Special Long Term Refinance Schemes – NABARD
Special Long Term Refinance Schemes – NABARD
National Bank for Agriculture and Rural Development introduced three Special Long Term Refinance Schemes to address the issue of rural migration and to give a boost to the agriculture and rural sector in the post-COVID-19 era. The scheme intends to develop all the potential Primary Agricultural Credit Society (PACS) as Multi-Service Centers (MSCs). The scheme also encourages banks to lend micro-food processing activities and create sustainable livelihood and employment opportunities for rural youth as well as reverse migrants. The current article briefs the three special refinance schemes.
Special Long Term Refinance Schemes
The three Special Long Term Refinance Schemes of the National Bank for Agriculture and Rural Development (NABARD) is as follows:
- Special Long Term Refinance Scheme for Transformation of PACSs as MSCS
- Special Long Term Refinance Scheme for beneficiaries of the watershed and wadi project areas
- Special Long Term Refinance Scheme for promoting Micro Food Processing Activities.
Special Long Term Refinance Scheme for Transformation of PACSs as MSCS
The Special Long Term Refinance Scheme for Transformation of PACSs as MSC intends to develop all the potential Primary Agricultural Credit Society (PACS) as Multi-Service Centers (MSCs) for three years commencing from the year 2020.
The objective of the Scheme
The key objective of the scheme is to support the Primary Agricultural Credit Society (PACS) to create quality infrastructure (capital assets) and to increase the business portfolio in tune with the needs of members.
Rate of Refinance
As part of this scheme, National Bank for Agriculture and Rural Development (NABARD) is providing concessional refinance to StCBs at a rate of 3%.
Under this line of credit, NABARD has envisaged the transformation of 35,000 PACS in three years commencing with the transformation of 5,000 PACS in the financial year 2021 and for subsequent years 15,000 PACS each during financial 2022 and financial 2023.
Interest Rate
The ultimate interest rate to be charged from the Primary Agricultural Credit Society will be less than 1% over and above the interest rate charged by NABARD and will be shared by StCB & CCB as per the mutually agreed terms.
Repayment Period
The repayment period of the Special Long Term Refinance Scheme for Transformation of Primary Agricultural Credit Society (PACS) will be up to 7 years.
Special Long Term Refinance Scheme for the Watershed and Wadi Project Areas
The details of the Special Long Term Refinance Scheme for the Watershed and Wadi Project Areas are as follows:
The objective of the Scheme
- The objectives of the scheme are to promote sustainable economic activities, livelihood, and employment opportunities for the beneficiaries in NABARD supported watershed and wadi project areas.
- The scheme is encouraging banks to lend at concessional rate to the beneficiaries to address the issue of rural migration
- The scheme aims to give a boost to the agriculture and rural sector in the post COVID era.
Rate of Refinance
The refinance will be available to all the eligible banks/Financial Institutions at a rate of 3% for a maximum period of 5 years. The revised ultimate lending rate to be charged by banks or a financial institution under the scheme will be revised as 06 months MCLR+1% or EBLR+2.5% whichever is lower.
NABARD has earmarked a refinance amount of Rs.5000 crore from 2020-21 to 2022-23.
Special Long Term Refinance Scheme for Micro Food Processing Activities
The details of the Special Long Term Refinance Scheme for Micro Food Processing Activities are as follows:
The objective of the Scheme
The objectives of the Special Long Term Refinance Scheme is to encourage banks to lend micro-food processing activities and create sustainable livelihood and employment opportunities for rural youth as well as reverse migrants due to the COVID-19 pandemic in the rural areas.
Feature of Scheme
The Special Long Term Refinance Scheme for Micro Food Processing Activities also envisages modernization and enhancing the competitiveness of the existing individual micro-enterprises and ensures their transition to the formal sector in rural areas.
The refinance scheme will give a fillip to the PM Scheme for Formalisation of Micro food processing Enterprises (PM FME) under Aatmanirbhar Bharat Abhiyan by Ministry of Food Processing Industries, Government of India under which about Rs.25, 000 crore investments are expected in the food processing sector.
Rate of Refinance
The concessional refinance at 4% is available to eligible financial institutions viz., commercial banks, and Small Finance Banks, StCBs, Regional Rural Bank and NABARD subsidiaries.
Structured Finance and Partial Guarantee Programme to NBFC-MFIs
The National Bank for Agriculture and Rural Development (NABARD) has also launched a dedicated debt and credit guarantee product to ensure the unhindered flow of credit in rural areas hit by the Covid-19 pandemic. The Structured Finance and Partial Guarantee Programme to NBFC-MFIs are providing a partial guarantee on pooled loans extended to small and mid-sized microfinance institutions (MFIs).
The partially guaranteed loan facility will catalyze much-needed financing to millions of households, agricultural, and business markets to sustain in the post-Covid-19 environment.
Please click on the official link on Special Long Term Refinance Schemes of NABARD for reference
