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Cold Storage Loan

About Cold Storage Loan

Cold Storage Loan is availed by farmers, individuals as well as group of individuals. This types of loans are offered by various banks in India besides NABARD and State Bank of India. The Loans for Cold Storage are used not only for setting up new cold storage facility but also for expanding an existing cold storage facility. In India the Agriculture sector is the prime source of livelihood for crores of people especially in villages and other rural places. Equally important, the farmers require adequate storage facilities to stock their farm produce that are to be transported to various places all over the country. Moreover, those who run the cold storage business offer cold storage facility to farmers as well as traders of farm products.

Capital to start cold storage facility

By way of storing various products like vegetables, fruits, dairy products and meat products, the farmers as well as traders are able to deliver the farm produce in good condition even at far away destinations. Moreover, running cold storage facilities is a flourishing business in India. Whether to establish a cold storage facility or to expand an existing facility, large scale capital investment is essential. Various banks in India have introduced their loan scheme for cold storages. The National Bank for Agriculture and Rural Development (NABARD) is ahead of all other banks in providing Cold Storage Loan to farmers as well as others who are in the cold storage business.

Purpose of Cold Storage Loan

Cold Storage Loan scheme is in fact very useful to agriculturists as well as traders who are running the cold storage business. Adequate cold storage facility is very essential to ensure uninterrupted supply of agricultural commodities to all parts of the country. Similarly, individual businessmen who want to start their own cold storage business can also avail the loan to set up the facility for the first time. Those who want to increase the capacity of their existing cold storage facility also can take advantage of this loan scheme. Farmers and individuals who run cold storage business can have sufficient capital required for smooth running of their cold storage business once they avail cold storage finance offered by NABARD and various other banks in India.

Features of Cold Storage Loan

Those who avail the Cold Storage Loan are required to pledge their asset as collateral security since all the loans under this scheme such as Cold Storage Loan from Nabard, SBI Cold Storage Loan, Canara Bank Cold Storage Loan and Loan for Cold Storage offered by any other bank are all secured loans. The borrower of the Cold Storage Loan can use the amount either to set up a new cold storage unit or for expansion and/or modernization of an existing cold storage facility. Normally, up to 75% of the total estimated cost of the project will be granted as loan under this loan scheme. Cold Storage Loan can be availed by farmers, individuals, group of individuals, co-operative societies and companies that are in cold storage business. Mortgage of land or site of the cold storage will be accepted as collateral.

Boosting the Agri sector

Since agriculture is the back bone of our country’s economy, a lot of people are in agriculture and in various agri-related businesses. The Cold Storage finance provided by many banks in India are of immense help not only to agriculturists but also to many new as well as growing agri-related businesses. Another advantage is that with sufficient number of cold storages across the country, supply and distribution of agricultural commodities in good condition will be ensured.

Eligibility Criteria for Cold Storage Loan

A few eligibility criteria are mentioned under the Cold Storage Loan Scheme for financing of cold storage units. Those who meet these criteria will be eligible to avail the Cold Storage Loan. Individuals as well as group of individuals can avail the loan. Likewise, co-operative societies, registered companies, proprietary concerns and partnership concerns are also eligible. In the case of companies as well as individual/partnership business concerns, the bank concerned will check the reputation of the business promoters. Also, when loan is applied for an existing cold storage, the bank will check whether the facility is in running condition and was running profitably during last 3 years. Equally important, the companies that apply for Cold Storage Loan must be maintaining their accounts strictly as per the rules. For new cold storage project, the promoters are required to submit the feasibility study report to the bank for availing the loan for cold storage.

How To Start Cold Storage Business

Interest rates and other charges on Cold Storage Loan

The rate of interest for loans under the Cold Storage Loan scheme will be based on the amount of loan availed as well as its tenure. Interest rate for this loan is also fixed on the CRA. The cold storage loan interest rate may vary depending on the policies of the financial institutions and also the concessions allowed by the Government to the agriculture sector. Normally, the maximum repayment period for this loan is 9 years. However the tenure of loans under the Cold Storage Loan scheme varies from 6 to 9 years. Borrowers can avail loan from Rs. 25 lacs up to Rs. 1 Crore under this loan scheme. The Collateral security for obtaining the loan should cover the full loan amount and moreover, the promoters/partners should execute personal guarantee also. 60% – 75% of the estimated total project cost will be granted as Cold Storage Loan.

Loan from NABARD

The NABARD loan for financing of cold storage units is sanctioned for 7 years or more for maximum 75% of the total project cost. If the tenure for repayment is 7 years or less, the rate of interest for cold storage loan from nabard will be Prime Lending Rate of NABARD + Risk Premium. In case the tenure of repayment of loan is above 7 years, the rate of interest for cold storage loan from nabard will be Prime Lending Rate of NABARD + Risk Premium + Tenor Premium.

