Working Capital Loan

Working Capital loan is extended to Dairy Co-operatives (including Milk Unions / Federations / Producer Companies) to tide over its financial need when their capital is likely to get locked up in the form of inventory of milk products/ raw materials.

In order to support the dairy cooperatives to meet their working capital requirement, NDDB has introduced ‘Working Capital Finance Scheme for Dairy Co-operatives’ with effect from 1st September 2017. The salient features of the scheme are given as below: 

1) Purpose

To meet the fund requirement for:

i) Purchase of conserved commodities1 to meet the demand for milk & milk products

ii) Conversion of surplus milk into conserved commodities

iii) Maintaining the minimum stock level of conserved commodities for day to day operations throughout the year

2) Who can apply?

i) The Dairy Co-operatives registered under a State Co-operative Societies Act or Producer Company under chapter IX-A of the Companies (Amendment) Act 2002 or under relevant chapter of the subsequent Companies Act/its amendment, having duly audited accounts for the previous financial year.

ii) No outstanding dues to milk producers/member societies for more than one payment period2 at the time of application

iii) No default in repayment of loans to NDDB/Bank/any other financial institution during last 3 years. 

3) Basis of Assessment

Under this scheme, NDDB shall sanction a maximum of working capital (called ‘sanction limit’ hereinafter) to each eligible applicant based on their operations in previous three years and estimates for the following year.

4) Quantum of Finance

The maximum sanctioned limit shall not exceed 80% of the peak working capital requirement of the applicant3.  

5) Validity

Maximum of 12 months. At the end of the tenure, the total loan outstanding along with interest accrued there on is to be repaid to NDDB, if the limit is not renewed.

6) Rate of Interest

The rate of interest is 7.30% p.a. with effect from 1st January 2023 on floating basis.

Interest will be charged at a floating rate of interest or at such rate as may be decided by NDDB from time to time on monthly rent basis. The monthly interest rate shall be payable on or before the last working day of the month, failing which, additional interest @3% p.a. will be charged from 1st day of the subsequent month.

7) Tenure of the Loan

Maximum 12 months from the sanctioned date as referred in the Sanction Letter. The same can be renewed at the discretion of NDDB. The eligible applicant has to submit the application in prescribed format to NDDB for availing financial assistance under the said Working Capital Finance Scheme. The borrowers may please refer detailed Guidelines for the Scheme.


1 Conserved commodities mean commodities which are used for reconstitution of milk like Skimmed Milk Powder (SMP), White Butter (WB) and Whole Milk Powder (WMP).
2 Maximum payment cycle should not be more than 15 days.
3 Will be calculated based on the peak stock level (peakest of the monthly average closing stocks) of conserved commodities to be held by the borrower during the loan tenure.