The Hindu Business Line : Nabard plans to recapitalise co-op credit structure

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Nabard plans to recapitalise co-op credit structure

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Mumbai April 18 "Nabard will not regulate commercial banks, non-banking finance companies and self-help groups but only other players like non-government organisations, trusts and co-operative societies which are into micro-finance," said Dr Y.S.P Thorat, Chairman, Nabard. The Micro Financial Sector (Development and Regulation) Bill 2007 proposes Nabard as the regulator for the micro-financial sector. The Bill was introduced in Parliament on March 20 and is currently before a Select Committee of Parliament.

In 2006-07, Nabard's balance sheet grew by about 20 per cent; 75 per cent of its investment credit portfolio went to the farm sector supporting agricultural investments, while 25 per cent went to the non-farm sector. Major components of the farm sector are farm mechanisation (21 per cent), micro finance (15 per cent), minor irrigation (7.6 per cent) and dairy development (5.7 per cent). "This year we plan to recapitalise the co-operative credit structure," he said.

During 2006-07, against a target of credit linking 3.85 lakh SHGs, 3.12 lakh new SHGs and 2.41 lakh existing ones were given credit.

Bank loans of Rs 2,922 crore were disbursed, supported by Nabard refinance support of Rs 1,161 crore.

"The focus has been on building a healthy co-operative banking structure. The revival package for the short-term co-operative credit structure is being implemented in ten States. Seven more States have agreed to implement the reform package. In the RRBs segment, merger of RRBs sponsor-bank wise at the State-level is near completion," said a statement from Nabard.

"Nabard proposes to set aside a Rs 500 crore corpus for financial inclusion to improve credit absorption levels, particularly, among the vulnerable sections of the society," said Dr Thorat.

Co-financing will be added to the menu in 2007-08. Dairying is an important source of subsidiary income to millions of farmers. The total budget for co-financing will be Rs 600 crore.

"Nabard plans to launch Village Adoption and Total Development scheme. It would entail debt counselling, financial education, centre for information on prices, seed replacement, testing and quality certification, extension practices and deepening of SHGs," said Dr Thorat.