Nabard to lend liquidity support to regional rural banks

In the wake of unseasonal rain damaging thousands of acres of standing crops in many states, Nabard today said it is committed to supporting regional rural banks and co-operative banks with liquidity support from a specially created Rs 1,600 crore fund.
If RRBs and co-operative banks face liquidity issues on account of extensions in repayments given to farmers due to natural calamities, Nabard will support them, its Chairman H K Bhanwala said, adding that "There will be no shortage of funds".
At present, damage assessment is on, after which local authorities declare the area as calamity-affected and then financial institution stretches repayment of the entire crop loan or a percentage of it, he said. Lenders would also simultaneously approve new loans for fresh crops, he added.

Nabard has the ability to refinance 60 per cent of loans on which repayments are delayed by deploying its Short-Term Conversion Fund, whose corpus is at Rs 1,600 crore.
"Once they offer conversion facility to farmers, and at the same time, offer new loans for fresh crops, they require liquidity support," Bhanwala said.
He said that Rajasthan, MP, Haryana and UP are among the worst-affected states, where unseasonal rains and hailstorms have done the most damage.

Till now, only MP has come forward with a request to be helped to the tune of Rs 150 crore, he said, fearing that there would be more such requests coming in.

He said even if requirement from RRBs and co-operative banks exceed the fund limit of Rs 1,600 crore, Nabard would be willing to help and also raise additional resources if need be.
"We are also willing to support it with further resources by augmenting our borrowings. From Nabard's side, if RRBs and co-operative banks face liquidity issues due to conversions to natural calamity hit farmers, there will be no shortage of funds," he said.