Loan from State Bank of India

The SBI cold storage loan must be repaid within a maximum period of 9 years including grace period of 2 years. The installments will be based on the cash flow. For financing of cold storage units in the private sector as well as private Ware Houses that are meant for farmers to store their agricultural commodities, State Bank of India has unique offers under the Cold Storage Loan scheme. The rate of interest for the SBI cold storage loan is also based on the CRA for Agricultural Advances.

Loan from Canara Bank

Canara bank cold storage loan will be granted to Cold Storage units that are empanelled by Canara Bank for the specific purpose under the Cold Storage Loans scheme. Also, the bank will provide produce loans to the farmers against Warehouse Receipts issued by the private cold storages that are empanelled by the Bank for the specific purpose of the Cold Storage Loan scheme. Moreover, Canara bank cold storage loan will be in the form of single transaction loan up to Rs. 50 lacs per borrower.

How to Apply for a Cold Storage Loan  

Those who want to apply for the Loan for Cold Storage may first visit the nearest branch of the Bank from which they prefer to get the loan for starting Cold Storage business. Next, the applicant can discuss in detail regarding his project as well as his application for Cold Storage Loan. Borrowers can also approach the Marketing Officers who will be regularly visiting the designated areas. The Marketing Officer will assist the applicant throughout the process of applying for the loan under the Cold Storage Loan scheme. The documents that are required to apply for the loan include

– the prescribed application form duly filled and signed by the applicant

– recent photograph of the borrower

– Pledge of warehouse receipts that show stocks of agricultural commodities

– Hypothecation of commodities stored separately with the farmer

Top Banks offering Cold Storage Loans

The following banks are offering loans under the Cold Storage Loan scheme,

NABARD

SBI

CANARA BANK

CORPORATION BANK

UNION BANK OF INDIA

IDBI BANK

PNB

Why Best NSSPL For Cold Storage

The demand for proper storage facility for keeping agricultural commodities goes on increasing in our country. The tasks before the farmers are production and proper storage of their products ensuring protection from rain, heat and pests. As a result of realizing the urgent need for more number of cold storage units the banks and other financial institutions have introduced the Cold Storage Loan scheme to provide cold storage finance to farmers as well as cold storage businesses. The farmers who find it difficult to pay rent for the cold storage facility can avail the loan and can set up their own cold storage facility to properly store their commodities.

About Natural Storage Solutions Pvt. Ltd.

Natural Storage Solutions Pvt. Ltd. is a leading designer as well as manufacturer of cold storage systems in India. All over India, to numerous clients, this company is offering turnkey solutions to the requirement of post-harvest cold storage facilities by farmers as well as cold storage companies. Natural Storage Solutions Pvt. Ltd. is now a global leader in the field of setting up Cold Storage facilities for agricultural commodities. This company has more than 21 years of experience and expertise in designing as well as setting up Cold Storage facilities. The company is committed to achieve 100% customer satisfaction. The post-harvest solutions for storing of agricultural commodities provided by the company are cost-effective and based on the most advanced technology.

Contact the Company

Farmers and Cold Storage business firms who are in search of the best technical solution to start new cold storage units or expand and innovate their existing cold storage units may contact immediately

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FAQ For Cold Storage Loan

What is cold storage loan?

Farm products and agricultural commodities will start to decay before they are delivered to the buyers if they are not stored properly. Providing Cold Storage facility to farmers as well as traders of farm products is a flourishing business. Loan provided by the banks to those who want to set up new cold storage facility or expand/modernize existing cold storage facility is called Cold Storage Loan.

Is there a requirement of collateral for this type of loan?

Collateral security is a must for availing Cold Storage Loan. The collateral should cover the entire loan amount. Mortgage of the land/site of the Cold Storage is accepted as collateral.

Is the loan to be renewed on an annual basis?

Loan for Col Storage must be renewed every 12 months. The bank will renew the loan after assessing satisfactory functioning of the cold storage facility.

What is maximum amount of loan that can be availed?

Most of the banks that are offering loans under the Cold Storage loan scheme provide loan up to Rs. 1 crore.

About the author

Mr. Yogesh Dahiya (Managing director) aged 49 years, having a Diploma in Fabrication Technology, has 25 years of experience in setting up cold storage and chilling plants. After completion of Diploma in Fabrication technology, he worked with indo-Techno Frigo Ltd. As Manager (fabrication) and Purchase Executive for a period of 5 years. He then joined L&T as General Manager (Projects). In 1997 he started his own company. Mr.Yogesh Dahiya is the key person of NSSPL (group company) and his job includes holding meeting with clients, understanding their requirements, selection of sites, suggestion of right technology, preparation of engineering design, civil works etc and then finally fabrication, installation and commissioning of the entire plants. Till now he had set up 160 cold storage and chilling plants of various capacities. In this project he takes care of all the technical aspects of the company.
2 Responses
  1. jagbir sangwan

    I have been through all details, but have some more queries as below:
    1. Electricity 24*7 is not there in my field, how i will run this business without Electricity.
    2. Loan interest rate
    3. Government subsidy as Haryana govt is providing som amount or % of project total cost.
    4. I am planning to storage 50-100 ton capacity.
    5. Any warranty period

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