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Hoping to give a boost to the agriculture sector after its decision to demonetise high-value currency, the government on Tuesday allowed the National Bank for Agriculture and Rural Development to raise ₹20,000 crore for short-term crop loans to farmers at lower rates.
The funds will be raised by Nabard at the prevailing market rate and will be used for on-lending to cooperative banks at an interest of 4.5 per cent.
“In light of the good monsoon and expectation of increased credit demand and to boost agricultural production, farmers need to be supported through cooperative banks, which purvey credit at their doorstep,” said an official statement.
The Union Cabinet also gave its post-facto approval for the allocation of additional capital of ₹2,000 crore to Nabard for this purpose in the Union Budget. Of this, additional capital of ₹500 crore will be released this fiscal.
An interest subvention of about 1.8 per cent and Nabard’s administrative cost of 0.2 per cent will also be provided as per the scheme of the Department of Agriculture, Cooperation and Farmers Welfare.
In line with the government’s focus on encouraging cashless payments by farmers, Nabard will also coordinate the conversion of operative Kisan Credit Cards into RuPay or ATM-enabled cards by cooperative banks and regional rural banks.
The Cabinet also gave ex-post facto approval for interest waiver for November and December 2016 for farmers accessing short-term crop loans from cooperative banks.
Nabard will provide additional resources to cooperative banks to extend the interest waiver. “An additional financial liability of ₹1,060.50 crore will be required for this purpose,” said the release, adding that the allocated ₹15,000 crore for 2016-17 for the Interest Subvention Scheme has already been utilised.
New pension schemeMeanwhile, the Cabinet also approved a new pension scheme for senior citizens that will provide a guaranteed return of 8 per cent for 10 years.
“The Union Cabinet has given its post-facto approval for launching of Varishtha Pension Bima Yojana 2017,” said an official statement, adding that it will be open for subscription for one year from launch.
The scheme will be managed by Life Insurance Corporation of India. It will give subscribers options for monthly, quarterly, half-yearly or annual pension. The differential return would be borne by the Centre as subsidy on an annual basis.
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