PERMANENT- ADVANCES -

Indian Overseas Bank Cir.No.: ADV / 303 / 2009-10

Central Office Date : 17.07.2009
763, Anna Salai Issuing Dept. :Priority Credit (Agri)
Chennai 600 002

To All Branches / Regional Offices in India

AGRICULTURAL ADVANCES

NEW SCHEME : IOB URBAN HORTICULTURE

Preamble

In urban centres there are many independent houses , bungalows , guest houses,
offices and private institutions having open space inside the compound and on
the terrace which can be used for horticultural purposes like raising kitchen-
garden , flower garden small orchards or roof gardens . Objective of the present
scheme is extending retail credit facility on easy terms for raising such gardens.
This is a Retail Product in Agricultural segment which should be released as a loan
and not as a Cash Credit facility.

A. Eligibility

1. Individuals

a. Should possess independent house having at least 500 s.ft of open space for
gardening. For raising roof garden, similar area of open unencumbered roof
space must be available.

B.Should have regular source of income. Salaried persons, professionals and

business men having steady income will be covered under the scheme. Salary
certificates of employees and income tax assessment orders of other individuals
should be obtained.

C. Tenants staying in privately rented houses should not be financed. However

owners can be financed even if they are not staying in the house.

D. Regular water supply should be available for gardening.

E. The garden space should be properly protected by boundary walls or fences or

parapet walls.

F. Finances can be extended at all centres (Urban, Metropolitan, Semi-Urban and

Rural) but finance in rural areas for commercial horticulture should be brought
under existing scheme. The present scheme is only for horticultural crops in
residential sites.

2. Institutions
a. Privately owned schools, offices, guest houses, hospitals and hotels having at
least 1000 square feet of open space for gardening are eligible. Parking space
and play areas should not be counted as garden space.

B. Proprietary or partnership firms, trusts and societies can be financed under this
scheme.

C. Borrowing institution should have ownership or long-term lease right (at least
five years) on the property.

B.Quantum of Finance

Loan amount should not exceed Rs.10000/- for every 1000 square feet of garden
space. For herbal plants or exotic vegetables, higher amount can be considered
depending on need with prior clearance from Priority Credit Department.

Area measuring 500 to 1000 square feet should be reckoned as 1000 square feet.
Less than 500 s.ft of space should be ignored for this purpose. Maximum amount
of loan should be Rs.1 lac for individual and Rs.10 lacs for institutions. Loans for less
than Rs.10000/- should not be considered.

Take–home pay norm (40% after all deductions) should be observed for
individuals. For commercial establishments, EMIs should be fixed based on cash
flow .

C.Security:

For Employees: Undertaking letter from employer or routing of salary through the
branch backed by standing instructions

For Other Individuals: Third party guarantee of an individual with worth not less
than that of the borrower for loans up to Rs.25000/-. Third party guarantee as
stated above plus Collateral Security for loans above Rs.25000/- , to cover at least
50% of the loan amount.

For Institutions: Collateral Security of at least 50 % of loan amount plus personal

guarantee of partners/trustees/promoters.

Prime Security in each case will be hypothecation of produce.

D. Repayment:

12 to 24 EMIs for individuals

12 to 36 instalments for institutions

E. Application:

As per applicability to the particular case , Salary Certificates, Employer’s

Undertaking letters , Standing Instructions , Trust deed , Bye-law of society ,
Resolution , Partnership Deed etc. should be taken along with prescribed
application form. Printed copies of the prescribed application forms will be
supplied by Stationery Department after printing. Till such time Agri.12 meant for
plantations and Horticultural loans may be used.

F. Rate of Interest:

Pricing will be as applicable to Agricultural Term Loans from time to time.

G.Discretionary Power:

Same discretionary powers as applicable to Agricultural Term Loans will apply to

these loans. Presently, Rs 2,50,000 for Scale IV, Rs.1,50,000 for scale III, Rs.1,00,000
for scale II and Rs,50,000 for scale I .

H. Name and Classification:

The scheme will be known as ‘IOB Urban Horticulture Scheme’ and these
loans will be classified under ‘Agriculture: Direct’

I. Miscellaneous:

The scheme is basically intended to encourage and facilitate kitchen garden or

decorative horticulture to be undertaken by owners, occupants and housewives.
The activity need not be commercial. There are institutions available in major
cities who conduct short-term courses for developing kitchen gardens and roof
gardens. For example, in Chennai. Tamil Nadu Agricultural University, Department
of Horticulture (Govt. of Tamilnadu) and Madras Horticultural Society
(Radhakrishnan Salai) conduct such courses for housewives as well as for other
amateur gardeners. Rotary Clubs and some NGOs also conduct summer classes
on such subjects either free of cost or on nominal payments. Depending on need
and demand, bank can organise exclusive programmes for IOB borrowers (at
their own cost) as a value-addition. A few gardens in all cities can also be
developed with active involvement of Bank as models for demonstration. Some
borrowers can also be guided to attach vermi-compost units to their gardens.

CONCLUSION

It is a novel scheme where all categories, .viz rural /semi urban / urban/ metro
branches can participate. Regional Office and Branches are advised to give
wide publicity about the scheme and increase the direct lending to agriculture. It may
also be noted that personal guidance by staff with active involvement in select
cases will generate enormous publicity value and goodwill for the Bank.

(S.N.MISRA)
GENERAL MANAGER
 INDIAN OVERSEAS BANK

PRIORITY CREDIT DEPARTMENT (AGRI)

CENTRAL OFFICE, CHENNAI

SCHEME FOR FINANCING “URBAN HORTICULTURE DEVELOPMENT”

ECONOMICS FOR THE UNIT AREA OF 1000 SQ.FEET:

S.No Purpose Unit Cost Total Cost

1 Excavation of top soil ( I ft. Re.1.00x1000 Rs.1000

depth)

2 Filling up with red soil Rs.2.25X 1000 Rs.2250

3 Labour charges for leveling & Rs.1.00X1000 Rs.1000

formation of beds

4 Cost of plant material like Rs.2.50X1000 Rs.2500

seeds, saplings, flowering
plants, ornamental plants

5 Farm yard manure, Bio Rs.1.50X1000 Rs.1500

Fertilisers & Bio Pesticides,
Vermicompost, Micronutrients
etc.

6 Irrigation facilities including Rs.5000

Sintex tank, pipelines, Drip
Irrigation equipments

7 Garden equipments Rs. 500

TOTAL Rs.13750

Use of Farm Yard manure, Bio Fertilisers, Bio Pesticides and Vermicompost are
advocated with an aim to avoid use of inorganic chemicals as a part of Eco
Friendly cultivation. This attempt shall reduce pollution in the atmosphere as the
project is mainly aimed to be implemented in the Cities.

Drip Irrigation is recommended as a part of water conservation measures since we

may get up to 40% water saving by using drip irrigation.

Rs.3750 is to be treated as Margin and a maximum loan of Rs.10,000/- may be

considered for an area of 1000 sq.ft.