The National Bank of Agriculture and Rural Development ( NABARD) has launched a Rs 5,000-crore rural credit fund aimed at increasing long-term credit in agriculture.
Under the facility, NABARD will be refinancing agricultural term loans extended by the cooperative banks and regions rural banks (RRB) to agriculturists. The ultimate aim of the scheme will be to make credit for investment purposes cheaper and through that to motivate those engaged in agricultural activities to invest more.
"It is the investment credit which catalyses capital formation and this initiative taken by Finance Minister will go a long way in promoting agriculture production and productivity," NABARD chairman Harsh Kumar Bhanwala said.
He futher adds that the share of Cooperative Banks and RRBs in investment credit in agriculture and allied sectors was an "abysmal" 13 per cent in 2013-14.
The bank will provide refinance to the cooperatives and RRBs at an interest of 7.85 per cent with a repayment period of five years so that the borrowers can benefit.