Nabard chairman YC Nanda told The Financial Express that talks have already been held with at least 3 leading banks in the country for the proposed tie-up for direct financing especially for large projects in frontier areas of agriculture, north east and various other states. "Nabard has no plans to go in for retail banking or universal banking but is quite keen to directly finance certain high risk and large projects alongwith some major Indian bank," he added.

However, he declined to divulge the names of banks or the amount to be financed directly. Nanda said that following the recent amendment to the Nabard Act, the direct financing would be possible in "exceptional circumstances approved by the Nabard board." Nabard can now lend in foreign currency, grant interim finance by way of direct loans, grant loan to state governments and other institutions/persons for rural infrastructure development.

Mr Nanda said that Nabard, which proposes to increase its turnover to Rs 50,000 crore from the existing Rs 31,000 crore in next three years, would set up a venture capital or incubation fund to provide finances to small enterprises especially from the rural areas. Although, such a fund of Rs 5 crore was floated in the past, the Nabard could not utilise it, he added.On setting up a separate arm for consultancy, Mr Nanda said Nabard, which is currently involved in refinancing, has a battery of experts to offer consultancy services in agriculture and related areas both in and outside India. In addition to this, Nabard would provide technical, legal, marketing and other assistance to persons engaged in agriculture and rural development activities.

Mr Nanda said that Nabard which has mobilised so far Rs 500 crore through its capital gains bonds would slash the coupon rate from the existing 9.75 per cent to 9.25 per cent in view. "This would enable us to achieve our target of mobilisation of nearly Rs 1,500 crore by the end of March 2001," he added. Mr Nanda said that in view of the amendments to the Nabard Act, it could have more scope for mobilisation of resources through issue of capital to various share holders. Furthermore, Nabard could issue shares to its staff and other individual subject to notification/approval of the centre.

"Nabard can now explore various new instruments of raising funds," he opined. According to Mr Nanda, Nabard could invest the surplus fund in rediscounting of bill, promisory notes arising out of notified trade and transactions, call money market, certificate of deposits and any other instrument or scheme approved by the Nabard board.

He said the ceiling of the Nabard's capital would be increased from Rs 500 crore to Rs 5,000 crore. Simultaneously, 51 per cent of the subscribed capital would be subscribed by the Centre and the Reserve Bank of India in notified proportion and 49 per cent of the subscribed capital could be issued to notified institutions or persons. Mr Nanda said that the composition of Nabard board has been changed in tune with the changes proposed in its capital structure. Provision for nomination of two directors amongst persons with experience of cooperative bank and one director from the persons with experience of commercial bank has been made discretionary. Moreover, state governments would have better stake/say in the Nabard board and "as and when shares are issued to private shareholders, statutory regulations would be framed by the Nabard board for election of four directors."