A recent press report said that Nabard plans to give refinance to commercial banks at differential rates of interest depending on their exposure to agriculture credit in developed and underdeveloped regions. The development finance institution is working on the scheme and it is likely to be finalized within a month’s time said Mr.Prakash Bakshi, Chairman, Nabard.
He also said that Nabard is looking at a base-rate-like concept. For instance, we may charge higher interest rates for providing refinance to banks that have given agriculture loan in regions such as Punjab and lower rates for banks that have lent in regions such as Bihar-Jharkhand. The idea is to incentivise the investment that can be used by small and marginal farmers.
The report further said that the refinance rate has been set at 10.5 per cent, but Nabard is re-looking the rate. The rate may be lower for the eastern states and dry land areas. The current financial year, Nabard has set a target of providing refinance to the tune of Rs 14,000 crore. Of this, it has already disbursed over Rs 4,000 crore and is likely to achieve the target by January or February.
In order to help RRBs put 100 per cent of their operations on the core banking platform, Nabard will be granting them assistance to the tune of 40 per cent of the cost from the financial inclusion technical fund.