India - Tamil Nadu Agricultural Credit Project : Credit 0250 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 250-IN Project Agreement (Tamil Nadu Agricultural Credit Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND S AGRICULTURAL REFINANCE CORPORATION AND TAMIL NADU COOPERATIVE STATE LAND DEVELOPMENT BANK AND THE STATE OF TAMIL NADU DATED JUNE 11, 1971 AGREEMENT, dated June 11, 1971 between INTERNA- TIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association), AGRICULTURAL REFINANCE CORPORATION (here- inafter called ARC), TAMIL NADU COOPERATIVE STATE LAND DEVELOPMENT BANK (hereinafter called LDB) and THE STATE OF TAMIL NADU. WHEREAS by a,development credit agreement of even date herewith between India, acting by its President (herein- after called the Borrower) and the Association (hereinafter referred to as the Development Credit Agreement), the Association has agreed to make available to the Borrower an amount in various currencies equivalent to thirty-five million dollars ($35,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition inter alia that ARC, LDB and Tamil Nadu agree to undertake such obligations toward the Association as hereinafter set forth; WHEREAs by an agreement of even date herewith between the Association and the State of Tamil Nadu, the State of Tamil Nadu has agreed to undertake certain obligations in respect of the carrying out of the Project; WHEREAs by a subsidiary loan agreement to be entered into between the Borrower and ARC, part of the proceeds of the credit provided for under the Development Credit Agreement will be made available to ARC on the terms and conditions therein set forth; and WHEREAS ARC, LDB and Tamil Nadu, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, have agreed to undertake the obligations hereinafter set forth; 4 Now THERFORE the parties hereto hereby agree as follows: ARTICLE I Definitions SECTION 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms de- fined in the Development Credit Agreement and in the Gen- eral Conditions (as so defined) have the respective mean- ings therein set forth, the term "Rs" means rupees in the currency of the Borrower, and the term "Tamil Nadu" means the State of Tamil Nadu, acting for the time being through its Department of Agriculture. ARTICLE II Execution of the Project iSECTION 2.01. ARC, LDB and Tamil Nadu shall carry out the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with sound administrative, financial and agri- cultural practices, and shall provide, or cause to be pro- vided, promptly as needed, the funds, facilities, services and other resources required for the purpose. SECTION 2.02. (a) ARC shall enter into a Subsidiary Loan Agreement with the Borrower on terms and condi- tions (including inter alia those set forth in Schedule 5 to the Development Credit Agreement) satisfactory to the Association. ARC shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Asso- ciation shall otherwise agree, ARC -shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. (b) ARC shall enter into agreements with LDB and each commercial bank selected in accordance with Section 5 8.01(g) and (h) of the Development Credit Agreement on terms and conditions (including inter alia those set forth in paragraph 1 of Schedule 2 to this Agreement) satisfac- tory to the Association. (c) ARC shall instruct Participating Banks to maintain separate accounts for Project lending and shall ensure that such accounts are audited by auditors acceptable to the Association. SECTION 2.03. LDB shall enter into an agreement with each Primary Bank on terms and conditions (including inter alia those set forth in paragraph 2 of Schedule 2 to this Agreement) satisfactory to ARC. SECTION 2.04. The operating policies and procedures for carrying out the Project shall be as set forth in Schedule 1 to this Agreement, as the same may be amended from time to time by agreement between the Association, ARC, LDB and Tamil Nadu. SECTION 2.05. ARC shall take such measures as shall be necessary to ensure that appraisals of Agricultural Loans are in conformity with agreed lending criteria andl to en- sure that not more than one Agricultural Loan is granted for the same investment. SECTION 2.06. Tamil Nadu shall organize the procure- ment of goods to be financed out of the proceeds of the Credit in accordance with the procedures set forth or re- ferred to in Schedule 3 to the Development Credit Agree- ment. SECTION 2.07. (a) Tamil Nadu shall cause all imported goods to be financed out of the proceeds of the Credit to be insured against hazards incident to the 'acquisition, trans- portation and delivery thereof to the place of use or in- stallation, or that adequate provision be made