The Hindu Business Line : Cooperatives flay Nabard move to hike refinance rates

THE `take it, or leave it' intonation of a circular from the National Bank for Agriculture and Rural Development (Nabard) announcing a hike in refinance rates has raised the hackles of co-operative lending institutions in the State.

Banks whose drawal applications are pending for release of refinance as on date (March 16, 2005) have the option either to avail of it at the revised rates of interest or withdraw pending applications, the circular, addressed to commercial banks, regional rural banks, State Cooperative Bank and the Cooperative Agricultural and Rural Development Bank (CARDB), said.

The refinance rate hike will hit the apex Kerala State Cooperative Agricultural and Rural Development Bank (KSCARDB) where it hurts the most, Mr K. Sivadasan Nair, President, stated in a communication addressed to Ms Ranjana Kumar, Chairperson, Nabard.

He requested that the latest revision in the rates be kept in abeyance and pending claims released at the existing rates.

Nabard had allotted a refinance programme of Rs 270 crore for year 2004-05 and the KSCARDB launched itself on a suitable lending programme. The refinance target was revised upwards to Rs 300 crore in line with the policy for doubling of agricultural credit formulated by the Centre. The bank went on to disburse its full entitlement in anticipation of receiving refinance.

But Nabard chose to stop the release in respect of lending made after October 1, 2004, that amounted to Rs 122.77 crore. Going forward, it went on to release Rs 50 crore in instalments in March 2005 in response to representations made.

According to Mr Nair, charging of the revised rate on pending claims as well as on refinance claims released after March 16 and pertaining to lending made prior to March 16 is in no way justifiable. This is because the bank cannot hope to apply the revised rates with retrospective effect.

The refinance claims submitted during October and November last are still pending for release and this further aggravates the situation.

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Cooperatives flay Nabard move to hike refinance rates