National Bank for Agriculture and Rural Development (Nabard) has raised interest rates on refinance by as much as 50 basis points. With this move by NABARD, loans to farmers and small industries by way of cooperative banks and regional rural banks (RRBs) are to become dearer by atleast 50 bps.
The refinance rate of the bank is now set at 8.25% for cooperative banks while it is 8.75% for commercial banks.
"The rate (interest rate) has been revised upward in the wake of monetary police review undertaken by Reserve Bank of India (RBI) this month," a senior official of Nabard said.
Farmers get long term finance from cooperative banks and RRBs mainly for dairy development, farm mechanisation, horticulture, poultry, microfinance and fisheries etc.
"Long-term finance is primarily given for capital formation in farm sector," said the official.
The bank plans to refinance as much as Rs 1000 crore in Punjab this year out of which state cooperative banks, RRBs and commercial banks would disburse Rs 550 crore, Rs 150 crore and Rs 300 crore, respectively, said the official.