The National Bank for Agriculture and Rural Development (Nabard) will commence direct lending to food processing industries in mega food parks and designated food parks by end of October. The Bank has set up a fund with a corpus of Rs 2,000 crore for this purpose, a top bank official said.
“The government announced in this year’s budget setting up of a Fund and gave the responsibility to Nabard to promote food processing sector through mega food parks. Nabard has been allocated Rs 2,000 crore fund, which will be utilized to lend to state government entities and private sector,” Nabard Chairman Harsh Kumar Bhanwala told Business Standard.
He said the guidelines have been approved and will be released at the stakeholders? meeting in Mumbai on October 29, 2014. “Once guidelines are released, we will start accepting proposals from the state governments and the private companies and issue sanctions thereafter,” he said.
Under the new Fund, Nabard would provide loans for a period of seven years at an attractive interest rate of 7.8 per cent to 8 per cent. Nabard would provide loans for large food chains and food processing units in a food park and also for creation of infrastructure at food parks, he said.
However, he said, considering short period available in the current fiscal, disbursals might spill over to the next financial year. The government would provide funds every year for this purpose, which will be announced during the next budget, Bhanwala said.
“We are suggesting state governments to avail as much as possible from this Fund. Karnataka, particularly, has immense scope for setting up processing units in the areas of pommegranate, cashew nut, mango, turdal and groundnut. A large number of agro processing units could come up and we are committed to support these units,” Bhanwala said.
He said for the first time in the country, Nabard is rolling out Rs 5,000 crore separate refinancing fund for cooperative banks and regional rural banks. “The fund is made available to banks for the first time to the extent of 90-95 per cent of whatever they lend at an attractive interest rate of 7.85 per cent. Funds are being made available to RRBs and Cooperative banks on a first come first serve basis. They have to utilize these funds for long term lending to agriculture sector in various states,” he said.
Till seven years ago, he said term lending used to be almost of 35 per cent of the total ground level credit flow to agriculture. This has declined on all India basis to 18-20 per cent. “This is very alarming. So, we want investment in agriculture to go up. So, we are giving refinance support at very reasonable rate of interest. Banks should come forward and make use of this fund,” Bhanwala added.
-BS
