The National Bank for Agriculture and Rural Development (Nabard) will soon issue rural bonds to the tune of Rs 5,000 crore in the next few weeks in a bid to create a corpus for rural development.
This is in line with the Budget 2007-08 announcement. Nabard will soon work out the finer details with the finance ministry. Sources indicated that the bonds are likely to be tax- free. ?However, at this stage, it is difficult to say anything clearly about their features. They would definitely be more attractive than regular bonds that are hitting the market. A concrete picture would emerge only after a few weeks,? a senior Nabard official said. Finance minister P Chidambaram had announced while presenting this year?s budget that Nabard would be allowed to issue rural bonds. Nabard is already providing refinance to the co-operative institutions. It is understood that the demand for refinancing would further increase with the overall volume of rural credit going up substantially.
In addition, Nabard would play the role of a regulator once the Micro Finance Sector (Development and Regulation) Bill is passed and will oversee the functioning of the micro finance institutions. The regional rural banks may also come under the regulatory ambit of Nabard to ?ensure that the regulator and the banks are in sync as both would focus on micro finance?, a senior member of All India Regional Rural Bank Employees Association (AIRRBEA) said.
The government has underlined that need to enhance focus on rural lending. In fact Nabard is also planning to start a micro-finance institution for providing finances to the poorest section of the society. It is already in talks with a number of banks on the issue.