for the insurance thereof, and for such insurance any indemnity 6 shall be payable in a currency freely usable to replace or repair ,such goods. Tamil Nadu shall keep the Association informed of such insurance arrangements. (b) Except as the Association may otherwise agree, ARC, LDB and Tamil Nadu shall cause all goods and serv- ices financed out of the proceeds of the Credit under Cate- gories IV and V of the allocation of the proceeds of the Credit set forth in Schedule 1 to the Development Credit Agreement to be used exclusively for the Project. SECTION 2.08. ARC, LDB and Tamil Nadu: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit relent to them by the Borrower and by ARC, re- spectively, and to disclose the use thereof in the Project; (ii) shall enable the Association',s representatives to in- spect the goods financed out of such proceeds and any rele- vant records and documents; and (iii) shall furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit so relent to them and the goods and services financed out of such proceeds. SECTION 2.09. ARC and LDB shall at all times charge interest on all of their loans at rates sufficient to enable ARC and LDB, respectively, to (a) cover all operating expenditures and charges including taxes (if any) and interest payments on borrowings; and (b) maintain ade- quate provisions for bad debts and maintain adequate gen- eral reserves in accordance with sound commercial practice. SECTION 2.10. ARC, in consultation with Tamil Nadu, the Participating Banks and the Primary Banks, shall pre- pare investment guidelines and establish loan rates for the financing of land drainage and inform the Association of them and of any substantial changes thereto. 7 SECTION 2.11. LDB shall, within three months after the Effective Date, appoint a senior agricultural economist and a civil engineer experienced in water use and management to its staff. SECTION 2.12. ARC shall require Participating Banks and Primary Banks, with the assistance of ARC, to carry out a series of short courses for staff on Project procedures and lending criteria; and shall require Participating Banks to keep -separate Project accounts. SECTION 2.13. ARC shall take such due measures as are necessary to ensure that all banks included in the Second Schedule to the Reserve Bank of India Act, 1934 (a) shall not lend for minor irrigation investments in the areas specified in Schedule 1 to the Development Credit Agree- ment outside of the Project lending program, and (b) in other areas in Tamil Nadu such banks (i) shall only lend for minor irrigation investments where a certificate of non- objection from the State Groundwater Directorate shall have been received and (ii) commencing one year after the Effective Date, in making loans for dugwell improvement, conform to the appraisal procedures and criteria set out in Schedule 1 to this Agreement. ARTICLE III Management and Operations of ARC and LDB SECTION 3.01. ARC and LDB shall: (a) at all times man- age their affairs, maintain their financial position, plan their future expansion and carry on their operations, all in accordance with sound business and financial practices and under the supervision of experienced and competent man- agement -assisted by experienced and competent staff in adequate number; and (b) take all steps necessary to ac- quire, maintain and review all rights, powers, privileges and franchises which are necessary or useful in the con- 8 duct of their business or in the carrying out of the Project. SECTION 3.02. LDB shall cause all Primary Land De- velopment Banks (a) not to lend for minor irrigation in- vestments in the areas specified in Schedule 1 to this Agree- ment outside of the Project lending program, and (b) in other areas in Tamil Nadu (i) only to lend for minor irriga- tion investments where a certificate of non-objection from the State Groundwater Directorate shall have been received and (ii) commencing one year after the Effective Date, in making loans for dugwell improvement, conform to the appraisal procedures and criteria set out in Schedule 1 to this Agreement. ARTICLE IV Financial Covenants SECTION 4.01. ARC, LDB and Tamil Nadu,shall maintain records adequate to reflect in accordance with consistently maintained sound accounting practices their operations and financial condition. SECTION 4.02. ARC, LDB and Tamil Nadu shall: (i) es- tablish and maintain separate accounts in respect of all funds disbursed and received on account of the Project; (ii) have their accounts and financial istatements (balance sheets,.statements of income and expenses and related state- ments) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independ- ent auditors acceptable to the Association; (iii) furnish