National Bank for Agriculture and Rural Development (Nabard) is planning to raise over Rs 10,000 crore during the current financial year for financing cooperative and commercial banks."It intends to raise Rs 3,000-4,000 crore through retail bonds, mop up another Rs 2,000 by issuing Certificate of Deposits, short term money market instruments and balance would be raised through mix of sources like corporate bonds," a senior Nabard official said.The extent of dependence on market borrowings will be less this year compared to funds raised in 2007-08 (Rs 1,3000 crore) due to availability of Rs 5,000 crore from National Rural Credit-short term (NRC-ST) facility, announced in the Budget for 2008-09. The interest rate for funds sourced from this corpus (NRC-ST) is expected to be 6 per cent, much less than the market borrowings done at average cost of over 8 per cent rate. It plans to bring down cost of funds below 9 per cent from 9.15 per cent in FY-08. The cost was 8.75 per cent in 2006-07. Referring to the performance of Nabard in the year ended march 2008, its chairman Umesh Chandra Sarangi said the refinance organisation has posted a net operational surplus of Rs 972 crore in 2007-08 over Rs 819 crore in 2006-07. It will deploy this surplus for short-term finance and funding various funds including those for rural innovation and watershed development administered by agency. In 2008-09, the bank has pegged short-term finance covering crop loans issued by regional rural banks and cooperative banks at Rs 22,000 crore. The investment refinance credit will be close to Rs 9,500 crore. "It will also step up co-financing activity for rural projects. It provided co-finance worth Rs 42 crore for 10 projects in 2007-08. Now, after experiencing, we will scale up operations and plan to fund projects worth Rs 600 crore this year", Sarangi added.
