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Nabard in talks with banks to co-finance projects

Our Bureau

CHENNAI, July 11

THE National Bank for Agriculture and Rural Development (Nabard) is looking at co-financing hi-tech projects in collaboration with commercial banks, according to Mr C.R. Patnaik, Chief General Manager, Nabard.

Addressing a press conference here today, Mr Patnaik said that consultancy and co-financing with other banks have been identified as new areas for expansion. The Centre's approval has been obtained and the necessary legislative amendments have been effected. The move is expected to catalyse flow of financial assistance to hi-tech projects, which can also be relatively high-risk ventures. Nabard's participation is envisaged to provide the banks a degree of comfort and generate willingness to assist such ventures, he said.

An innovative package of financial assistance was being formulated in discussion with the banks. In Tamil Nadu, it has initiated discussions with the Indian Bank and the Indian Overseas Bank, he said.

Mr Patnaik was responding to questions at the press conference on the occasion of the 21st formation day of Nabard, which completes two decades of operation on July 12.

The success of creating self-help groups in association with NGOs and other voluntary organisations has made Nabard among the largest agencies involved in micro credit delivery. It hopes to bring under the SHG umbrella over 10 crore individuals by 2008.

Replying to a question, he said that the Rural Infrastructure Development Fund would be further diversified to cover any project that would augment rural economy. Earlier, it had targeted minor irrigation schemes, enhancing rural connectivity, particularly roads and bridges, and more recently rural schools, water supply and sanitation projects. Now IT-based projects will also be considered as these will help augment flow of information to rural areas. In collaboration with the Himachal Pradesh Government, Internet-based information kiosks have been set up to help disseminate market information to farmers and improve public access to Government officials, he said.

Wasteland development has been an area of focus since the mid-1980s and Nabard has mediated lease arrangements for farmers. However, these have met with limited success except in cases where the State Governments have evinced interest. The Tamil Nadu Government's scheme presents opportunities for synergy with Nabard's programme, which could also be extended to include private sector participation.

Nabard has also requested the Tamil Nadu Government to expedite and widen the scope of the new crop insurance scheme available to individual farmers. The programme has till now met with limited success with delays in settlement of claims.

On the status of Agri Development Finance Companies promoted by Nabard and nationalised banks, he said that a mismatch between "activity and capability'' has affected the operations. While three companies were promoted in Chennai, Hyderabad and Bangalore, these were funding operations distributed throughout the State and could not effectively monitor the funding. Further, since they were categorised as NBFCs, these had no access to the Debt Recovery Tribunal, which was a cost effective process, and had to depend on conventional legislative processes, which were relatively costlier and time consuming.

However, the lacuna would now be addressed with Nabard itself stepping into co-financing of projects, he said.

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