Plantations :
Advances are made to agriculturists such as tea gardeners to finance their growing crops. When the produce is harvested, processed and sold, the
money is repaid to the bank.
The basis of calculating the amount of the advance is the estimated crop of the season. This depends upon the area under cultivation, expected yield, etc. Separate advances are made for each season’s crop.
The crop to be produced is hypothecated to the bank. Generally, the fixed assets of the plantation are also mortgaged with the bank as collateral
security. Finance is taken from the bank to incur expenditure on the crop. As such, the amount of the advance increases as the crop grows.