Nabard, five banks to co-finance agro credit

The National Bank for Agriculture and Rural Development (Nabard) has signed a memorandum of understanding with five public sector banks, wherein Nabard will co-finance agriculture credit along with these banks.

Unlike in the past, Nabard will share the risk of default with the banks.

Nabard chief general manager Bhawar Puri expressed the hope that credit flow to agriculture in Gujarat will receive a boost with the development and said under the arrangement, Nabard will scrutinise the projects, while the banks will provide funds.

"However, under the co-financing project, Nabard will also share risks with the banks in case of defaults," Puri said.

He said the scheme has recently been introduced and the Gujarat regional branch of Nabard will begin implementing the project.

"The co-financing scheme has been introduced recently and we expect to participate in a big way for facilitating credit flow to agriculture," Puri said.

The banks with which Nabard has signed the co-financing memorandum of understanding are Central Bank, Union Bank of India, Corporation bank, Dena Bank and Punjab National Bank.

Puri said changes effected by Nabard in its seasonal agricultural operations policy for 2004-05 in refinancing co-operative banks will also provide a boost to credit opportunities to the agriculture sector.

"This step will also make credit available more easily to the agriculture sector," Puri said.

Commenting on watershed project grants in the past fiscal year, Puri said the assistance in 2003-04 witnessed a 157 per cent increase over the past year.

From a grant of 33 lakh in 2002-03 to watershed projects, the grant amount increased to Rs 85 lakh, a rise of 157 per cent.

Nabard extended financial assistance to the tune of Rs 1,111 crore in Gujarat in the fiscal year 2003-04, up 17 per cent than the disbursement in the previous fiscal year.

This amount has been disbursed for agriculture and allied activities, rural development, infrastructure development, micro credit and other rural development initiatives.

"The annual growth in disbursements over the past few years has been between 12 and 14 per cent, but this year, the growth has been substantial at 17 per cent," Puri said.

Commenting on the expected growth in disbursements in the current fiscal year, Puri said, "We expect the disbursements this year to be in excess of Rs 2,000 crore in Gujarat. This will be a sizable jump compared with this year."