New Delhi, Jun 9 (KNN) The National Bank for Agriculture and Rural Development (NABARD) has reduced the rate of interest by 20 basis points (bps) on their long term refinance facility to banks with an objective to promote investments in agriculture.

Announcing the new rates, Chairman, NABARD, Harsh Kumar Bhanwala said that rates of refinance will now be 9.50 per cent for 5 years and above and 9.70 per cent for 3-5 years period. Banks availing more than Rs 500 crore in a single drawl will further be incentivised by 10 bps. 

The new rates will be applicable from June 6, 2014. 

“To combat food inflation, efficient agricultural technologies get a further incentive of 50 basis points,” according to an official release by the Ministry of Finance.

In addition, NABARD shall further give 50 basis points reduction, for innovative agricultural activities which enhance production and productivity, the Ministry said.
These activities among others include; production under controlled conditions like poly houses with water saving drip and fertigation facilities, precision farming, post-harvest management, etc. The list includes 12 such innovative farm practices to enhance fruit and vegetable production. “This initiative is aimed at combating the food inflation by addressing the supply side constraint,” the release added.

NABARD will also extend the 50 basis points rebate for supporting single purpose under area development schemes, mainly to benefit small and marginal farmers. 

Bhanwala said that this initiative will incentivise the Cooperative Banks, RRBs and Commercial Banks in reversing the decelerating trend of investment credit and will aid in enhancing capital formation in agriculture. (KNN Bureau)