Prakash Bakshi, chairman, Nabard.

Prakash Bakshi, chairman, Nabard.

Govt approves 3,000 crore capital infusion in Nabard

Govt approves 3,000 crore capital infusion in Nabard

New Delhi: The government on Tuesday approved 3,000-crore capital infusion over a period of two years in National Bank for Agriculture and Rural Development (Nabard) to help the lender mobilise higher resources from the market.

The Union cabinet approved the proposal for augmenting the capital base of Nabard by infusing 3,000 crore, as the government equity in two instalments of 1,000 crore in 2011-12 and 2,000 crore during 2012-13, information and broadcasting minister Ambika Soni said here.

Prakash Bakshi, chairman, Nabard.

As per RBI’s guidelines, the outstanding total resources mobilised at any point of time by a Financial Institution should not exceed 10 times its Net Owned Funds (NOF).

It becomes important to raise NOF such that Nabard’s ability to mobilised resources from the market can be enhanced, she said.

The infusion of the additional share capital by the Government of India will increase the NOF and thus the borrowing capacity of Nabard to enable it to extend its various activities, she said.

At present, the authorised capital of Nabard is 5,000 crore, of which, the paid up capital is 2,000 crore.

The Government of India holds 99 per cent share capital of Nabard. It is to be noted that the Reserve Bank of India (RBI) divested its 71.5% stake in Nabard to the government last year.

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