DEVELOPMENT BANKING
Forward Sales Contract

    Forward Sales Contract is a contract of sale of goods between the farmer who agrees to sell their agro-products of certain amount with quality and the buyer agrees to purchase the goods as agreed on a future date with the agreed price, at an earlier stage.

  • For Whom

    • Buyers/Sellers entered into the Forward Sales Contracts for marketing of agricultural commodities and falling into one of the following categories are eligible to receive credit facilities under the scheme.

    • Individual Farmers/Individuals
    • Farmer Organizations
    • Farmer Companies
    • Partnerships
    • Co-operative Societies
    • Limited Liability Companies
  • Maximum Credit Limit

    • The upper limit of loan for paddy purchase subject to Forward Sales Contract under the New Comprehensive Rural Credit Scheme is Rs. 50 M.

  • Repayment Period

    • Maximum repayment period for Yala and Maha Seasons is 180 days for paddy and 270 days for the other crops.

  • Securities

    • Guarantors and pledge over paddy stocks to be purchased
    or
    Mortgage over immovable properties / Securities acceptable to the Bank

  • Product Features
    • Buyers and sellers entered into a Forward Sales Contract to sell any agro products that belongs to the under mentioned category, are entitled to apply for this facility.
    • The People's Bank function as a facilitator in the business activity.
    • Loan facilities available for Yala and Maha seasons.

    Paddy, potato, Chilli, Red Onion, Big Onion, Maize, Soya beans, Black gram, Pineapple, Tomato etc.
  • Benefits
    • Farmer can obtain loans subject to the Forward Sales Contract.
    • Can obtain facilities upto 60% of the FSC agreement and be within the repayment capacity.
    • Possession of an account when applying for a facility is not necessary.
  • Benefits for Buyers/Millers/Producers
    • Maximum loan limit 75% value of the Forward Sales Contract agreement.
    • Should possess the repayment capacity and storage capacity.
    • Possession of an account when applying for a facility is not necessary.
  • Benefits for farmers
    • Farmer can sell his agro products to a fare price.
    • Can obtain a better harvest with the help of modern methods.
    • Can improve the quality and the bulk of the harvest.
    • Obtain an Insurance cover for the damage of the cultivation.
    • To have a good income through out the year.
  • Benefits for millers
    • Can purchase quality agro products.
    • Can obtain loan facilities at the interest rate 12% or less.
    • Since the purchase price is known well in advance, the best selling price can be decided.