For the first time, National Bank for Agriculture and Rural Development (Nabard) will provide funds to the Centre for irrigation projects. Till date, Nabard was providing assistance only for roads.

The bank will, in the next fifteen days, raise about ₹6,000 crore (through private placement) and then pass it on to the Centre for funding irrigation projects under Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), Harsh Kumar Bhanwala, Chairman, said.

The bonds will have a tenor of 15 years and carry average cost of 6 per cent for the government. A memorandum of agreement has been signed between Nabard and the Water Resources Ministry — in the presence of Union Water Resources Minister Uma Bharti — for providing Central assistance to 99 prioritised irrigation projects under PMKSY.

Nabard will make available the entire estimated ₹77,000 crore for PMKSY over the next four years, Bhanwala told BusinessLine .

Elaborating on the plans for the fund mop-up this fiscal, Bhanwala said that Nabard will raise the funds in several tranches under two types of bonds.

Repayment liability

One type will be in which the Centre will take the liability for repayment, and the other in which Nabard will bear the obligation to repay the bonds.

Of the targeted funds mop-up of close to ₹20,000 crore this fiscal, the Water Resources Ministry will bring in ₹1,500 crore (budgetary allocation), the bonds for which Centre will take the repayment obligation will amount to about ₹6,000 crore, and the balance amount of about ₹12,000-13,000 crore will be directly raised by Nabard under its own books.

Related Topics
comment COMMENT NOW