The Union Cabinet
chaired by the Prime Minister Shri Narendra Modi has given its
post-facto approval for the following decisions:
i. National Bank for Agriculture & Rural Development (NABARD) will make
short term borrowings at prevailing market rate of interest for approx.
Rs.20,000 crore for on-lending to Cooperative Banks at 4.5% rate of
ii. Additional capital of Rs.2,000 crore to be provided to NABARD for
this purpose through the Union Budget. To start with, additional capital
of Rs.500 crore may be released to NABARD during 2016-17 itself.
iii. Interest Subvention of about 1.8% and NABARD's administrative cost
of 0.2% to be provided as per the scheme of Department of Agriculture,
Cooperation & Farmers Welfare (DAC&FW). The extent of interest
subvention may vary depending on the rate at which NABARD raises funds.
iv. NABARD will coordinate the conversion of operative/live KCCs into
RuPay/ATM-enabled Kisan Credit Cards (KCCs) by Cooperative Banks and
Regional Rural Banks (RRBs) in a mission mode.
In the light of good monsoon and expectation of increased credit demand
and in order to boost agricultural production, the farmers need to be
supported through Cooperative Banks, which purvey credit at their
doorstep, to enable them to scale up their agricultural operation.
The approval will ensure increased availability of short term crop loans
to farmers through Cooperative banks at reduced rate of interest. The
conversion of operative/live KCCs into RuPay/ATM-enabled KCCs will
enable easy and hassle free availability of credit and in keeping with
the spirit of 'Digital' India, will facilitate digital and cashless
transactions by farmers.