Nabard expects rural credit fund in Union Budget

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26 Aug, 2025 12:21

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Nabard is expecting announcement of a rural credit fund in the forthcoming Budget to push agricultural investments and boost supply chain in the sector.

The share of cooperative banks and regional rural banks (RRBs) in investment credit in agriculture and allied sectors has been coming down and was an abysmal 13 percent in 2013-14, despite the vast reach of these banks in rural areas.

The Rs 5,000 crore long-term rural credit fund announced in the Union Budget 2014-15 was aimed at motivating cooperative banks and RRBs to extend term loans/investment credit to their clients at concessional rates.

"Nabard has already released around Rs 4,000 crore from this fund which is a very promising off-take in my view," Nabard Chairman Harsh Kumar Bhanwala said in a statement here on Thursday.

"Nabard believes that it is the investment credit which catalyses capital formation and this initiative will go a long way in promoting agriculture production and productivity," he added. The policy level implications of the newly designed self-help groups (SHGs) digitisation program are vast in scale.

The SHGs, comprising over 7 crore poor households will be available online on a real time basis. "As this programme is for empowerment of SHGs, we expect a significant emphasis on this initiative," he said. The percentage of farmers with less than 1 ha of land, forms 56 percent of the landless and marginal households.

The credit requirement of these farmers' households is small and often seasonal. "However, without any collateral to offer, this segment faces challenges of accessing credit from banks.

At Nabard, we see the joint liability groups (JLG) mechanism as an optimum solution to this logjam.

This mechanism is extremely suitable for collateral free long term and seasonal credit for this segment," he said.

Based upon our experience, the government in the Union Budget 2014 announced a target of financing 5,00,000 joint liability groups of tenant farmers by banks for the year 2014-15, he said.

"Any significant growth in this sector is dependent upon full participation of the banking sector and we hope that the Budget amplifies that," he added.

Lack of adequate and proper storage facilities is resulting into the colossal loss of fruits and vegetables, cereals and grains across the country.

The government had allotted Rs 5,000 crore under a separate warehousing infrastructure fund (WIF) in the year 2013-14. This was utilized fully by Nabard.