New Delhi: The National Bank for Agriculture and Rural Development (Nabard) plans to increase short-term lending to regional rural banks (RRBs) and co-operative banks in 2007-08 to Rs20,000 crore from Rs14,500 crore in the last fiscal.
“We are targeting Rs 20,000 crore short-term lending this fiscal despite financial constraints as the RBI has stopped assistance for short-term credit from December 2006,” Nabard General Manager Krishna K Gupta told PTI.
Reserve Bank stopped the assistance citing inflationary reasons last year, Gupta said, adding the bank used to get Rs6,500 crore under the scheme. Initially, RBI curtailed the assistance to Rs3,500 crore; then it brought it down to Rs3,000 crore and later stopped it altogether, he said.
Nabard has to raise the required money from the market at higher rates at about 9% per annum and is incurring losses because of this, he said, but did not say anything about the estimated losses on this account.
He said the bank is in talks with the government and RBI to restart funding.
RBI used to lend money to Nabard under the short-term credit limit at a uniform rate of 6% per annum before discontinuing the same.
The bank targets to extend Rs8,500 crore as long-term loans to RRBs and co-operative banks. Loans for up to one year come under short-term lending, while loans above that comes under long-term lending.