Scrapping RBI decision not to continue its support forms key demand

Our Bureau

Kolkata, Jan. 12

The employees of National Bank for Agriculture and Rural Development (Nabard) propose to launch action programme shortly in support of their various demands.

The programme will include holding of seminars in different parts of the country, deputation to Nabard management, the Union Government and the Reserve Bank of India and organising dharna before Parliament during the Budget session, according to Mr V.K. Bhosale, General Secretary of All India Nabard Employees' Association.

In a statement on Friday , Mr Bhosale outlined the demands, the most important being the scrapping of RBI's decision not to continue the support it now extends to Nabard, both directly and indirectly.

The direct support, it was pointed out, was by way of providing general line of credit and contributions to National Rural Credit Funds while the indirect support was treating the bonds issued by Nabard as priority sector instruments. From February 1, all these would be withdrawn.The general line of credit, as extended by RBI to Nabard, virtually acted as the lifeline to various cooperative banks and regional rural banks whose short-term credit needs were met by it. The decision to scrap the line of credit, Mr Bhosale felt, had been taken by RBI apparently to tide over the problem of dwindling profitability but such a problem, it was pointed out, had arisen out of dollar sterilisation operations despite the recommendation of the Vyas Committee not to discontinue the line of credit. National Rural Credit Funds maintained and run by Nabard took care of the medium and long-term credit to agriculture and rural development and tax burden of Nabard. If Nabard bonds were not treated as priority sector instruments, it Nabard would be forced to raise resources from the market at a higher cost. This in turn would render the rural credit costlier.The statement also demanded restoration of staff welfare measures and more recruitment to overcome the present shortage of manpower.

(This article was published in the Business Line print edition dated January 13, 2007)
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