The Hindu Business Line : Nabard hiking rates irks co-op banks

Kolkata, July 14 The cooperative credit institutions, covering state cooperative banks, district central cooperative banks and primary agricultural credit societies, are upset at the decision of the National Bank for Agriculture & Rural Development (Nabard) to charge nine per cent rate of interest on the liquidity support to these institutions.

This is much higher than what senior Nabard officials had earlier promised to charge, say sources close to cooperative credit institutions. At a meeting held at the office of the Union Agriculture Minister, Mr Sharad Pawar, in New Delhi on June 23, the sources pointed out, the Nabard officials had indicated a 3.5 per cent rate of interest (on the line of short-term seasonal agricultural operation) on the loans to be provided by it to these institutions to enable them to onlend to farmerseligible for fresh loans after the loan waiver. The representative of the credit institutions, however, had insisted on even lower rate of interest of 2.5 per cent.

If Nabard now charges at nine per cent rate of interest, the sources estimate, the ultimate borrowers will have to pay at 13 per cent whereas the small and marginal farmers seven per cent rate of interest.

Nabard, it is learnt, has made it clear that it can reduce the rate of interest provided it gets adequate Government subvention.

Pawar’s intervention sought

Meanwhile, Mr Samir Ghosh, Chairman of West Bengal State Cooperative Bank, has sought Mr Pawar’s immediate intervention for an early end to the impasse caused by Nabard’s decision.

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