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The National Bank for Agriculture and Rural Development (Nabard) has reduced the interest rate on its long-term refinance facility to banks by 20 basis points to promote investments in agriculture.
The new rates will be 9.5 per cent (9.7 per cent earlier) for 5 years and above and 9.7 per cent (9.9 per cent earlier) for 3-5 years.
Banks availing themselves of more than Rs 500 crore in a single drawal will further be incentivised by 10 bps. The new rates are applicable from Friday, June 6, 2014. One basis point is equal to one-hundredth of a percentage point.
50 bps cut in rates
The financial institution further said that it will offer 50 basis points reduction in interest rate for innovative agricultural activities, which enhance production and productivity.
These activities, among others, include production under controlled conditions like poly houses with water saving drip and fertigation facilities, precision farming, etc. The list includes 12 such innovative farm practices.
Nabard will also extend the 50 basis points rebate for area development schemes. These incentives will give a boost to investment credit which will aid capital formation in agriculture.
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