Business Standard

Nabard planning interest-free loans

Read more on:    Nabard | Pacss | Dccbs
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Issues guidelines for developing multi-service centres.

The National Bank for Agriculture and Rural Development is bracing up to give a big push to develop primary agriculture cooperative societies () as multi-service centres, by providing them low- or zero-interest loans in place of grants.

PACSs are expected to use such loans — or even grant — to support the setting up of knowledge dissemination centres, provide training to farmers and bear the initial administrative cost to start a new business. Only that the societies cannot use them towards the capital cost of a project. The source for such financial aid would be a producer organisation development fund formed by the state-run , headquartered in this metropolis. The corpus is envisaged to be of help to about 77,000 agri coops across the country.

Nabard also plans to provide loan to district central cooperative banks () to support PACs. Such banks would be allowed to charge a maximum of 1 per cent additional interest over and above the Nabard-charged interest rate. If DCCBs get loans sanctioned at 10 per cent interest, they are not expected to charge more than 11 per cent from PACSs.

Loans can be routed through regional rural banks, where DCCBs is not in good health. In the case of loans routed through DCCBs and RRBs, Nabard would continue to be involved in identifying PACSs, appraising proposals and monitoring project implementation and loan recovery.

These initiatives are part of broad guidelines that the 1982-founded Nabard has issued for developing PACSs into multi-services centres.

A Nabard official said on Saturday that PACSs could play a crucial role in providing input facilities to members — in the form of cash of kind component. They can also help in providing agriculture implements on hiring basis, besides storage facility, he told Business Standard.

“However, to increase the business portfolio of PACSs and make it a self-sustainable entity, it is essential that they should provide additional services. These include the enabling of collective purchase of inputs and quality storage capacity as per the negotiable warehouse receipt system,” he noted. Also, PACSs can help curb incidents or avert situations that force farmers to go for distress sale of the produce in the wake of immediate credit.

The official said the PACSs could also go for upgradation of existing storage capacity or construction of a godown, along with sorting and grading units — to enable them to issue warehouse receipts. Based on these receipts, the farmers can get loan against the crop stored — and can cultivate the next crop. This would help them earn better price. For, the crops are held without affecting the fund flow position.

Moreover, PACSs can also take up the purchase of hi-tech agri implements like power tiller, land leveller, paddy transplanter and combine harvester depending upon the requirements of members. The earning would be from the rental of these equipment.

The Nabard official said PACSs could also support the establishment of agro-processing and agri information centres. The societies can also help in the setting up of testing laboratories for soil and water and create a panel of experts for providing services on payment basis. Both lab and guidance would be available to farmers at a cost.

The PACSs, which are either in the area of marketing or intend to undertake this activity, may create this channel to facilitate the farmers in marketing, he added.

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