NEWS & ADVICE : FIXED DEPOSITS
Govt likely to pick RBI’s stake in NABARD
By Neelima Shankar
Mar 15, 2010
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Government of India may pick up RBI's stake in the National Bank of Agriculture and Rural Development (NABARD) in the upcoming fiscal. The Government had apportioned Rs. 1450 crore in this budget.

It has been revealed that the Government after consultation with RBI has decided to acquire 72.5% of share holding in NABARD which is currently held by RBI, thus making it a wholly government owned organization.

Official sources suggested that the transfer of shares is in process and is likely to materialize in the upcoming fiscal.

NABARD has a paid up capital of Rs. 2000 crore. It was set up as a central rural development bank with a directive to focus primarily on credit flow facilitation to agricultural activities, MSMEs, cottage industries, handicrafts and other rural crafts so as to promote these activities in the country.

The Narasimhan committee recommended the transfer of RBI's stake in NABARD, SBI and NHB to the Government so that RBI's chief functioning as owner of banks and banking as well as monetary regulator remains in priority.

The government acquired 59.73 per cent stake held by RBI in the country's largest bank SBI for Rs 35,531.33 crore in 2007.

The stake transfer would not effect the functioning of credit delivery system in the country as all policies regarding functioning of the bank will be decided by the Government in consultation with RBI.

After getting ownership control in NABARD, SBI and NHB, the Government will also have a greater say in their boards apart from the flexibility to issue directives to meet the credit objectives of the priority sector.

 


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