Cabinet clears NABARD's Rs20,000-cr short term market borrowing for refinancing coop banks

The union cabinet chaired by Prime Minister Narendra Modi has given post-facto approval for the Rs20,000-crore short term borrowing programme of the National Bank for Agriculture and Rural Development (NABARD) for on-lending to cooperative banks at 4.5 per cent rate of interest.

The government will provide additional capital of Rs2,000 crore to NABARD for this purpose through budget allocation, with the first tranche of Rs500 crore released during 2016-17 itself.

Interest subvention of about 1.8 per cent and NABARD's administrative cost of 0.2 per cent will be provided as per the scheme of the department of agriculture, cooperation and farmers welfare (DAC&FW). The extent of interest subvention may vary depending on the rate at which NABARD raises funds.

NABARD will coordinate the conversion of operative / live Kisan Credit Cards into RuPay / ATM-enabled KCCs by cooperative banks and regional rural banks (RRBs) in a mission mode.

In the light of good monsoon and expectation of increased credit demand and in order to boost agricultural production, the farmers need to be supported through cooperative banks, which purvey credit at their doorstep, to enable them to scale up their agricultural operation.

The approval will ensure increased availability of short term crop loans to farmers through cooperative banks at reduced rate of interest.

The conversion of operative / live KCCs into RuPay / ATM-enabled KCCs will enable easy and hassle free availability of credit and in keeping with the spirit of 'Digital' India, will facilitate digital and cashless transactions by farmers, says a government release.