Farm credit may exceed Rs 13 lakh crore in FY20: Nabard

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Published: July 13, 2019 12:44:27 AM

According to an estimate, about 70% of the agricultural credit is extended as short-term crop loans while 30% is disbursed long-term of about 3 years repayment period.

Sowing and monsoon, the two key factors that influence demand for agricultural credit, will be favourable for the sector, he said.Sowing and monsoon, the two key factors that influence demand for agricultural credit, will be favourable for the sector, he said.

The credit disbursal for the farm sector may exceed Rs 13 lakh crore in 2019-20 against Rs 12.5 lakh crore disbursed during last fiscal, according to Nabard. Finance minister Nirmala Sitharaman did not announce the farm credit target for this year in her Budget speech.

Speaking to reporters on Friday, Nabard chairman Harsh Kumar Bhanwala said the deficit in sowing areas will make up by end of the season and monsoon may also be normal as predicted by the India Meteorological Department. Sowing and monsoon, the two key factors that influence demand for agricultural credit, will be favourable for the sector, he said.

The share of the National Bank for Agriculture and Rural Development (Nabard) in total agricultural credit was about Rs 1.80 lakh crore last year while the remaining are disbursed by public and private sector banks. According to an estimate, about 70% of the agricultural credit is extended as short-term crop loans while 30% is disbursed long-term of about 3 years repayment period. While there is a general interest subvention of 2% (from the base rate) for all farm loans, an additional 3% interest subsidy on crop loans up to Rs 3 lakh is paid to farmers who repay their loans in one year, making the effective rate of interest at 4%.

Bhanwala also said Nabard plans to raise about Rs 55,000 crore from the domestic market in the current fiscal to fund its business growth and also support various agricultural and rural development schemes of the government.

Nabard has already raised Rs 12,000 crore from the market in the first quarter of the current financial year, the chairman said. The agency had raised Rs 56,069 crore through non-convertible debentures, of which Rs 33,169 crore was for the government schemes and the remaining was for Nabard’s own funding requirements. It raises funds through long-term bonds, usually of 10-15 years tenures.

In 2018-19, Nabard’s loan portfolio grew nearly 22% to Rs 4.32 lakh crore. Assets under management of the bank were at Rs 4.87 lakh crore at the end of March 2019, up by 20% since March 2018. Separately, Nabard also raised about Rs 30,000-extra budgetary resources for various government programmes.

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