Nabard cuts rates on rural credit

The National Bank for Agriculture and Rural Development (Nabard) has slashed interest rates on various short-term/ medium-term refinance extended by it to co-operative banks and regional rural banks (RRBs) by 25 to 75 basis points.

The financial institution has cut the refinance rates in order to enable these banks to bring down their cost of credit so that cheap credit is available to the farmers, rural artisans, entrepreneurs and weavers.

The rates of interest on refinance on crop loans has been reduced by 25 basis points to 5.75 per cent for co-operative banks and by 75 basis points to six per cent in the case of RRBs.

The revised rates are effective from January 1 and are applicable to the refinance outstanding from client banks as on that date as well as to drawals made thereafter.

This is the second downward revision in interest rates by Nabard within six months.

Nabard said considering the need to boost marketing credit to farmers to enable them to obtain remunerative prices for their agricultural produce, the interest rates pertaining to this line of credit from Nabard to co-operative banks and RRBs has been slashed by 0.75 per cent.

The rates of interest on refinance to co-operative banks and RRBs for production, procurement and marketing of handloom/ handicraft products and other products of village and cottage industries as also industry, services and business activities in the rural areas have been reduced by 0.25 to 0.75 per cent.

The rates of interest charged by Nabard to commercial banks on refinance provided in respect of their working capital advances to primary weavers' co-operative societies, state handloom/ handicraft development corporation have also been reduced by 0.50 per cent.

To give a thrust to rural housing (for which the ultimate borrowing lending rates are generally lower) as also to rural non-farm sector, the maximum interest rates on refinance are fixed at 6.5 per cent and 6.75 per cent, respectively.

For states in the North eastern region for all agencies, the rate of interest is 5.75 per cent for all slabs.

In case of investment credit and interest rates on long term loans, the bank has announced an across the board reduction of 25 basis points from the existing interest rates in all slabs effective from January 9.