The equity grant strengthens an FPO's capital. The government matches the share capital members put in, up to ₹2,000 per farmer and ₹15 lakh per FPO, and the FPO issues extra shares of the same value to its members. This part explains the rule, who qualifies, how the shares are shared out, and when the money can be taken back.
The short version
- A matching grant: up to ₹2,000 per farmer member, and at most ₹15 lakh per FPO.
- It is not government ownership; the FPO issues extra shares of the same value to its members.
- Key conditions: 50% small and marginal shareholders, no member above 10%, a woman director, an 18-month business plan.
- It can be drawn in up to three tranches within four years of the first application.
How the Matching Works
Each member's contribution is matched up to ₹2,000, and the FPO's total is capped at ₹15 lakh.
The grant matches the equity that farmer members have put into the FPO. It is limited to ₹2,000 per farmer member and ₹15 lakh per FPO. It is not a government share in the FPO: it is a grant, and the FPO turns it into extra shares for its members.
Its purpose is to make the FPO more viable, more creditworthy, and more owned by its members. The scheme set aside ₹1,500 crore for it.
400 members have each paid ₹1,500: the grant is ₹6,00,000 (₹1,500 matched for each). If each had paid ₹3,000, the grant would be ₹8,00,000, because each member's match stops at ₹2,000.
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Source: Operational Guidelines 11.1, 11.2 and 11.4
Did you know?₹1,500 crore was set aside for equity grants: enough for the full ₹15 lakh in every one of the 10,000 FPOs.
Who Is Eligible
A registered FPO with member equity, mostly small farmers, no dominant shareholder, a woman director and an 18-month plan.
Eligibility for the equity grant
- The FPO is a legal entity: a producer company or a cooperative
- It has raised equity from members as its Articles or bye-laws require
- At least 50% of shareholders are small, marginal or landless tenant farmers (women preferred)
- No single member holds more than 10% of total equity
- At least one woman on the board, with adequate representation of women
- A business plan and budget for the next 18 months
A farmer who belongs to two FPOs with different produce receives the matching grant only once. The Addendum removed the earlier requirement of a separate Management Committee.
Source: Operational Guidelines 11.3; Addendum item 15
How the Extra Shares Are Shared Out
Shares are allotted in proportion to members' current holdings, every member gets at least one, and shares of a member who leaves pass to another member.
- Pro-rata allotment. Extra shares are allotted in proportion to each member's current shareholding, within the limits, and every shareholder must receive at least one share.
- If the grant is too small. If it cannot give everyone one share, allocate by land holding, starting with the smallest farmer, or by a transparent draw of lots.
- When a member leaves. The extra shares from the grant pass to another or a new member within 90 days, through an open draw of lots. The member who leaves receives nothing for them.
Source: Operational Guidelines 11.4(a) and (c)
Tranches and Recovery
Up to three tranches within four years; the grant is recovered if shares are not issued in 45 days, the FPO closes within five years, or it is misused.
The grant can be drawn in up to three tranches, within four years of the first application and within the CBBO's support period, as members raise more capital. Each later tranche is treated as a fresh application, with full checks.
The grant can be recalled, and the FPO is legally bound to repay it, if: (a) it does not issue the extra shares within 45 days of receiving the money; (b) it closes or is dissolved within five years of receiving it; or (c) it misuses the grant for anything outside its Memorandum, Articles or business plan. The implementing agency can also claim damages.
Source: Operational Guidelines 11.4(b) and (d), and 11.10
Check yourself
Tap an answer to see whether you are right, and why.
An FPO has 300 members who each paid ₹2,500. What is the most it can receive?
- ₹7,50,000
- ₹6,00,000
- ₹15,00,000
Each member's match is capped at ₹2,000: 300 × ₹2,000 = ₹6,00,000.
Within how many days must the FPO issue the extra shares?
- 30 days
- 45 days
- 90 days
Clause 11.4 sets 45 days from receiving the grant.
A member who received extra shares leaves the FPO. What happens to those shares?
- The member sells them
- They pass to another member within 90 days by draw of lots
- They are cancelled
Clause 11.4(c): the leaving member gets nothing for them.
Remember these things
- The grant matches member equity: up to ₹2,000 each, ₹15 lakh per FPO.
- It needs mostly small farmers, no member over 10%, a woman director and a plan.
- Extra shares go pro-rata; everyone gets at least one.
- Issue shares within 45 days, or the grant can be recalled.
Part 12 walks through the application: the form, the documents and the 45-day rule. For FPOs whose members are also certified under PGS-India, KrushiFlow submits farmer records to the PGS-India portal in bulk.