NABARD to raise Rs 11,000cr frm mkt

National Bank for Agriculture and Rural Development (NABARD) will raise about Rs  1,000 crore from the market in the current fiscal (FY07) to support its refinance for commercial banks and co-operative banks.

The total resource requirement for FY07 is pegged at Rs 14,000-15,000 crore in the current financial year. Out of which Rs 3,000 crore would be raised from general line of credit from Reserve Bank of India (at bank rate ), NABARD chairman YSP Thorat said on the sidelines of seminar on financial inclusion organised by Skoch Consultancy In Mumbai today.

For its market borroiwngs, the refinance institution would approach banks, basically short term resources (1-3 years) and insurance companies and tap insurance companies and pension funds for long term funds (upto 10 years), he said.

The refinance for the cooperative sector would be about Rs 14,000 crore while it
would lend Regional Rural Banks (RRBs) Rs 2,000-3,000 crore.

NABARD would lend to co-operatives at 2.5% and RRBs at 4.5%. The actual cost funds for refinance institution is about 7.5-8%. The gap between the cost of funds and rate at which funds are lend to co-operatives and RRBs would be met by the government of India through interest subvention (subsidy).