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A substantial portion of farm loans by primary agricultural credit societies is mobilised through costly deposits from the public. To provide crop loans at not more than 7%

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Thiruvananthapuram Feb. 21 The National Bank for Agriculture and Rural Development (Nabard) has released Rs 54.29 crore to the Kerala State Cooperative Bank (KSCB) at an interest rate of 2.5 per cent.

This is as refinance against the initial credit limit of Rs 342.65 crore (seasonal agricultural operations) sanctioned by Nabard to KSCB, according to Mr B.S. Shekhawat, Chief General Manager, Nabard.

Nabard had earlier released Rs 70.50 crore for the same purpose, thus, taking the total amount released so far to Rs 124.79 crore. The loans are given to KSCB on the condition that the farmers will be provided crop loans at a rate not exceeding 7 per cent for amounts up to Rs 3 lakh.

Mr Shekhawat said in a statement here on Wednesday that Nabard covered 40 per cent of the total crop loans issued by district cooperative banks, which is higher than the 25 per cent covered by the KSCB.

He said that in Kerala, a substantial portion of farm loans by primary agricultural credit societies (PACs) is mobilised through costly deposits from the public. It being so, the PACs had initially resisted the move for lower interest rates for farmers and adopted the concessional rates of interest to only that portion of the loans, which was backed by concessional refinance.

For the rest of the loans, which was going out of their own resources, the PACs continued to levy the earlier higher rates of interest. Nabard did not agree to this and insisted on a single concessional rate to all farmers, irrespective of the source of funds.

Nabard also put the condition that in the case of PACs, on whose behalf the refinance was sought, they must uniformly apply interest rates below 7 per cent.

Later, at a high-level discussion held between top officials of Nabard and the Finance and Cooperative ministers, the State Government had agreed that Nabard support would be available only to those PACs that uniformly charged concessional interest rates on all crop loans.

The Principal Secretary, Cooperation Department, has now issued a `comfort letter' to Nabard assuring that the PACs, for which refinance is sought, will charge interest rates prescribed by the State Government with effect from April 1, 2006. This will be irrespective of their source of funds, Mr Shekhawat said.

More Stories on : Farm credit | Agricultural Institutions | Co-operatives | Kerala

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