The National Bank for Agriculture and Rural Development) NABARD has launched a long-Term Rural Credit Fund which was announced in the Union Budget 2014-15.
Announcing its launch in Mumbai last week, NABARD Chairman Dr Harsh Kumar Bhanwala said this would motivate the Cooperative Banks and Regional Rural Banks (RRBs) to extend term loans/investment credit to their clients at concessional rates.He pointed out that the share of Cooperative Banks and RRBs in investment credit in agriculture and allied sectors is an abysmal 13 per cent in 2013-14.
“It is the investment credit which catalyses capital formation and this initiative taken by the Union Finance Minister will go a long way in promoting agriculture production and productivity,” he said.
It may be recalled that the Finance Minister in the Union Budget announced creation of the new fund to facilitate providing refinance support to Cooperative Banks and RRBs for their agricultural term loan operations with an initial allocation of Rs5,000 crore during 2014-15. The aim of the fund is to boost long term investment credit at the ground level.
Dr Bhanwala said the NABARD would provide refinance facility with repayment period of five years at 7.85 per cent per annum to Cooperative Banks and RRBs and the NABARD would advise these banks to provide long-term credit at concessional rates.