Introduction

The Indian financial system consists of banking institutions like Commercial banks (public sector and private), Regional rural banks, Rural agricultural co-operative banks (State apex level and district level), Urban co-operative banks, Small finance banks and Foreign banks; and Non-banking financial Institutions (organised and unorganised).

The major social commitment of the institutional banking system, in addition to providing financial inclusion to our people, is financing the priority sectors of the economy. As per the directives of RBI, all banking institutions are required to involve at least 40% of their net bank credit to priority sectors consisting of agriculture, micro and small enterprises, renewable energy, export credit etc. All activities allied to agriculture, like fish farming and marketing, comes under preferred category for bank financing. Bank finance is provided for investment activities like establishment of productive assets and as working capital for running enterprises.

The National Bank for Agriculture and Rural development (NABARD) was set up on 12 July 1982 as an apex level financial institution through an Act of Parliament, to facilitate integrated development of rural areas and address the need for investment and working capital credit for agriculture, through the banking system. NABARD has its corporate office at Mumbai, 30 regional offices covering all states and 400 district level offices all over the country. NABARD serves credit functions like providing agricultural refinance to banks, financing state governments for infrastructure projects and direct financing of projects. It also has non-credit functions like credit planning, institutional development and supervising rural financial institutions.

Investment credit

Investment credit support covers Asset creation/ acquisition, buildings, Plant and machinery, Equipment, Infrastructure, Preliminary & Prepaid expenses and Working capital (one cycle). Investments in fisheries covers all fish production systems like marine capture fisheries, mariculture, inland open-water fisheries, inland aquaculture and brackish water aquaculture. The various activities covered in marine fisheries are mechanised boats (trawler, gill netter, long liner), traditional boats (Country crafts, Wooden/FRP), outboard motors, in-board engines, nets, net making units and boat building yards.

The potential activities for bank financing in the inland fisheries sector are freshwater aquaculture (freshwater fish farming and freshwater prawn-scampi farming), fish/ prawn hatcheries, reservoir fisheries (boats/nets, cage/pen culture) and integrated farming (fish farming integrated with agriculture/animal husbandry). Brackish water fisheries activities covered are brackish water aquaculture (finfish farming, vannamei shrimp farming), hatcheries (fish/ shrimp) and feed mills. Other potential activities are processing plants (freezing–IQF, value-added products : ready-to-eat/cooked, canning, traditional processing activities -salting & drying, pickles), upgradation/modernization of existing plants, pre-processing plants, ice plants/cold storages and marketing infrastructure (vehicles & insulated boxes, kiosks with deep freezers, mariculture/ coastal aquaculture (seaweed farming, mud crab rearing/fattening, mussel culture, oyster farming, lobster fattening), ornamental fish breeding & rearing, diagnostic labs and aqua clinics.

Norms for financing by banks

Potential activities, viable farm models, investment costs per unit and other terms for financing like margin money, moratorium (grace) period, repayment period etc. are fixed on a state-basis by NABARD on the recommendation of a Standing Committee on Unit Cost represented by banks and Government departments. The unit costs are accepted by the State Level Bankers Committee (SLBC) as directives for lending operations and credit planning. The prescribed unit costs are used as indicative costs with a deviation up to 10% by banks while financing.