The National Bank for Rural and Agricultural Development (Nabard) has sought Rs 14,000 crore from the government to provide refinance assistance on easier terms to farmers. | |
| The bank has however decided to continue to re-set its rates for select states, ones that are willing to meet stiff conditions set by it, despite its earning taking a hit in the process. |
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| Nabard is expecting a total operational surplus of Rs 1,200 crore against Rs 1,332 crore achieved last year. "We have set this target taking into account the hit that we will bear as a result of the re-set. Last year, we took a hit of Rs 314 crore," explained Ranjana Kumar, chairperson of Nabard, at the Banking Conclave organised by Ficci today. |
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| "We would like to offer lower rates to farmers at most 9 per cent against 11.5 per cent being offered to them by co-operatives. We would also ask co-operative banks to pass on the low interest benefit," she said. Nevertheless, state governments will also be required to re-orient their planning, recruitment and non-performing assets (NPA) recovery policies in order to seek assistance on the basis of restructured rates. |
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| Already, states such as Haryana, Andhra Pradesh, Kerala and Karnataka have agreed to do so. |
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| "West Bengal on the other hand could not avail the benefits because they did not comply with our norms," she explained. "Re-setting rates in future will be part of Nabard's existing strategy," explained Kumar. "This year, we will try to provide better rate of refinance to small and marginal farmers," she said on Wednesday. |
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| This will also allow co-operative banks provide agricultural and other loans at rates comparable to those being provided by banks. |
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| While Nabard will also provide cheaper refinance options to co-operative banks. She also said that depletion of cooperative banks' share in rural credit to 22 per cent, down from over 60 per cent in 1992 remains a matter of concern. |
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| "At Nabard, we extended short-term credit and special liquidity support of Rs 9,350 crore during 2004-05, which was 45 per cent higher than the previous period," she said. |
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| "The basic idea was to reduce the cost of refinance to more manageable levels," she added. |
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| Nabard has also recently initiated co-financing along with other banks and it shares 50 per cent of the loan amount involved. |
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| Kumar also said that at Nabard they expected to be more closely involved commodities such as tea and sugar, to which it had limited exposure till now. It has also outlined a package for the sugar industry in states such as Karnataka and Maharashtra. |
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