The National Bank of Agriculture and Rural Development (NABARD) today launched a Rs 5,000-crore rural credit fund aimed at increasing long-term credit in agriculture.
Under the facility, first announced in the Budget by Finance Minister Arun Jaitley, 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, 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 said the share of Cooperative Banks and RRBs in investment credit in agriculture and allied sectors was an "abysmal" 13 per cent in 2013-14.
NABARD 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.