The National Bank for Agriculture and Rural Development (NABARD) has reduced the rate of interest on its long term refinance facility to banks by 20 basis points with the objective of promoting investments in agriculture.
NABARD said the new rates of refinance will be 9.50 per cent for 5 years and above and 9.70 per cent for 3-5 years. Banks availing more than Rs500 crore in a single drawl will further be incentivised by 10 bps.
The new rates will be applicable from 6 June 2014, NABARD chairman Harsh Kumar Bhanwala said while announcing the new rates.
To combat food inflation, efficient agricultural technologies get a further incentive of 50 basis points, he added.
In addition, NABARD will further give 50 basis points reduction 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, post-harvest management etc. The list includes 12 such innovative farm practices to enhance fruit and vegetable production.
This initiative is aimed at combating the food inflation by addressing the supply side constraint.
NABARD will also extend the 50 basis points rebate for supporting single purpose under area development schemes, mainly to benefit small and marginal farmers.
Bhanwala said this initiative will incentivise the cooperative banks, RRBs and commercial banks in reversing the decelerating trend of investment credit and will aid in enhancing capital formation in agriculture.
NABARD's initiative is in tune with the Modi government's avowed policy of increasing investment in agriculture, both public and private, especially in agri-infrastructure with the aim of converting farming into a profitable ventures through scientific practices and agro-technology.