(i) Purchase of good quality high milk cows/buffaloes with minimum average daily milk yield of 6.5 litres or exotic cross bred cow. Animals at the time of advance should not preferably be in more than second lactation. However, relaxation in deserving cases may be given by Incumbents for one more lactation. In no case the animals financed should be in more than their third lactation.

(ii) Construction of shed(s) for keeping the animals.

(iii) Purchase of dairy machinery or other equipments of dairy business in case the activity is run on commercial lines and as main occupation.

(iv) In case where the borrower(s) is/are not capable of providing fodder for the animals maintained by them, he/she/they may be extended additional need based credit facility for purchase of fodder and other feeds for 3 months from the date of purchase of the milch animals. This may also be given term loan which is to be recovered with the instalments of milch animals.

(v) Cost of transportation of animal from cattle market, if any, and insurance premium may also be considered for bank financing along with cattle.

Characteristics and qualities of good quality high yielding milch animals and some of technical aspects and pointers for good cattle management are given in Appendix-I.

(vi) Composite loans may be given for purchase of milch cattle and one month concentrate feed requirements as also for cultivation of fodder crops in integrated manner. This will ensure proper feeding of the animals on the one hand and propagating mixed farming on the other hand, thus enhancing farm productivity leading to more incremental income to the borrower(s) enabling him/her/them to repay bank loan regularly.


(i) Individual borrowers undertaking dairying as subsidiary activity:

(a) The intending borrower(s) should be having experience in maintenance of milch animals.

(b) He should be landless agricultural labourer or farmer/any individual who has arrangements for supply of adequate quantity of fodder.

(c) Activity should be economically viable.

(d) He should have shed/accommodation for keeping the animals or should have adequate space for constructing the shed for keeping the animals.

(ii) Individual borrowers undertaking commercial dairy as main activity:

(a) Borrower(s) should be well experienced in running a dairy farm on commercial basis intending to undertake dairying as his main vocation/business.

(b) He must have accommodation for maintenance of animals or suitable space for construction of shed should be available with the applicant on which shed could be constructed.

(c) Applicant should have arrangements for growing/storage of feeds, fodder and concentrates.

(d) Project report should be submitted by the applicant which should indicate the techno-economic viability, marketing arrangements, infrastructure, etc.


Need-based loan should be provided. A unit of 2 milch animals is considered viable minimum size for such an activity for continuous production of milk. Cost of the milch animals should be in conformity with the unit cost approved by NABARD from time to time.


4. Margin Norms:

For production credit and/or Investment Credit:

Amount of Loan Margin

i) Upto Rs.1,00,000/- NIL

ii) Above Rs. 1,00,000/ to Rs.2 lakh 5%

iii) Above Rs.2 lakh to Rs 5 Lakh 10%

iv) Above Rs 5 Lakh 25%

5. Security norms:


Production Credit/

Investment Credit



For loan upto Rs.1,00, 000/-

Hypothecation of assets created out of bank loan.


Above Rs.1,00, 000/-

  1. Hypothecation of crops and/or assets created out of bank loan. And
  2. Charge on land as per Agricultural credit operations and miscellaneous Provisions Act of the State concerned/Mortgage of agricultural land valued at 100% of amount of loan for other farmers and 75% of the loan amount for small farmers/marginal farmers.



Alternate security viz. charge/lien over liquid securities such as term deposits/NSC/KVP, etc. which may be considered adequate to cover the 100%of loan amount.




Loans for purchase of milch animals should be repaid as under: -




Types of Investment

Repayment period (including gestation period)

Gestation period


Cross bred cow(s)

5 years

Repayment to be linked with lactation period.



5 years

-do -


2 Graded Murrah buffaloes

5 years



Cross bred calf rearing

6 years

30 months


7. RATE OF INTEREST: 11.60% TO 12.85% (Terms and Conditions follows)

Above are only salient features of the scheme. For details please contact nearest branch