Alleged slackness of NABARD in setting credit limit for KSCB

The stalemate in agricultural lending in the cooperative sector is continuing for the second successive year owing to the alleged slackness of the National Bank for Agriculture and Rural Development (NABARD) in setting the credit limit for the Kerala State Cooperative Bank (KSCB) for the current year too.

Official sources told The Hindu here that the alleged indifference of the apex bank is likely to affect the functioning of the KSCB which has major stakes in the agriculture sector. Unless the NABARD sets the credit limit, the KSCB will not be able to provide financial assistance to the farmers who depend on the bank.

The eligible credit limit of the bank last year was Rs.638 crore. The bank director board is understood to have made several requests to sanction the limit, but to no avail. Though three months have elapsed in the current financial year, there is no initiative from the NABARD so far to resolve the crisis.

The KSCB, which has an extensive link of 14 district and 1,602 primary banks, is the main agriculture lending source of the small and marginal farmers who constitute almost 60 per cent of the farming community in the State. If the target set for farm lending in the previous year was Rs.2,000 crore, it was proposed to enhance it to Rs.5,000 crore in the current year. This proposal was made considering the need to enhance productivity and the extent under paddy and vegetable cultivation. Loans for paddy and vegetable cultivation are being given at 4 per cent interest rate. The Palakkad District Cooperative Bank is even providing interest-free loans to paddy farmers as an incentive to boost cultivation.

The consistent efforts of the KSCB to improve its financial health have started yielding rewards and the rate of non-performing assets has come down considerably over the years. Currently, the bank has deposits to the tune of Rs.6,500 crore and has disbursed loans worth Rs.2,100 crore. After meeting the statutory norms set by the Reserve Bank of India, it has a surplus fund of Rs.2,000 crore too. A sizeable chunk of the funds collected through the deposit mobilisation drive has been deposited in commercial banks at lesser interest rates for want of lending avenues. In the absence of serious moves, the impasse is likely to continue till the year end, the sources said.