The Hindu : Kerala News : Nabard sanctions Rs. 144.27 crores

Online edition of India's National Newspaper
Tuesday, Sep 14, 2004

Kerala

Kerala

Nabard sanctions Rs. 144.27 crores

By Our Special Correspondent

THIRUVANANTHAPURAM, SEPT. 13. The National Bank for Agriculture and Rural Development (Nabard) today sanctioned Rs. 144.27 crores to the Kerala State Cooperative Bank (KSCB) for financing crop loans through 12 of the 14 district cooperative banks.

In a press release, the chief general manager of the Nabard, B. S. Shekhawat, said the bank would be charging an interest of only 5.25 per cent on this loan sanctioned for the year 2004-05.

He said two of the district cooperative banks (Ernakulam and Palakkad) were not eligible for its support. He did not specify the reason for this.

Mr. Shekhawat said the Nabard would consider sanctioning more funds to the KSCB, provided the loan sanctioned now was fully utilised and the cooperative banks in the State adhered to certain credit and banking disciplines. Funds from the Reserve Bank of India were being sourced by the Nabard at an interest of 6 per cent.

During 2003-04, the KSCB had utilised only Rs. 14.93 crores out of a total credit limit of Rs. 106.64 crores sanctioned by the Nabard. "It is expected that, this year, the KSCB will fully utilise the limit of Rs. 144.27 crores. All banks, including cooperative banks, are expected to increase their agriculture lending by 40 per cent during 2004-05 and double [it] in three years from now," Mr. Shekhawat noted.

The credit limit sanctioned now was to help the district cooperative banks to provide funds to the primary cooperative banks at low interest rates. The cooperative banks had decided to issue crop loans up to the level of Rs. 50,000 at an interest of 8.5 per cent. The Nabard's refinance support would have a multiplier effect on the credit flow for agriculture by enabling the cooperative credit structure to add its own share at each level and deploy the total resources to augment farm lending, he said.

Relief measures

He said the cooperative banks had been advised to implement various relief measures to help the `farmers in distress' and the `farmers in arrears' so that they would become eligible borrowers again. The Nabard had also introduced `liquidity support' facility for the KSCB to enable it to overcome any short-term liquidity crunch on account of the credit-related relief measures extended to farmers.

Mr. Shekhawat, however, expressed concern over the declining trend in agriculture lending by the KSCB and district cooperative banks. Bulk of the agriculture lending in the State had come from the commercial banks and the regional rural banks. Together, they had accounted for 64 per cent of the total agriculture lending.

He said the two regional rural banks in the State (the North Malabar Gramin Bank and the South Malabar Gramin Bank) had come up with very good performance in the matter of agriculture lending.

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