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NABARD offer to avert liquidity crisis

THIRUVANANTHAPURAM: The National Bank for Agriculture and Rural Development (NABARD) is understood to have increased the refinancing facility to the Kerala State Cooperative Bank (KSCB) to 75 per cent of the actual crop loans for 2008-09 from 35 per cent to avert a liquidity crunch likely to arise on implementing the agriculture debt waiver and debt relief schemes of the Centre.

Already the KSCB has crystallised a sum of Rs.1476.65 crore for 7,47,075 accounts which will be reviewed on September 30. The KSCB is learnt to have sought a special 100 per cent refinancing package at an interest rate below 4 per cent to overcome the liquidity crisis which was feared to wreak havoc in the cooperative banking sector. As per the decision, the KSCB will be allowed to draw up to 75 per cent of the actual crop loan disbursed from April 1, 2008 to September 30 from NABARD, within the overall credit limit sanctioned to the bank.

The level of non-performing assets of the bank would not be an impediment in availing itself of the facility. NABARD has extended the ‘instant facility’ as a special case subject to the condition that the excess amount released to the bank beyond the prescribed quantum of refinance would be adjusted from the funds to be sanctioned by the Centre under the debt waiver and relief packages. Cooperative banks have to furnish a certificate on dues for securing refinance. NABARD has also specified that the crop loan waiver covered under the packages will not be treated as overdue and considered as part of the non-overdue loans coverage (NODC) furnished by the bank for the release of refinance for 2008-09.

Banking sector sources told The Hindu that the decision to increase the refinancing facility would be a solace to the cooperative banking sector.

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