to the Association as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of said separate accounts and their financial statements for such year as so audited and (B) the report of such audit by said auditors, of such ,scope and in such detail as the Association shall have reasonably requested; and (iv) furnish to the Association such -other information concerning their accounts and financial statements and the 9 audit thereof as the Association shall from time to time reasonably request. SECTION 4.03. LDB shall cause the accounts 'of the Pri- mary Banks to continue to be audited by independent audi- tors acceptable to the Association. SECTION 4.04. ARC shall require the separate Project accounts of the Participating Banks, as referred to in Section 2.12 of this Agreement, to be audited by independ- ent auditors acceptable to the Association. ARTICLE V Consultation, Information and Inspection SECTION 5.01. The Association, ARC, LDB and Tamil Nadu shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the As-socia- ttion, ARC, LDB and Tamil Nadu shall from time to time, at the request of either party, exchange views through their representatives with regard to the performance of their respective obligations under this Agreement, the adminis- tration, operations and financial condition of ARC, LDB or Tamil Nadu and other matters relating to the purpose of the Credit. SECTION 5.02. The Association, ARC, LDB and Tamil Nadu shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, or the per- formance by any of them of its obligations under this Agreement or the performance by the Borrower and ARC of their respective obligations under the Subsidiary Loan Agreement. SECTION 5.03. ARC, LDB and Tamil Nadu, respectively, shall enable the Association's representatives to inspect all their records and documents relevant to the Project. 10 ARTICLE VI Effective Date; Termination; Cancellation and Suspension SECTION 6.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. SECTION 6.02. (a) This Agreement and all obligations of the Association and ARC, LDB and Tamil Nadu there- under -shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agree- ment shall terminate in accordance with its terms; or (ii) a date when all principal amounts withdrawn by ARC under the Subsidiary Loan Agreement and interest thereon shall have been repaid by ARC to the Borrower. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in para- graph (a) (ii) of this Section, the Association shall promptly notify ARC, LDB and Tamil Nadu of this event and, upon the giving of such notice, this Agreement and all obligations of the parties thereunder shall forthwith terminate. SECTION 6.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any partial cancellation or suspension under the Development Credit Agreement. ARTICLE VII Miscellaneous Provisions SECTION 7.01. Any notice or request required or per- mitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agree- ment shall be in writing. Such notice or request shall be 11 deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such i ace or making such request. The addresses so specifle are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Indevas Washington, D.C. For ARC: Managing Director Agricultural Refinance Corporation Shreeniketan F Block Shiv Sagar Estate Dr. Annie Besant Road Worli, Bombay, 18 W.B. India Cable address: Agrefinans Bombay For LDB: Chairman Tamil Nadu Cooperative State Development Bank 32, Luz Church Road Mylapore Madras 4 India 12 Cable address: Nilavalam Madras, India For Tamil Nadu: Secretary to,the Government of Tamil Nadu Finance and Planning Department Fort St. George Madras 9 India Cable address: Madrasfinance Madras India SECTION 7.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of (i) ARC may be taken or executed by its Managing Director or such other person or persons as ARC shall designate in writing; (ii) LDB may be taken or executed by its Chairman or such other person or persons as LDB shall designate in writing; and (ii) Tamil Nadu may be taken or executed by the person duly authorized by it. ,SECTION 7.03. ARC, LDB and Tamil Nadu shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of the person or per- sons who will, on behalf of ARC, LDB and Tamil Nadu, take any action or execute any documents required or per- mitted to be taken or executed by ADC, LDB and Tamil Nadu, respectively, pursuant to any of the provisions of this Agreement. SECTION 7.04. This Agreement may be executed in sev- eral counterparts, each of which shall be an original, and all collectively but one instrument. 