New Delhi: To boost credit flows to the farm sector, the government has proposed to infuse Rs 500 crore in National Bank for Agriculture and Rural Development (NABARD) during 2012-13.
It has been proposed to provide Rs 500 crore to Nabard during the current fiscal which will augment the capital, official sources said.
The infusion of additional share capital by the Government of India will increase the Net Owned Funds (NOF) and thus the borrowing capacity which in turn will enable Nabard to extend its various activities, sources added.
As per the RBI's guidelines, the outstanding total resources mobilised at any point of time by a Financial Institution should not exceed 10 times its NOF.
The apex agriculture and rural development bank got a capital support of Rs 1,000 crore during the financial year ended March 2012.
At present, the authorised capital of Nabard is Rs 5,000 crore, of which the paid up capital is Rs 3,000 crore.
The Government of India holds 99 percent share capital of Nabard. It is to be noted that the Reserve Bank of India (RBI) divested its 71.5 percent stake in Nabard to the government in 2010.
Besides, the government has proposed to allocate Rs 10,000 crore to Nabard for setting up of RRB Credit Refinance Fund to enhance the capacity of Regional Rural Banks to disburse short term crop loans to the small and marginal farmers.
Interest subvention (subsidy) for short term credit to the farmers has been pegged at Rs 6,000 crore for 2012-13. The provision is for interest subsidy to NABARD, Regional Rural Banks, Cooperative Banks and public sector Banks for providing short-term credit to farmers at 7 percent per annum.
The target of credit flow to agriculture sector by banks and financial institutions has been raised to Rs 5,75,000 crore in 2012-13 from Rs 4,75,000 crore in the previous fiscal.