The Hindu Business Line : Nabard sanctions Rs 208 cr to Kerala co-ops

THE National Bank for Agriculture and Rural Development (Nabard) has sanctioned a credit limit of Rs 208 crore to Kerala State Co-operative Bank (KSCB) for disbursement to farmers.

The amount will be disbursed through rural credit co-operatives to help the farmers meet their short-term crop production requirements. With this, the total limit sanctioned by Nabard to KSCB during the year is at Rs 350 crore.

A high-level meeting of Nabard held here has also decided, in the interest of the farmers, to resume the facility of investment credit of up to Rs 98 crore to KSCB during the year, provided the latter agrees to certain reforms and improvements.

The meeting noted that the co-operatives in the State, at their base level, have the unique nomenclature of "service co-operative banks" for the Primary Agricultural Credit Societies (PACS), which are fully regulated by the Registrar of Co-operative Societies and not by the Reserve Bank of India. The licence from RBI is given to District Co-operative Banks (DCBs) and the State Co-operative Bank.

A large chunk of the deposits mobilised by PACS at higher than the market rates of interest, now at approximately Rs 11,000 crore, are deposited with DCBs at equally high interest rates. As much as 62 per cent of deposits with DCBs come from PACS, making the cost of funds of the former high.

The KSCB, in turn, depends on DCBs for as much as 94 per cent of its total deposits. Since the co-operative banks are required to cater primarily to the needs of the farm sector in the State, this situation makes the agriculture credit costly.

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