India is one of the largest producers of several crops and agricultural products in the world. The abundant produce requires high quality storage solutions until they reach the end consumer. Storage of crops and allied products require high quality warehouses with adequate facilities. The Warehouse Development and Regulatory Authority of India assists in setting up of warehouses and cold storage facilities to aid producers. 

There is a huge demand for warehouses that are easily accessible and provide high protection from natural calamities, rodents and other damaging elements. Banks and other financial institutions have numerous loan products to aid in the building and setting up of a warehouse. 

Applying for a Warehouse & Storage Facility Loan

Setting up a warehouse or cold storage facility is required for individual farmers who produce agriculture products in large amount, corporations that deal with food items and various other items, logistics, etc. As both banks and government provide funding facilities for setting up a warehouse, you can either approach a bank at their branches or apply online for such loans. It’s important you check your eligibility criteria before applying for the loan. 

Eligibility Criteria:

To get the loan for setting up a warehouse, the following eligibility criteria are required:

  • The applicant can be individual entrepreneurs, farmers, proprietary and partnership firms, co-operatives, agro-processing co-operative societies, corporations, agro-industrial corporations, agricultural produce marketing committees, agro-processing corporations, self-help groups, marketing boards, etc. 

  • The borrower should have a good repayment ability

  • It is recommended to have a good personal or business credit score for higher approval chances.

  • Loans are provided to applicants who conform to the guidelines laid down by the Warehouse Development and Regulatory Authority of India.

Once you have checked your eligibility, you may approach the banks or other lending institutions to get the loan with the filled-in application form and other required documents. You may also call the customer support team to get details about the loan and application process. 

Quantum of Loan: One can get warehouse loan for up to 80% of the project cost as the maximum loan amount. Currently, warehouse loans are offered anywhere between Rs. 1 Lakh to Rs. 20 Crores. 

Rate of Interest: The current rate of interest ranges anywhere between 10.5% - 11.5%.

Repayment tenure: Available repayment tenures currently range between 7 years and 11 years depending on the lenders’ policies. 

Banks and Other Organisations Offering Loans for Warehouse and Storage Facilities

NABARD National Bank for Agriculture and Rural Development (NABARD) has been exclusively set up by the Indian Government in regulating the warehouse infrastructure across the country. Following are the features of the loan provided for installing a warehouse and storage facilities. 

  • Loans will be provided for creation of storage infrastructure with a minimum aggregate capacity of 5000 metric tonnes for agricultural and allied products.

  • Storage facilities refer to warehouses, silos, cold storage and controlled atmosphere stores.

  • Loans can be availed for improvement or modernization of existing facilities with due merit.

  • It offers repayment tenures of 7 years or more.

  • For repayment period less than 7 years, the interest rate would be prime lending rate of NABARD + Risk premium. For repayments of more than 7 years, interest rate would be calculated as prime lending rate of NABARD + risk premium + tenure premium.

  • Loans will be provided only to those facilities that conform to the guidelines laid down by the Warehouse Development and Regulatory Authority (WDRA) or National Centre for Cold chain Development (NCCD).

  • State governments and state-owned corporations can avail loans at a concessional rate of 1.5% less than the prevailing rate. They are also given a loan of up to 95% of the project cost.

State Bank of India – Gramin Bhandaran Yojna

This is a capital investment subsidy scheme for construction or renovation of rural godowns. This scheme aims at modernizing and creating scientific storage capacity in the rural areas to store farm products so that farmers are not forced to sell their produce in distress. 

  • The facility can be constructed or located in an area marked as rural or outside of any municipal corporation limits

  • It can also be availed by rural godowns located inside food parks promoted by the Ministry of Food Processing Industries

  • The loan quantum is Rs.3000 – Rs.4000 per tonne for new construction and Rs.750 per tonne for renovation.

  • The loan is regulated by NABARD, and it offers up to 75% of the project cost. 

  • Mortgage/security of the land and godown is mandated.

  • Repayment tenure of 11 years with a grace period of 1 year.

IDBI Bank – Warehouse Receipt Finance

This loan is offered to individual farmers, public & private limited companies, dealers, traders and APMCs against agricultural commodities to store farm produce such as Soya bean, Cotton (including bales), Mustard, Maize, Wheat, Sugar, Paddy, Cashew, Castor, Chilli and Turmeric.

  • The loan amount can be used for storing farm produce in warehouses, market yards, godowns and silos.

  • The loan amount ranges between Rs. 25,000 to Rs. 100 crores.

  • The repayment period is maximum of 12 months from the date of lodging commodities or shelf of the product. 

Bank of India – Cold Storage

The loan can be used to construct cold storage chambers along with concrete racks and staircases.

  • It can be utilized for installation of machineries and plant required for the running of the cold storage units.

  • Loan amount of up to 85% of the project cost is offered.

  • The maximum repayment tenure is up to 9 years with a moratorium period of 1 year.

  • It requires complete insurance of the assets purchased with the bank loan.

End Note

In India, the warehouses in the unorganised sectors are mainly godowns which do not have adequate facilities. During monsoon, there will be leakages which can damage electronic items. Every year, losses in lakhs are incurred due to insufficient or inferior storage solutions. Hence, there is a high demand for quality warehousing and cold storage solutions throughout the country. Also, the Government has founded numerous schemes to help individuals and organisations set up warehouses that can benefit millions of agriculturists. One should act prudently and utilize these facilities to set up a warehousing facility which will prove to be a profitable business enterprise.