The Hindu Business Line : Nabard refinance to banks up 50 pc

Fiscal figures
The financial institution's total balance sheet grew by 11.3 per cent to Rs 67,645 crore (Rs 60,779 crore).
The total outstanding loans rose 20 per cent to Rs 58,088 crore (Rs 48,355 crore).
Disbursements grew by 0.54 per cent to 8,628 crore (8,528 crore).

CREDIT EXPANSION: Mr. Y. S. P. Thorat (left), Chairman, Nabard, and Mr S. S. Acharya, Executive Director, at a press conference in Mumbai on Thursday. - Paul Noronha

Mumbai , April 13

The National Bank for Agriculture and Rural Development (Nabard) saw its refinance to commercial banks increase by over 50 per cent year-on-year, for the fiscal ended March 31, 2006.

For 2005-2006, the refinance was Rs 4,028 crore against Rs 2,569 crore in 2004-05.

As on February 2006, commercial banks, regional rural banks and co-operatives disbursed an aggregate of Rs 1,46,668 crore by way of farm credit. This is against Rs 1,25,000 crore in 2004-05.

With the credit in the banking system likely to grow by around 25 per cent in 2006-07 and deposit growth to be around 17 per cent, the refinance could see further increase in this fiscal, said Dr Y.S.P. Thorat, Chairman, Nabard.

The total balance sheet grew by 11.3 per cent to Rs 67,645 crore (Rs 60,779 crore). The total outstanding loans rose 20 per cent to Rs 58,088 crore (Rs 48,355 crore). Disbursements grew by 0.54 per cent to 8,628 crore (8,528 crore).

However, the surplus before tax was Rs 1,150 crore (Rs 1,333 crore). This is because Nabard did not pass on the increased cost of borrowing to its clients in order to keep ground level interest rates at realistic levels, Dr Thorat said.

The weighted average cost of borrowings has gone up by 58 basis points in 2005-06, which has led to a squeeze on margins for the institution.

Nabard raised Rs 9,000 crore in 2005-06. However Dr Thorat admitted that accessing markets in 2006-07 would not be as comfortable as last year, as the tax benefit available on its long-term capital gain bonds were withdrawn in the 2005-06 budget. "We will speak to the Government and the RBI for support,'' he said.

Some of the goals of Nabard for 2006-07 are implementation of the Vaidyanathan Committee Report in phases (the report has recommended a Rs 15,000-crore revival project for the co-operative sector), developing financial products other than refinance and facilitating the extension of the outreach of credit to the excluded.

The states that have agreed to adopt the report are Rajasthan, Gujarat, Maharashtra and Orissa, Dr Thorat said.

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