13 IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and delivered in the District -of Columbia, United States of America, as of the day and year firsit above written. INTERNATIONAL DEVELOPMENT AssOCIATION By /s/ J. BURKE KNAPP Vice President AGRICULTURAL REFINANCE CORPORATION By /s/ L. K. JHA Authorized Representative TAMIL NADu COOPERATIVE STATE LAND DEVELOPMENT BANK By /s/ L. K. JHA Authorized Representative THE STATE OF TAMIL NADu By /s/ L. K. JHA Authorized Representative 14 SCHEDULE 1 Operating Policies and Procedures I. Investment Program and Technical Criteria Filter Point and Tubewell Investments 1. (A) Thanjavur District (i) Taluks: Thanjavur (North), Papanasam, May- uram, Nannilam, Kumbakonam, Shyali Area description: Cauvery sub-basin Investments: 5,000 filter points Pump: 5 hp centrifugal (guideline) 1,000 shal- low tubewells (depth 50 m) Pump: 5 hp centrifugal (guideline) (ii) Taluks: Mannargudi, Tirutturaipurdi, Naga- pattinam Area description: Vennar sub-basin (Vada- padimangalam aquifer) Investments: 2,000 filter points Pump: 5 hp centrifugal (guideline) (iii) Taluks: as listed under (i) and (ii) above Investments: 4,000 electric pump sets Pump: 5 hp centrifugal (guideline) (iv) Taluks: Orattandu, Pattukkottai Area description: New Delta sub-basin (Salya- mangalam aquifer) Investments: 90 medium tubewells (depth 60 m) Pump: 5 hp centrifugal (guideline) (B) Tiruchirappalli District (i) Taluks: Alangudi, Udayiarpalayam Area description: Miocene sands Investments: 50 medium tubewells (depth 70 m) Pump: 15 hp submersible or turbine (guideline) 15 (ii) Taluk: Udayarpalayam Area description: Miocene sands Investments: 60 medium tubewells (depth 70 m) Pump: 15 hp submersible or turbine (guideline) (iii) Taluks: Perambalur, Lalgudi, Musiri, Tiruchi- rappalli, Kulitalai Area description: crystalline rock Investments: 300 shallow tubewells (depth 50 m) Pump: 5 hp centrifugal placed in pit (guide- line) (C) South Arcot District (i) Taluk: Chidambaram Area description: Vellar/Coleroon alluvium reservoir Investments: 2,500 shallow tubewells (depth 50 m) Pump: 5 hp centrifugal (guideline) (ii) Taluk: Cuddalore Area description: Panruti Investments: 500 medium tubewells (depth 100 m) Pump: 5 hp centrifugal placed in pit (guide- line) Dugwell Development 2. (A) Chingleput District Taluks: Kancheepuram, Madurantagam, Chingleput (B) Dharmapuri District Taluks: Dharmapuri, Hosur, Harur, Krishnagiri, Uttangarai (C) North Arcot District Taluks: Tiravannamalai, Chengam, Vellore, Gudi- yattam, Tirupattur 16 (D) Salem District Taluks: Sankari, Tiruchengode, Omalur, Mettur, Rasipuram Area description: crystalline rock Investments: in new dugwells and the improvement and energizing of existing dugwells to a total value not exceeding Rs 125 million Pumps: 5 hp centrifugal (guideline) II. General Lending Requirements 3. Technical requirements applying to all Project minor irrigation investments as a condition of lending: (A) Pump-size and Instant Discharge Each tubewell, filter point and dugwell will be equipped with suitable pumps with a minimum of 5 hp in order to obtain a minimum instant discharge of 10 1/second as a condition of irrigation efficiency. (B) Spacing of Tubewells and Filter Points in Sedi- mentary Areas (i) The minimum distance between a tubewell or a filter point and any other energized well will be determined for each different groundwater res- ervoir by the Theis formula applying an annual minimum withdrawal of 130,000 M3 for a tube- well and 70,000 M3 for a filter point and a maximum drawdown of 6 m. The application of this formula would result in a spacing range 500 m to 1,000 m for tubewells and 200 m to 600 m for filter points. (ii) In order to obtain a good use of irrigation water and reduce the risk of flooding, lending banks endeavor to apply as an appraisal cri- teria the irrigation of a minimum of 10 ha for each tubewell and 5 ha for each filter point. 17 (C) Spacing of Dugwells and Tubewells in Crystalline Areas (i) The minimum distance between dugwells and tubewells will be determined by the application of the following formula: Rmm . eA . Aba S = 100 rmm Where: Sm =distance between wells in meters. Rmm= annual watering of irrigated land in millimeters. rmm = annual recharge, in millimeters, to groundwater from rainfall, seepage from canals and tanks, return from irrigation occurring in the likely recharge area of the well, to be calculated from field ob- servations on water level fluctuations, run-off gauging and soil retention ob- tained from small representative basins installed in the areas of the Project under the responsibility of the State Groundwater Directorate. %= cropping intensity. A a minimum economic area to be irrigated by one well. (ii) In order to obtain a good use of irrigation water and reduce the risk of flooding, lending