BoB signs MoU to become preferred lender for FPOs in Maharashtra

PUNE : Nationalised banks are hopeful of increasing lending to the priority sector following the Budget announcement of 100 per cent tax deduction for the next five years for farmer producer organisations (FPOs) with a turnover of up to Rs 100 crore.

“The tax incentive has increased prospect of lending to FPOs,” said BR Patel, general manager (rural, agri banking, CSR) at the Bank of Baroda. “We have started sensitisation and training of our staff to make them understand the FPO/ FPC (farmer producer companies) model.”

The Small Farmers’ Agribusiness Consortium (SFAC) has signed a memorandum of understanding with the Bank of Baroda, which has become a preferred lender for FPOs in Maharashtra.


It has already entered into an agreement with the consortium for lending to FPOs in the rest of the country. India has about 4,000 FPOs promoted by various organisations such as SFAC, Nabard and other development institutions.

Since there are very few FPOs with a turnover of more than Rs 100 crore, the tax incentive is expected to benefit almost all FPOs in the country.

In addition, FPOs have now demanded exemption from market cess and professional tax that the directors of farmer producer companies have to pay.