The company facilitates loans and credit services in three different ways :
1. Activity specific loans to members – cattle loans
The producer company provides activity specific cattle loans to eligible members. The producer company itself has taken loans from private financial firms such as Ananya microfinance, Friends of Women World Bank, Samuniti finance, etc. for this purpose. This year, over 150 cattle loans were provided under this activity. The company draws service charges and an interest margin from this activity.
2. Linkages of women groups or SHGs with credit sources
The members are grouped into farmer groups or women SHGs, which are in-turn linked with NABARD Financial Services for credit. This linkage and liaison with NABARD Finance is managed by the producer company. The credit transaction is entirely between the group and NABARD Finance. The Company earns a service charge.
3. Credit for individual members through Kisan Credit Card
The producer company facilitates individual members to get their Kisan Credit Cards from commercial banks. This is a transaction entirely between the bank and the members, with the company only facilitating the registration process. Most banks are reluctant to issue KCC to farmers, due to fear of default. But thanks to Marutham’s repayment records, and its ability to ensure repayment of its member loans, banks have gained the confidence to issue KCC to its members. For the members, this is the cheapest credit available. Crop loans are available, on a per acre basis at 5-6% interest. This service of the company has elicited a very enthusiastic response. It just registered over 1000 members under this scheme. The members pay a facilitation charge.
Thus, they have three types of loans to the members – those distributed to the producer, those to the groups, and those directly to the individual. Apart, from the KCC loans which are the responsibility of the individual, other loans are monitored by the groups through the principle of joint liability.