Nabard To Enter Commercial Lending

Confirming the move, Nabard chairman P Kotaiah told Business Standard that the Reserve Bank of India, the promoter of Nabard, has agreed to the proposal to open a direct financing window and the market borrowing programme. It will also pave the path for direct borrowing from multilateral agencies.

The central bank has cleared the draft amendment to the Nabard Act, 1981. There is an enabling provision for commercial lending and borrowings. The amendment is likely to take place in the winter session of Parliament.

Nabard is going beyond the business of refinancing for the first time since its inception in 1981. The draft amendment, cleared by the Reserve Bank of India, will enable Nabard to resort to market borrowings and lend commercial advances besides floating subsidiaries.

 

As a starting point of the diversification plan, we would like to pick up equity in the proposed local area banks in the private sector, Kotaiah said.

The RBI has recently stipulated that the minimum capital base of the local area banks will be Rs 5 crore with the promoters