Nabard plans to use extra allocation to consolidate

National Bank for Agriculture and Rural Development (Nabard), currently in the midst of a restructuring and reorganisation exercise, plans to consolidate its position in microfinance, warehousing development and rural infrastructure, in the wake of increased budgetary allocation.

The finance minister had allocated Rs 1,5000 crore under the Rural Infrastructure Development Fund (RIDF), Rs 300 crore for the promotion, training and linking self-help groups (SHGs) with the banking system and Rs 5,000 crore for developing warehousing projects.

Chief general manager K R Nair told Business Standard, "The budgetary provisions have come as a shot in the arm. In Union Budget 2011-12, the government had made a dedicated allocation of Rs 2,000 crore for financing warehousing infrastructure under the RIDF. Though it was a new activity, the guidelines for which were approved only in September, Nabard has already sanctioned warehousing projects to state governments aggregating Rs 1,500 crore, and refinance drawal applications from banks worth Rs 500 crore are being processed. This would also be released shortly. The assistance of Rs 2,000 crore is likely to result in the creation of a storage capacity of 5.5 million tonnes." He added with the allocation of Rs 5,000 crore, additional storage capacity of 15 million tonnes would be created.

Nair said Nabard provided refinance to banks and direct finance to state governments for warehousing development.

These loans are given at eight per cent to commercial banks, with the condition that from the repayment, Nabard would reimburse 1.5 per cent directly to borrowers.

On SHGs, another Nabard official said more than 6.3 million SHGs were currently operational in the country. To promote the SHG movement, Nabard had identified 83 of the 115 districts affected by Left-wing extremism. He added the monitoring mechanism would be improved, using electronic bookkeeping and mobile-based tracking system of SHG accounts. Training modules and approaches were also being revised.