banks will endeavor to apply as an appraisal criteria the irrigation of a minimum of 10 ha for each tubewell and 5 ha for each dugwell, the latter based on a discharge of 180 M3/day. 4. In addition, the following conditions will apply to all the above proposed investments: (a) If adequate irrigation and drainage channels did not already exist on farms to benefit from the pro- 18 posed investment, the provision of such facilities will be a condition of a loan and could be included in the Project financing. (b) No energized wells will be financed within six miles of the coast. (c) All proposed minor irrigation investments will re- quire a certificate of non-objection from the State Groundwater Directorate before a loan is made. III. Guidelines for Organization and Appraisal Procedures Organization 5. (a) Insofar as it is not incompatible with the responsi- bilities of ARC under the Project as the refinancing agency, the Tamil Nadu State Groundwater Direc- torate would exercise advisory control over Project minor irrigation development. It will work through two divisions: one situated in and covering the dis- tricts of Thanjavur, Tiruchirapalli and South Arcot in which the filter point and tubewell investments would be located, the other situated in and covering the districts of Chingleput, Dharmapuri, North Arcot and Salem in which dugwell development will be located. (b) Both divisions will establish and maintain a census grid map (1:63,000) of their respective areas. They would issue to lending banks copies of the grid maps covering areas within their lending authority. They will guide and coordinate the activities of bank ap- praisal teams working in their areas but will not be responsible for staffing such teams, which remains a banking function, assisted as appropriate by the cooperative department and technical departments of the Tamil Nadu State Government. General Procedures 6. (a) Primary Banks and Participating Banks will ad- vertise, seeking applications for loans and setting 19 out lending terms and an explanation of appraisal methods. Invitations for applications could be stag- gered according to taluk or block. (b) A bank appraisal team, normally consisting of a supervisor of the lending bank, a valuation officer and a technical officer (engineer or geologist), will visit applicants' farms on a group basis and in the course of appraisal will sketch on an appraisal map (scale 1:10,000) within the areas prescribed in (c) below, the following: (i) all existing wells, showing whether they were energized or not, and, if energized, whether by electricity or diesel power; (ii) farms and area (ha) served by each such well; (iii) the well sites proposed for installation or elec- trification; (iv) farm(s) (with owners' name(,s)) to be irrigated by proposed wells; (v) electricity lines; (vi) proposed irrigation channels or pipes to be in- stalled/improved for distribution from pro- posed wells. (c) The areas to be covered by the sketch maps will be, from the proposed well: (i) for filter points and filter point electrification, 600 m radius; (ii) for tubewells, 1,000 m radius; (iii) for dugwell development, 600 m radius. (d) In addition, dugwell development appraisal will be assessed against the estimated groundwater re- sources of elementary watersheds and these water- sheds will be the basic unit of group appraisal. Calculations of groundwater recharge will be based on estimated amounts of rainfall, runoff, evapo- 20 transpiration and soil moisture parameters sup- ported by a qualitative analysis of factors such as gradients, soil structures, vegetation and surface water storage. The divisions of the State Ground- water Directorate will be responsible for demarcat- ing the approximate limits of these watersheds and of groundwater reservoir boundaries. In assessing groundwater resources, the appraisal team will in particular consider: (i) the probability of an instant discharge of 36 AP/hour as a minimum requirement being ob- tained from the proposed development; (ii) the probable extent of the weathering of crystal- line hard rock in the area of the proposed development; (iii) whether irrigation purposes would be better achieved by the installation of a new well, which should generally not exceed an investment of Rs 12,000 or by the improvement of an exist- ing well, at a cost generally not exceeding Rs 5,000, by energizing an existing well or by extending the use of water discharged from existing wells. (e) Proposed tubewell investments will be subject to individual financial appraisal; all other proposed minor irrigation investments will be subject to uni- form financial appraisal. All appraisals will specifi- cally include proposals on whether: (i) there would be a group loan to farmers who would receive water from the proposed develop- ment; (ii) the owner(s) would enter into an agreement to sell water to farmers other than borrowers; (iii) there would be other cooperative ownership arrangements. 