The Hindu : Tamil Nadu / Chennai News : NABARD urged to provide reimbursable credit at 3 per cent

Online edition of India's National Newspaper
Wednesday, Mar 22, 2006

Tamil Nadu

Tamil Nadu - Chennai

NABARD urged to provide reimbursable credit at 3 per cent

Special Correspondent

"Only then can Centre provide farm credit at 7 per cent for khariff 2006-07"

CHENNAI: The Centre's move to provide farm credit at 7 per cent for khariff 2006-07, with a ceiling of Rs. 3 lakh, will be possible only if the National Bank for Agriculture and Rural Development (NABARD) provides reimbursable credit at 3 per cent below the bank rate of 6 per cent, according to the All-India Cooperative Bank Employees Federation.

In a statement here on Tuesday, federation general secretary P. Balakrishnan said such reimbursements should be extended up to 80 per cent of the total as was done till a few years ago. The reimbursement was gradually reduced to the current level of 22 per cent.

Interest subsidy

He also wanted the Centre to persuade States to give interest subsidy at a minimum of three per cent for all farm loans, since it would help cooperative banks have adequate margin.

It would also enable them to disburse farm loan at not more than 7 per cent. Karnataka and Chhattisgarh had given interest subsidy at 5 per cent and 4.5 per cent respectively.

The federation said the interest for infrastructure advances by the agriculture and rural development banks should be on a par with the rate of interest offered by short-term cooperative banks such as the state apex cooperative bank, the central cooperative banks and the primary agriculture cooperative societies.

A similar concession should be given to long-term cooperative credit institutions such as the state agricultural rural development and primary agricultural rural development banks.

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