantee Scheme for Livestock Sector

 

Source: PIB

 Context: The Ministry of Fisheries, Animal Husbandry, and Dairying has launched the “Credit Guarantee Scheme” under the Animal Husbandry Infrastructure Development Fund (AHIDF) to support the rural economy by leveraging Micro, Small & Medium Enterprises (MSMEs) in the Livestock sector.

 

What is Credit Guarantee Fund?

The Credit Guarantee Fund is a financial mechanism that provides risk mitigation for lending institutions, by lending to individuals or businesses, even without sufficient collateral. If the borrower defaults, the fund reimburses the lending institution for the guaranteed portion of the loan.

 

The Credit Guarantee Fund Trust, established in March 2021, is India’s first-ever fund trust under the Credit Guarantee Scheme for the agriculture and Animal Husbandry sector. It aims to significantly increase the number of MSMEs benefiting from the AHIDF scheme and strengthen the ecosystem for collateral-free credit from banks.

  

Features of the Scheme:

Under the scheme, the Department of Animal Husbandry & Dairying has established a Credit Guarantee Fund Trust of Rs. 750.00 crores (under NABARD), which provides credit guarantee coverage of up to 25% for credit facilities extended to MSMEs by eligible lending institutions.

  

Advantages:

This initiative aims to improve access to finance for underserved livestock entrepreneurs, especially first-generation and underprivileged individuals who lack collateral security.

 

About AHIDF

It is a Central Sector Scheme launched by the Ministry of Animal Husbandry, Fisheries, and Dairying. Its aim is to encourage investments in dairy and meat processing infrastructure, as well as animal feed plants.