Besides the cabinet also approved changes in the Nabard Act, 1981, for expanding the operations of the key financial institution.
The cabinet approval, which would lead to changes in the Nabard Act, 1981, will allow the bank to introduce credit products, establish new linkages and develop new clients.
Once the changes are made to the Nabard Act, the bank would be allowed to undertake short-term lending operations, a senior official said after the cabinet meeting. The cabinet also approved merging the posts of the chairman and the managing director of Nabard.
The amendment proposes to enlarge the meaning of a cooperative society to include multi-state cooperative societies registered under any Central law or any other state law.
The amendments allow Nabard to lend to new institutions, mainly societies covered under the Multi-state Cooperative Societies Act and other central laws, producer organisations or such class of financial institutions which are approved by the Central Government, an official statement said. This is likely to benefit a larger segment of financially excluded farmers in the country, it said.
The proposed changes also include a proposal to transfer about 1 % stake with RBI to the government, making the bank 100% state-owned. Following the receipt of share capital contribution to the extent of R500 crore on June 25, 2012, the shareholding of government in Nabard has gone up to 99.42%.
The decision to transfer the balance 1% shares to the government from RBI in Nabard shall be carried out, which will provide for increased public accountability, a statement said.
Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) increased the minimum support price (MSP) for copra for 2013 by R150 per quintal for both ball and milling copra. The hike is lower than what was sought by the agriculture ministry.
Last year, the MSPs of milling copra and ball copra were fixed at R5,100 and R 5,350 per quintal respectively. Copra MSP has been raised by R150 per quintal for both the varieties, food minister KV Thomas said.
Recently, the agriculture ministry had proposed that the National Agricultural Cooperative Marketing Federation of India (Nafed) continue its price support operations of copra in the 2013 season. In 2012, Nafed procured 75,000 tonne of copra in Tamil Nadu, Andhra Pradesh and Kerala.
The hike in the MSP would definitely help farmers, Rajeev Gupta, managing director, Nafed told FE. The area under copra is estimated at 1.9 million hectare while production is pegged at 14,745 million nuts.