Nabard to fill up MFI credit gap in AP

Our Bureau Hyderabad | Updated on April 01, 2011

Good news for self-help groups (SHGs) that suddenly witnessed a sharp fall in credit flow from micro finance institutions following the crisis in the financial year 2010-11.

The National Bank for Agriculture and Rural Development Bank has agreed to extend refinance to commercial banks whatever funds they allocate for micro finance needs of the groups.

The apex bank held discussions with SERP (Society of Elimination of Rural Poverty or Indira Kranthi Patham) last month to assess the credit requirement for SHGs.

It was estimated that the gap (between the need and the shortfall) would be at Rs 400 crore.

“For the current financial year, we estimate that the credit requirement could be at Rs 1,000 crore. We are ready to refinance the banks in this regard,” Mr P. Mohanaiah, Chief General Manager (Andhra Pradesh), NABARD, said.

Tenant farmers

Keeping in view the financial problems faced by tenant farmers, the NABARD would step up support to tenant farmers as they establish joint liability groups (JLBs) seeking financial assistance from banks and other financial institutions.

Self-help groups generally needed a cool-off period of six months to become eligible to seek credit. But with regard to tenant groups, they could immediately get access to credit,” Mr P Mohanaiah said.

Of the 4,600 JLBs it supported last year, 3,000 belonged to tenant farmers. This year the number could significantly grow with the State Government agreeing to issue an Ordinance that promised certain rights to tenant farmers.

Collective farming

With regard to collective farming, he said the bank could help Farmers' Club graduate into such collectives and tap opportunities in different commodities.

The apex rural bank would also take up 40 villages (two villages in each district) to develop them as model villages.

“We are doing this as a pilot project. We will take care of their infrastructure, credit and social sector spending needs.

To begin with, we will spend Rs 10-15 lakhs a village from NABARD side,” he said.


Meanwhile, the bank's outstanding business in the State went up to Rs 11,140 crore as on March 31, 2011, from Rs 9,424 crore the previous year. It gave a credit support of Rs 6,758 crore in the State during the year.

The bank set a refinance target of Rs 4,000 crore of crop loans, Rs 2,500 crore of investment credit and Rs 1,300 of rural infrastructure development finance.

The bank would promote master farmers' programme in select villages to train some youth in agriculture production.

They, in turn, would become change agents in their respective villages.

Published on April 01, 2011

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