The Union Cabinet has given the green light to NABARD to make short term borrowings at the prevailing market rate of interest for approx. Rs.20,000 crore for on-lending to Cooperative Banks at 4.5% rate of interest.
The Union Cabinet which was chaired by the Prime Minister Shri Narendra Modi has also given its post-facto approval for additional capital of Rs.2,000 crore to be provided to NABARD through the Union Budget. To start with, additional capital of Rs.500 crore may be released to NABARD during 2016-17 itself.
It also decided that the Interest Subvention of about 1.8% and NABARD’s administrative cost of 0.2% to be provided as per the scheme of Department of Agriculture, Cooperation & Farmers Welfare.
NABARD will coordinate the conversion of KCCs into RuPay Card in a mission mode, a govt release read.
Considering a good monsoon season this year and an expectation of increased credit demand and a boost in agricultural production, the farmers need to be supported through Cooperative Banks, which purvey credit at their doorstep, to enable them to scale up their agricultural operations, the Cabinet meet noted.