Nabard to get Rs 3,000 cr capital infusion

In a bid to expand credit flows to the farm sector, the government has proposed to infuse Rs 3,000 crore in National Bank for Agriculture and Rural Development (Nabard).

The government has proposed to strengthen Nabard's capital base by infusing Rs 3,000 crore, in a phased manner in view of the enhanced target for flow of agriculture credit. This would raise its paid-up capital to Rs 5,000 crore, according to Budget documents tabled yesterday in Parliament.

Besides, for refinancing the short-term crop loans of the cooperative credit institutions and RRBs at concessional rates, the government has proposed a contribution of Rs 10,000 crore to Nabard's Short-term Rural Credit Fund for 2011-12 from the shortfall in priority sector lending by Scheduled Commercial Banks, it said.

Interest subvention for short term credit to the farmers has been pegged at Rs 4,868 crore for 2011-12. The provision is for interest subsidy to Nabard, Regional Rural Banks, Cooperative Banks and Public sector Banks for providing short-term credit to farmers at 7% per annum, it said.

The target of credit flow to agriculture sector by banks and financial institutions has been raised from Rs 3,75,000 crore this year to Rs 4,75,000 crore in 2011- 12.