Credit Guarantee Fund Scheme for Farmers Producer Organizations

The Credit Guarantee Fund Scheme for Farmers’ Producer Organisations is a central sector scheme of the Government of India, implemented through the Small Farmers’ Agribusiness Consortium and supported by the National Bank for Agriculture & Rural Development via its subsidiary trust. The scheme was introduced under the framework of promoting Farmer Producer Organisations under the “Formation & Promotion of 10,000 FPOs” programme. The purpose of the scheme is to provide credit‐guarantee cover to eligible lending institutions so that they extend collateral‐free loans to eligible FPOs/Producer Companies, thereby improving access to institutional credit for farmer collectives. The benefit for you, as a farmer collective or agribusiness entity, is that your financing becomes more accessible and the lending institution risk is mitigated through the guarantee cover.

Key Features
Financial Assistance
Eligibility Criteria
Documents Required
Application Process for the Scheme

Key Features

Guarantee cover for collateral-free lending: The scheme enables ELIs to lend to farmer producer organisations (FPOs) without requiring collateral or third-party guarantee because the lending risk is mitigated by the guarantee cover provided under CGF-FPO.
Cover up to 85 % of the sanctioned credit facility or up to a defined maximum limit: The guarantee cover is structured so that a significant portion of the loan (up to 85 %) is covered by the guarantee in case of default, or up to a maximum ceiling (for example Rs 85 lakh in some cases). This provides comfort to lenders to extend credit.
Managed through a dedicated fund/trust mechanism: A dedicated Credit Guarantee Fund Trust is set up (via NABARD’s subsidiary) to manage the guarantee operations receipts, guarantee cover, claim settlement—ensuring an institutionalised process.
Eligible Lending Institutions (ELIs): The scheme identifies various types of lenders (scheduled commercial banks, regional rural banks, cooperative banks, NBFCs rated “BBB and above”, etc) as ELIs who can participate in the scheme and seek cover for their exposures to FPOs.
Plain registration and claim process: The scheme prescribes that after sanction of a loan to an eligible FPO, the ELI applies for guarantee cover. In the event of default subject to scheme conditions, the guarantee may be invoked, and the claim settled up to the cover percentage.
Supports credit flow under FPO promotion programme: The guarantee scheme is aligned with the Government of India’s programme to form and promote 10,000 FPOs, so that the FPOs promoted through that programme are eligible to access credit under more favourable conditions thanks to this guarantee support.

Financial Assistance

Component	Assistance Provided	Detailed Explanation & Example
Guarantee Cover for Loans to FPOs	Up to 85 % of eligible sanctioned credit facility (or up to maximum cap)	Example: Suppose your FPO obtains a loan of Rs 1 crore from a bank as a working-capital facility. Under CGF-FPO, the guarantee cover may cover up to Rs 85 lakh (85 % of 1 crore) if the loan defaults, making the lender more willing to sanction the loan
Access to Collateral‐Free Credit	Loans can be sanctioned without third‐party guarantee or collateral	Example: Because the scheme provides guarantee cover, the lender may proceed without requiring you to pledge land or obtain a separate guarantor, easing access for your FPO.
Risk Mitigation for Lending Institutions	Protects ELIs by reducing their risk of lending to small/collective agribusinesses	Example: The bank’s potential loss from the loan to your FPO is partly mitigated by the guarantee (up to the cover amount), making banks more willing to fund FPOs rather than only large agribusinesses.

Eligibility Criteria

Who Can Apply:

Farmers’ Producer Organizations registered under the Companies Act or Co-operative Societies Act.
FPOs promoted by NABARD, SFAC or other government agencies.
Newly formed or existing FPOs seeking term loans or working capital.
FPOs with viable business plans for aggregation, processing, input supply or marketing.
FPOs meeting lender-specific KYC and financial criteria.

Who Cannot Apply:

FPOs not legally registered under recognized statutes.
Informal farmer groups or unregistered collectives.
FPOs with history of loan default, fraud or irregularities.
Entities not controlled or owned by farmers as per FPO guidelines.
FPOs seeking loans for activities outside the agriculture value chain.

Documents Required

Certificate of Incorporation of FPO
Memorandum & Articles of Association
List of farmer members and shareholding pattern
Board resolution for loan application
Business plan / DPR
Audited financial statements (if available)
Bank account statements
KYC of directors/authorized signatories

Application Process for the Scheme

Option 1: Apply with Bullit (Recommended)

Click here to start with guided support. Our team verifies eligibility, compiles documents, and handles application & follow-ups on your behalf. You can monitor progress while focusing on operations.

Recommended for: Lean teams. Designed to save you time and effort. Access expert help from start to finish.

Option 2: Apply through Lender and NABARD (Official Process)

Approach any eligible lending institution such as commercial banks, RRBs or co-operative banks.
Submit loan proposal, registration documents and business plan of the FPO.
Bank evaluates viability and sanctions the loan.
Bank submits application for guarantee cover under the scheme to the designated NABARD agency.
Guarantee is issued to the bank upon compliance with scheme norms.
Loan is disbursed to the FPO, and reporting continues as per guidelines.

Power Combos with The Scheme