21 (f) Lending banks will submit to the appropriate di- vision of the State Groundwater Directorate a copy of the sketch map with relevant information and recommendations. The division will enter the in- formation on its census grid map. (g) The division will issue a certificate of non-objection to the lending bank where it was 'satisfied that the proposed investment was technically feasible and conformed to the technical criteria. (h) The division will physically check all doubtful cases and, in addition, 10% of all recommended applica- tions. (i) On receipt of the division's certificate on non- objection, lending banks will complete loan formali- ties in the usual way and where appropriate docu- mentation will include an agreement for the sale of water. B. Financial Feasibility of Farm Investments (1) All investments shall be evaluated in terms of in- cremental returns from the additional investment, in accordance with the evaluation method prescribed by ARC. (2) Loans for tractor purchases shall be granted only to Beneficiaries who shall (a) offer assurances that he has or will have at the time he receives the trac- tor, at least three implements for use with the trac- tor; and (b) demonstrate that the tractor will be used for cultivating not less than 40 ha of cropped area per year or for 1,000 hrs of productive work in agriculture per year. (3) Tractor borrowers will be required to buy post- warranty service on their tractors for the life of the tractor loan. 22 SCHEDULE 2 Principal Terms of Relending Agreements The following sets forth the principal terms and condi- tions under which part of the proceeds of the Credit or the equivalent thereof shall be relent to LDB, Participating Banks and the Primary Banks: 1. Lending Terms to LDB and Participating Banks from ARC: (a) Interest rate not less than 61/2% per annum; (b) Repayments in installments set to coincide approxi- mately with collections from Beneficiaries; (c) Refinancing will be by way of purchase of deben- tures and by loans at the rate of 90% of Agricul- tural Loans for minor irrigation and land drain- age; 75% of Agricultural Loans for other invest- ment purposes. 2. Lending Terms to Primary Banks from LDB: (a) Interest rate not less than 734% per annum; (b) Repayments in installments set to coincide approxi- mately with collections from Beneficiaries; (c) Loans will cover the total amount of Primary Banks' lending to Beneficiaries. 3. Lending Terms to Beneficiaries from Primary Ba*ks and Participating Banks: (a) Interest rate not less than 9% per annum; (b) A once-and-for-all evaluation fee of 1/% of the cost of individual Project costs; (c) Collateral: 50% of developed value of land; (d) Downpayments: 23 (i) for normal lending a minimum of: (a) 10% of the cost of land drainage and soil conservation projects, (b) 25% of the cost of tractor projects and well-drilling equipment, (e) 20% of the cost of other projects including tractor implements; (ii) for lending to small farmer Benficiaries (as designated in the agreements referred to in Section 2.02(b) of this Agreement), a minimum of 10% of the cost of minor irrigation invest- ments costing less than Rs 10,000 each; In all cases specified downpayments could include the cost of the Beneficiary's obligatory share con- tribution to the Primary Bank where LDB was the lending bank. (e) Maturities, which will not exceed the life of the asset financed, will be: (i) for normal lending a maximum of: (-a) 9 years for tubewell or dugwell improve- ment loans, (b) 10 years for land levelling and land drain- age scheme loans including two-year grace period in which interest only will be pay- ,able, (c) 7 years for farm mechanization, filter point and pumpset loans, (d) 5 years for well-drilling equipment; (ii) for lending to small farmer Beneficiaries (as defined for the purposes of paragraph 3(d) (ii) above) a maximum of : (a) 15 years for minor irrigation loans (ex- cluding loan for pumpsets) where the in- vestment cost less than Rs 10,000 each, 24 (b) 15 years including two-year grace period for land levelling. In each case repayments will commence in the year following the completion of the investment. 4. Other LDB Lending Operations: Except as the Association may otherwise agree, LDB and Primary Banks will apply the same evaluation fee, collateral, downpayment and maturity requirements to all their similar lending operations, and the same inter- est rates to all their lending operations.