Nabard to reduce interest on loans to Andhra

The National Bank for Rural Development (Nabard) has indicated to lower the interest rate on future loans to the state government for works taken up under the Central government's Rural Infrastructure Development Fund (RIDF).

Officials in the chief minister's office said here on Monday that in her today's meeting with chief minister Y S Rajasekhara Reddy, Nabard chairperson Ranjana Kumar had agreed to reduce the rate of interest keeping in line with the recent trend adopted by commercial banks. The bank had charged up to 13 per cent interest on such loans in the past, officials said.

Nabard is not willing to offer any relief to state governments by not accepting debt swapping of previous loans fearing adverse affect on its financial performance.

Meanwhile, the Andhra Pradesh government has sought Rs 700 crore loan from Nabard for the new Remote and Interior Areas Development (RIAD) programme under RIDF. About Rs 360 crore is expected to be released by December, 2005 by the bank in the first phase.

According to official sources, certain deviations from the existing parameters under RIDF have to be okayed by Nabard to sanction the loan for RIAD programme, which was agreed to in-principle by Ranjana Kumar today.

Ever since the RIDF was launched by the Government of India in 1995-96, Andhra Pradesh has been in the forefront in utilising this scheme. In the past one decade, hundreds of projects with a total outlay of Rs 8,500 crore had been sanctioned in the state, of which the loan component from Nabard amounted to Rs 6,800 crore.