Nabard will increase credit in the countryside this fiscal year through higher refinancing and the revamp of the rural bank

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Mumbai: Rural credit will get a boost this financial year with the National Bank for Agriculture and Rural Development (Nabard) – the apex bank for the agricultural sector – aiming to grow its balance sheet again by 15% over the course of FY23. In addition, Nabard will revamp recently capitalized Regional Rural Banks (RRBs) to improve credit provision.
Speaking to reporters in Mumbai, Nabard Chairman GR Chintala said the bank’s balance sheet grew by 15% to Rs 7.6 lakh crore in FY22 from Rs 6.6 lakh crore in FY21. For the current financial year, Nabard aims to increase its balance sheet to Rs 8.8 lakh crore, for which it plans to raise Rs 45,000 crore through bond issuance.
Speaking on the RRB revamp, Chintala said: “The plan is almost ready. We will target each of these 22 RRBs and set out plans for the next five years. We will also cover HR areas and we will complete this exercise in six months. In FY22, the government disbursed Rs 4,084 crore for the recapitalization of RRBs. Of this Rs 3,197 crore has been released at 21 RRB so far.
Chintala said the apex bank has computerized inspection operations of rural state cooperative banks so that there is no time lag and Nabard can take corrective action in the same year. Nabard is also considering a proposal to have a rural distress index, as recommended by a study on agricultural loan waivers. The aim is to measure agrarian distress by looking at the level of indebtedness and other inputs. Collecting granular data on rural distress should facilitate policy decisions.
Nabard, which lends largely to major rural lenders, saw its loan portfolio increase by 12.9% to Rs 6.8 lakh crore as of March 31, 2022, from Rs 6 lakh crore the previous year. The outstanding loan was Rs 6.5 lakh crore compared to Rs 5.6 lakh crore at the end of March the previous year.
It disbursed a concessional refinance of Rs 15,000 crore from the Long Term Rural Credit Fund to RRBs and Cooperative Banks (CBs) to boost agricultural capital formation. It also extended refinancing support of Rs 8,820 crore to the NBFC sector and Rs 3,447 crore to smaller financial banks.
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