To boost agro investment
In response to growing demand by farmers and banks, the NABARD has reduced the rate of interest by 20 basis points (bps) on their long term refinance facility to banks with an objective to promote investments in agriculture. The new rates are applicable from June 6 last.
NABARD Chairman Dr Harsh Kumar Bhanwala said, “The rates of refinance will now be 9.50 per cent for five years and above and 9.70 per cent for three to five years’ period. Banks availing more than Rs 500 crore in a single drawl will further be incentivised by 10 bps.”
In addition, NABARD shall further give 50 bps reduction for innovative agricultural activities, which enhance production and productivity. These activities among others include production under controlled conditions such as poly houses with water saving drip facilities, precision farming and post-harvest management, etc. The list includes 12 such innovative farm practices to enhance fruit and vegetable production. “By addressing the supply side constraint, the initiative aims to combat food inflation,” said Dr Bhanwala.
NABARD will also extend the 50 bps rebate for supporting single purpose under area development schemes, mainly to benefit small and marginal farmers. Dr Bhanwala said, “These initiatives will incentivise the Cooperative Banks, Regional Rural Banks and Commercial Banks in reversing the decelerating trend of investment credit and will aid in enhancing capital formation in agriculture.”