Nabard Slashes Refinance Rates By 50 Bps

The National Bank for Agriculture and Rural Development (Nabard) has slashed interest rates on refinance provided to the banking sector for various purposes by 0.5 per cent.

The rate cut would apply to commercial banks, urban cooperative banks, regional rural banks (RRBs), state cooperative banks and state cooperative agriculture and rural development banks.

The new rates will be effective from November 1, 2001.

"It is hoped that banks will take advantage of reduction in interest rate and advance more to the agriculture and rural development activities," the NABARD said in a press statement.

The interest rate on refinance for minor irrigation and watershed development has been cut down to 8 per cent for all slabs. RRBs and cooperative banks can draw refinance at a still lower interest rate of 7.5 per cent and 7 per cent, respectively, for loans up to Rs 25,000.

 

For other farm activities and non-farm sector, Nabard will provide refinance at 9 per cent interest for loans between Rs 25,000 and Rs 2.0 lakhs and at 10 per cent interest for loans above Rs 2.0 lakhs. The commercial banks will be charged 8 per cent interest for loans up to Rs 25,000.

For funding self-help groups, the cooperative banks will get refinance at 7 per cent interest and commercial banks and the RRBs at 7.5 per cent. The banks will, however, be free to decide the interest rate to be charged by them from self-help groups subject to stipulations by the Reserve Bank. These groups, in turn, will be free to decide the interest rates to be charged from their members.

Interest rate on refinance for financing cold storages and for storage of horticulture produce under the government's capital investment subsidy scheme will be 8.5 per cent.