Rural fund to focus on co-op banks' recast

Part of Rs 50,000 crore corpus being created for agricultural infrastructure and rural credit fund will be used to restructure the ailing district cooperative banks. The entire corpus will be managed by Nabard.

A day after the announcement of the creation of the fund by the finance minister, Nabard chairperson Ranjana Kumar said: "Viability of district cooperative banks is an issue. Part of the fund will be used to recast the weak district cooperative banks which will play a major role in disbursing rural credit."

Around 40-45 per cent of 367-odd district cooperative banks are weak and some of them have even got their net worth eroded by their accumulated losses. Their branch network, spread across rural India, is 12,626-strong.

"In the entire exercise of credit disbursal in rural India, a string of players, including cooperative banks, self-help groups and commercial banks, will play a key role. Nabard will be the facilitator," Kumar said.

The plan of action for the three-year Rs 50,000 crore scheme "" christened Agriculture Infrastructure Credit Fund (AICF) "" will be ready next week.

"We will submit the scheme by January 16. Within a month it will take off. The money will be disbursed in phases," Kumar said.

The focus will be on export, value-added agri products and greater efficiency and productivity.

"If the farmers get the funds at the right time, transaction costs in agriculture can come down drastically. We will ensure timely disbursals of funds. The focus will be on wasteland development, minor irrigation and a host of other relevant areas. There will be a second green revolution," she said.

Nabard had recently held a meeting with commercial banks and cut down its refinance rate by about one percentage points across various slabs.

"We have reviewed the entire system of rural lending. The approach has to change. There will be greater coordination between Nabard and commercial banks at the district level," Kumar added.

Nabard will also explore the areas of commodity trading and food processing.

"We are the best milk producer in the world. In vegetable we stand second and one tenth of world's fruits grow in India. But we have not been able to cash in on these advantages because of heavy wastage. We can create an infrastructure to take care of this," she said.

Nabard will also emphasise on land reforms and try to improve the quality of life of farmers. "We will finance small farmers to purchase land. We can need to employ some intermediaries to ensure that small farmers are able to buy lands from big land holders," Kumar pointed out.