New Delhi, Aug 07: A bill to enable the National Bank for Agriculture and Rural Development reduce transaction costs to the benefit of farmers through direct refinance of central co-operative banks, was introduced in Lok Sabha today.
The bill, introduced by Finance Minister Jaswant Singh,
amidst uproar on the Public Accounts Committee report on
Operation Vijay, seeks to obviate the need for extending
refinance by Nabard through several tiers of the cooperative
system.
"As Nabard refinancing to district central co-operative
banks (DCCBs) directly, does not at present exist, it is
proposed to amend the Nabard Act, 1981 to introduce this
refinancing of DCCBs directly, on a voluntary basis",
according to statement of objects and reasons of the bill.
The states which volunteer to implement the crop loan
scheme shall have the benefit of this direct refinancing. This
method will reduce transmission costs, directly benefitting
the farmers having accounts in co-operatives for their
agriculture credit and reduce cost of credit, it says.
"Since this refinance passes through several tiers of the
co-operative system, at each of these tiers transaction costs
get added, which ultimately have to be borne by the borrower
who ends by paying a much higher rate of interest," the
statement said.
The Nabard (Amendment) Bill, 2003 assumes significance in
the wake of the recent decision of public sector banks to make
available crop loans to farmers at an interest rate not
exceeding nine per cent for loans up to Rs 50,000.
Bureau Report
