Financial Intermediation Loan

The MAGNET Society (Maharashtra Agribusiness Network - MAGNET Society, a legally registered entity registered under the Societies Act, 1860) by Government of Maharashtra. MAGNET society is a executing agency for implementation of Asian development Bank assisted Maharashtra Agribusiness network (MAGNET) project on behalf of Government of Maharashtra in the state.

Under MAGNET project the Financial Intermediation Loan (FIL) component is included with an objective to improve the access to financial services by various stakeholders, including the FPOs/FPCs, aggregators, processors, value-chain/logistics operators, exporters, etc., for the development of selected value chains in the horticultural sector viz., Banana, Pomegranate, Orange, Sweet Orange, Custard Apple, Guava, Sapota, Strawberry, Okra, Chilly (Green & Red), Flowers, Mango, Lemon, Cashew Nut and Snake Gourd in the state of Maharashtra. The MAGNET Project has a target to cover two lakhs farmers, through FPOs/FPCs and other stakeholders under the MAGNET project over the next six years.

In order to address the challenges faced by FPOs and other operators in accessing credit, the FIL component is included in the project. It is envisaged that the FIL will be extended to member financial institutions to further on-lend to targeted and eligible sub-projects. It is also envisaged that since such FIL to member FIs shall be extended at a considerably lower rate, these FIs shall be able to on-lend at competitive rate to sub-projects. Two types of loans, namely Term Loan and Working Capital Loan, shall be extended to eligible sub-projects from FIs.

It is envisaged that term loan at competitive rates will lead to incentivizing FPOs and other value chain operators in infusing their equity and the obtained debt to set up suitable projects eligible under MAGNET. Similarly, working capital assistance shall enable the sub-projects to optimally utilize their capacities and shall assist in meeting their operational obligations more efficiently. Total outlay proposed in the project for FIL component is Rs. 484.567 Crore.

In order to achieve the target under FIL component, the MAGNET Project is partnering with a number of PFIs (Participating Financial Intermediaries- The participating financial institutions partnered by the MAGNET Society for extending Financial Intermediation Loan (FIL) to the ultimate beneficiaries). These PFIs are selected after Financial due diligence and Integrity due diligence by Asian Development Bank. Governing council of MAGNET society will approve the PFIs as Implementing agency for FIL component under the project.

MAGNET Society and PFI has entered into an financial Agreement which provides a broad framework for performance obligations, funding, areas of cooperation/collaboration, information sharing, consultation, mechanisms for progress monitoring and periodic reviews, between the MAGNET Society on one part and the PFIs on the other part, with the objective of enhancing access to financial services by various stakeholders in the identified value chains.

Loans are made available through PFIs (Participating Financial Intermediaries) namely Bank of India, Samunnati Financial Intermediation and services private ltd and Federal Bank.