Andhra Pradesh - Hyderabad   

New package for farm sector

Special Correspondent

NABARD to set up micro-finance institution with Rs. 100 cr authorised capital

HYDERABAD: The National Bank for Agriculture and Rural Development is setting up a micro-finance institution, NABARD Financial Services (NABFINS), to provide credit at “reasonable” interest with an authorised capital of Rs.100 crore. It will have an issue capital of Rs.20 crore and will be headquartered in Karnataka.

Disclosing this here on Tuesday on the sidelines of national seminar on ‘Agricultural credit’, organised to kick start NABARD’s silver jubilee celebrations, Y.S.P. Thorat, chairman, said the institution would be subscribed up to 51 per cent by NABARD and the rest by banks and several States. The institution would start functioning in the two months by taking up a pilot project in Karnataka. In the second phase, it would be extended to Andhra Pradesh and Tamil Nadu and gradually other States.

Chief Minister Y.S. Rajasekhara Reddy, who inaugurated the seminar, expressed concern at the “serious trouble” facing the agriculture sector and called for four per cent rural credit.

Mr. Thorat said the major defects of MFI institutions are lack of transparency in account disclosure, high transaction costs, higher rate of interest and coercive collection. “We want to show that an MFI can function without any defects and deliver micro-credit at affordable rate and without coercive practices”. The interest rates would be affordable, as the idea was to reduce transaction costs.

NABARD had earmarked Rs.600 crore to co-finance certain projects with banks by lending 50 per cent cost. To a question on recommendations of the Vaidyanathan Committee, he said the first tranche of Rs.460 crore was being released for revival of 22 district cooperative central banks in Andhra Pradesh.

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