Livestock Credit Card to be listed

Problem

Like any other business, small livestock farming also require financial support for enhancement and stablisation of income. This has become of importance as markets of livestock products (egg, meat & milk) are on rise and prices are remunerative. Goat farmers in such area are changing from subsistence level to semi intensive production level responding to market demand.

However one of critical financial constraints in livestock farming comes in terms of working capital finance. In livestock business almost 33% of cost livestock is annual cost of feeding of livestock. However SALES realization most often takes min one month (dairy) and around 8 to 10 months in case of small ruminants.

Formal banking has not been able to reach such goat farmers owing to their remoteness, illiteracy and lack of suitable credit and insurance product in mainstream financial services. Present micro finance growth has also served this sector at very limited level due to weekly repayment regime, low creditability in typical assessment system, aversion of goat farmers to participate in regular meetings and low volume of credit accessible. Self Help Group (SHG) movement and community banking has tried to serve this segment to an extent but absence of business service linkages as well focused credit plan around this business has frequently underserved the credit and investment need.

Innovation

The Goat Trust, Financial Innovation team is presently studying the area to understand existing ways and means of meeting such need and advantages and essential features such product will have to be adaptable.

Purpose of Livestock Credit card (LCC)

  • To meet working capital needs of livestock farming
  • To reduce distress sale of livestock
  • To enhance adoption of improved practices and profitability of business
  • To enhance purchasing power for feed & medicines

Product features

First 30 days of credit is free and without any interest and thereafter interest charges is levied at @ 1% monthly. In fact its weekly calculation as 0.25% and minimum one week interest is charged if credit crossed for more than 48 hours of limit period.

General terms and conditions of Livestock Credit card is as follows.

  • Credit card is issued to JLG members only so Peer pressure is basic strategy.
  • A credit appraisal format with previous history and creditability is prerequisite.
  • Only given members of Bakari Bank.
  • Credit limit is small and mostly materials are provided rather than cash.
  • Livestock have to be tagged and with photo, which gives general perception that animal had been hypothecated .
  • A sale eligibility certificate is issued by bank once credit card is closed.
  • Proper records of limits; withdrawal is maintained and shared in village level meeting.

Credit limits

Type of Livestock Herd Size (Adult) Credit Limit(Feed/medicine & other inputs – 25% cash max) Pre Conditions Process
Goats 1 to 2 Rs 500 JLG/SHG members
3 to 5 Rs 1000 JLG/SHG members Credit appraisal form, Tagged and hypothecation of animals
6 to 10 Rs 2000 JLG/SHG members Credit appraisal form, Tagged and hypothecation of animals
Poultry (duck/Hen) 5 to 10 Rs 500 JLG/SHG members Credit Appraisal form, Agreement , Flock photo, wall writing on house
11 to 20 Rs 1000 JLG/SHG members Credit Appraisal form, Agreement , Flock photo, wall writing on house
More than 20 Rs 75 per backyard adult hen JLG/SHG members Credit Appraisal form, Agreement , Flock photo, wall writing on house

Membership Fee - Rs 50

Other benefits

  • Customer purchasing more than Rs 10000 worth materials in a year is provided group Insurance coverage from next year onwards.
  • 5% rebate is admissible in cost of medicines for members who purchases medicine of Rs 500 or more in a year.
  • Special gift and prizes will be announced at each quarter to our best customer.