The
National Bank for Agriculture and Rural Development (Amendment) Bill, 2012, has
entered the final stages of being legislated. The token 1 per cent stake of
capital that the Reserve Bank of India holds in Nabard is sought to be vested
in the centre, completing the transition.
The
Bill states that “the capital…which has been subscribed by the Reserve Bank…
shall…stand transferred to, and vested in, the Central Government.The Reserve
Bank shall be given…in cash, for transfer to, and vesting in the Central
Government of the capital…. an amount equal to the face value…at Rs 20 crore.”
The
central bank had sold its majority stake to the centre in 2010. The latter now
owns 99 per cent in Nabard. The 2012 Bill will help bring about the complete
transfer. Direct lending will replace the function of refinance, until now
synonymous with Nabard, as the new theme song.
“Nabard…may
provide by way of refinance, loans and advances…to state cooperative banks….
primary agricultural credit societies…,” the Bill says.
NEW BENEFICIARIES
It
may provide loans and advances also....“to any financial institution or to any
class of financial institutions…approved by the board…” There is also a notable
expansion of the range of entrepreneurial activities the apex agricultural bank
can support, including in the SME sector. Agro-industries, small and medium
enterprises and handlooms are additions to the list of beneficiaries.
The
posts of chairman and managing director are being merged into a single chairman
and managing director.
Mr
Jose T. Abraham, vice-president, All-India Nabard Employees Association, said
all these will push Nabard to a faster path towards commercialisation.
DIRECT LENDING
Agriculture
finance and rural development have traditionally been a central bank function,
carried out through Nabard. The 2012 Nabard bill will sever the umbilical cord
of the Reserve Bank with development finance at the ground level.
Direct
lending has been strongly opposed by cooperatives all over the country, Mr
Abraham told Business Line.
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