We are expecting a vibrant crop production this year: Nabard chief Bhanwala

The National Bank for Agriculture and Rural Development (Nabard), India's main financial institution for rural development, is expected to play a crucial in helping millions of people who are returning to villages in the national lockdown to contain the coronavirus. Harsh Kumar Bhanwala, Chairman, Nabard, in a telephonic interview with Namrata Acharya shares his insights about the present state of agriculture and other rural sectors: Edited Excerpts

Q. What is the status of special refinance window made available to Nabard by RBI?

During current FY 2020-21, we have extended a fresh lending of more than Rs 12000 crore to RRBs and Rural Cooperatives. RBI has given us a refinance window of Rs 25,000 crore. The RBI facility is for one year. We will blend it with our own resources for augmenting resources of these Rural Financial Institutions. In addition, we will be funding some of the MFIs. NABARD currently refinances 17 MFIs. These MFIs cover approximately 70 per cent of the total assets in the sector. Some of them  also finance  smaller MFIs.

Q. Out of the Rs 25000 crore facility, how much RRBs and cooperatives can avail?

Out of this facility, I expect Rs. 20000 crore will be for them.

Q. Many smaller MFIs say they are keen to get funding from your subsidiaries. What is your view?

We are open to that either directly from us on the applicable norms or through bigger MFIs who avail refinance from us..

Q. What is your assessment of impact of Covid 19 on agriculture?

Although there are challenges in a few segments of the agriculture sector, it has seen the least impact on account of Covid 19. We are expecting a vibrant crop production this year. Preparations for next phase of sowing are robust. The sale of fertilizers, seeds this year is encouraging and it is not less than last year. The water availability in reservoirs is also better than last year. Procurement wise, many states, is more or less as per schedule. In Punjab a major procurement State, procurement levels are more or less like last year for the corresponding procurement period.  

Q. But do you see problems in lifting?

As of now, scenario is not bad. Rather, there will be higher demand through PDS this year, as so many people have gone back to villages and there would be need for meeting more food requirement in rural areas. Infact the stock will come in handy to meet this demand.

Q. What is your assessment of Kharif loan offtake this year?

Normally Kharif loan offtake starts from mid May. Credit flow will not be an issue. If there are any shortfall for any smaller banks, we are trying to meet the gap from our side by providing robust refinance support.

Q. What kind of agri loan disbursements are you expecting this year?

This year, target for agriculture loan is Rs 15 lakh crore. Out of this, Rs 9 lakh crore is earmarked for crop loan. We are confident this will be achieved.

Q. What about long term loans, especially for agri-investment?

Tractors sale is a positive segment in the automobile sector. I also see a trend of custom hiring for farm equipment. There are new set of people who offer these services. So demand will come from them. Since there is movement of migrant labour back to their native states, farm mechanization will also get an impetus in the labour deficit areas. There will be more demand at local centres in rural areas for warehouses and cold storages.

Many farmers’ organization have been very active in procuring and supplying the agricultural produce locally. They are also trying to get linkage with bigger value chain. In this context, onboarding IT platforms for market linkages is likely to accelerate. Further, efforts for direct procurement of produce outside APMC will get a boost.

Agri start-ups are likely to witness a greater supporting eco-system. NABARD has supported some of them and will continue to do so.

Q. Do you see need for any support for construction activities in rural areas?

NABARD is committed to support both on farm and off farm in rural areas. We will continue to focus on infrastructure lending in rural sector, where there is a huge demand particularly in irrigation, connectivity, housing, warehousing sector, rural health infrastructure etc.

State governments and banks have repaid. We have a few entity accounts with regard to  food parks & warehouses, where we have given moratorium as per RBI guidelines. They have committed to pay on time.