Development finance institution Nabard, on Wednesday, said its balance sheet grew 17% to Rs 4.06 lakh crore in financial year 2017-18 and its loans and advances grew 15% to Rs 3.54 lakh crore in the same period. Speaking to reporters, Nabard chairman
H K Bhanwala said that he expects a disbursement of Rs 75,000-80,000 crore under its long-term refinance in FY19. Excerpts:
What were your total borrowings in FY18 and what is your expectation for the next year?
Our outstanding borrowings stood at Rs 3.33 lakh crore on March 31, 2018, a growth of 19% from the outstanding borrowings of Rs 2.79 lakh crore in FY17. If you consider the last four years, my average growth in borrowings has been close to 13%. My outstanding borrowings were Rs 2.02 lakh crore at the end of March 2014.
Our borrowings are of two kinds: one is, mandated borrowings out of the Rural Infrastructure Development Fund (RIDF) for priority sector shortfall of banks and, second is, borrowings from the market. In FY18, we raised around Rs 33,000 crore through bonds while we had raised Rs 25,000 crore in FY17. We anticipate a similar increase in our market borrowing for FY19 as well. Four years ago, the proportion of my mandated borrowings —RIDF to my total borrowings — was 65%, which has reduced to 52% in FY18. The weighted average cost of raising money from the markets has fallen from 7.35% in FY17 to 7.05% in FY18.
Do you plan to raise money overseas?
Let the hedging cost come down and let there be stability in the rupee-dollar exchange (rate). Once the hedging costs are reasonable, foreign borrowings can certainly be a source, provided that they are cheaper than my domestic rates.
What is your outlook on long-term refinance?
We are seeing an increase in the segment. Four years ago, our outstanding for term lending was Rs 47,000 crore. It has gone up to Rs 1.2 lakh crore in FY18. So there is appetite and a commitment from Nabard that we want to promote investment in agriculture and therefore term lending should go up. While it is comparatively easier to see an increase in the crop loan segment, which has a subvention from the government, the non-subvented portion has real investments and we see good potential in it. We disbursed `65,000 crore in FY18 as long-term refinance and we are keeping a target of `75,000-80,000 crore for FY19.
With the share of RIDF falling, are you under pressure to raise funds from the market?
I think we have already enhanced our market access and we will still have priority sector shortfall — I envisage for four or five years. So it is not a cause of worry and moreover, RIDF is not benefiting Nabard but benefiting banks. Also, if you have RIDF, then there are major opportunities for lending by banks.