The Hindu Business Line : Co-ops get Rs 1,700-cr credit under Nabard package

THE National Bank of Agriculture and Rural Development (Nabard) has already disbursed Rs 1,700 crore to co-operative banks under a special liquidity package and is confident of meeting its Rs 2,500 crore target by June this year.

"We are on course with the special liquidity package for the co-operative banks. With the kharif season coming up, we feel that the credit offtake will increase and the co-operative banks will be able to avail of the special package that carries an interest rate of just 5 per cent," the Nabard chairperson, Ms Ranjana Kumar, told Business Line.

The special package was worked out last year when two successive droughts led to poor recoveries of agricultural credit for banks. It was felt that a special package was needed for co-operative banks in order to help them tide over their liquidity crunch.

"The agricultural loans of farmers were rescheduled and the farmers could pay both the interest and capital over five years with a two-year moratorium. At the same time, it was decided to have a special package for the co-operative banks as well," Ms Kumar said.

She said that Nabard has been stressing to the co-operative banks to streamline their operations in order to bring down the rate of interest for their borrowers. "As against our normal refinance rate of 5.25 per cent, we have offered funds to the co-operative banks at 5 per cent. If they manage themselves properly between the State, district and primary co-operative bank levels, they can offer a good rate to their borrowers," she said.

Meanwhile, Nabard has increased its base refinance rate by 25 basis points to 5.5 per cent with effect from the new financial year. Nabard offers refinance facilities for agricultural credit to commercial banks.

Depending on the quantum of advances made by a particular bank, it can claim refinance from Nabard at concessional rates.

The rate of interest charged by Nabard depends on the size of the advance and the minimum rate of 5.5 per cent would now be applicable for advances less than Rs 50,000 made to individual farmers.

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Co-ops get Rs 1,700-cr credit under Nabard package