Important Definitions Related to Credit Guarantee Fund

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Amount in Default

Amount in Default means the principal and interest amount outstanding in the account(s) of the Farmer Producer Company (FPC) Borrower in respect of term loan and working capital facilities (including interest), as on the date of the account becoming Non Performing Asset (NPA), or the date of lodging claim application/recall of advance, whichever is earlier or such of the date as may be specified by SFAC for preferring any claim against the guarantee cover, subject to a maximum of amount Guaranteed and shall not include penal interest, other charges and any other costs debited to the FPC by the Eligible Lending Institution (ELI).

Annual Service Fee

Annual Service Fee means the annual fee payable to SFAC at a specified rate on the amount outstanding in the Bank’s Books on the specified date.

Collateral Security

Collateral security means the security provided in addition to the primary security, in connection with the credit facility extended by an Eligible Lending Institution to a borrower.

Credit Facility

Credit Facility means any financial assistance(fund based and/or non-fund based) extended by an Eligible Lending Institution (ELI) to an Eligible Borrower without any Collateral Security or Third Party Guarantee.

Credit Guarantee

Credit Guarantee Fund: means the Credit Guarantee Fund for FPCs created by GOI with SFAC for the purpose of extending guarantee to the eligible lending institution(s) against their collateral free lending to eligible FPCs.

Eligible Borrower

Eligible Borrower: means a new or existing FPC, meeting Eligibility Criteria laid down under the Scheme, seeking credit facility from Eligible Lending Institutions under the Scheme, without any Collateral Security or Third Party Guarantee.

Eligible Lending Institution

Eligible Lending Institution (ELI): means a Scheduled Commercial Bank for the time being included in the second Schedule to the Reserve Bank of India Act, 1934, and Regional Rural Banks, NCDC, NABARD and its subsidiaries, NEDFi, or any other institution (s) as may be decided by the SFAC Board or as directed by the Government of India from time to time.

Farmer Producer Company

Farmer Producer Company (FPC): means a Company of Farmer Producer Members as defined in section IXA of the Indian Companies Act, 1956 (including any amendments thereto or re-enactment thereof) and incorporated with the Registrar of Companies (RoC). Other categories of farmer producer organizations (such as cooperatives) may be considered for inclusion at a later stage.

Guarantee Cover

Guarantee Cover means maximum cover available per eligible FPC borrower.

Guarantee Fee

Guarantee Fee means the onetime fee at a specified rate of the eligible Credit facility sanctioned by the ELI, payable by the ELI to SFAC.

Non Performing Asset

Non Performing Asset means an asset classified as non-performing based on the instructions and guidelines issued by the Reserve Bank of India, from time to time.

Primary Security

Primary security in respect of a credit facility the agreed tenure of the term credit, and where working capital facilities alone are extended and/or continuing working capital arrangements granted along with the Term Loan, for a period of 5 years or block of 5 years and/or loan / working capital credit or other facilities’ termination date, whichever is earlier or such period as may be specified by the SFAC.


Year means Financial Year, beginning April 1 and ending March 31.


Quarter / Quarterly basis shall mean April 01 to June 30, July 01 to September 30, October 01 to December 31 and January 01 to March 31 wherever relevant. means the assets created out of the credit facility so extended.

Tenure of Guarantee

Tenure of Guarantee Cover means the agreed tenure of the Term loan/ composite credit i.e. the maximum period of Guarantee Cover from the Guarantee start-up which shall run through.