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Informist, Thursday, Jan. 9, 2025

 

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--NABARD head: Need govt support to smoothen KYC process in rural areas 
--NABARD head:Need concessional foreign funding to improve credit in economy 
--NABARD head: Working on new schemes to support sustained rural demand 
--NABARD head: Working with govt on new schemes for rural areas, agri sector 
--CONTEXT: NABARD head Shaji K.V. speaking at Grameen Mahotsav event 
--NABARD head: Working with Agri Insurance Co. Ltd. to launch new pdts 

 

NEW DELHI – India needs to work closely with multilateral institutions in order to get access to concessional foreign funds, said National Bank for Agriculture and Rural Development Chairman Shaji K.V., as lower cost funds will aid financing the demand for credit in the economy, especially lower-priced credit. The demand for credit will only go up, and it is a good sign of economic activity, we need to be able to fund that growth with cheaper priced loans, Shaji K.V. said at NABARD's Grameen Bharat Mahotsav event.

 

He said that while household savings in rural areas were traditionally believed as the primary capital to kickstart business activities, there is a rising awareness in rural areas about bank credit to start the same. This has led to a huge demand for credit, especially for low-interest and collateral-free lending, the chairman said. "It has become imperative for the government and NABARD to work on innovative products to fund this credit demand," Shaji said Thursday, a few weeks before Finance Minister Nirmala Sitharaman presents the Budget for 2025-26 (Apr-Mar) on Feb. 1. The Budget support on the farm sector and related areas must continue, he added.

 

Speaking about the government's support, the Department of Financial Services Secretary M. Nagaraju, who was also present at the event, said that the government is "very keen" to improve bank credit to not just agriculture activities but also related activities like fishery, water harvesting, among others. He said that the government has identified the need to form clusters and collectivise these sectors to better streamline the flow of credit. "We plan to have at least one Farmer Producer Organisation in every cluster," Nagaraju said. As per NABARD's website, till date, 7,000 farmer producer organisations have been promoted in the country by various agencies. NABARD alone has promoted 4,484 farmer producer organisations under its various promotional initiatives.

 

The NABARD chairman further said that to support agriculture and allied activities, the rural development bank was working with Agriculture Insurance Co. Ltd. to launch newer insurance products for the sector. Besides, NABARD was also partnering with the finance ministry to launch new schemes for rural areas and the agriculture sector. "These new schemes will help to support sustained rural demand," he said.

 

On demand from the centre, Shaji K.V. said that there was a need for government support to improve the Know Your Customer framework for rural areas in order to better serve the people who do not have a bank account. "Even if newer products are launched by financial institutions, without a proper KYC mechanism, it will be of not much use," he said. In his closing remarks, the NABARD Chairman said that he expects credit disbursals to the agriculture sector by commercial banks and regional banks in FY25 to cross INR 28 trillion.  End

 

Reported by Priyasmita Dutta 

Edited by Akul Nishant Akhoury

 

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