More funding for NABARD, SIDBI & NHB

In order to increase the resource base of NABARD, SIDBI and NHB, the Finance Minister, Shri P Chidambaram has proposed to tap into the resources of the scheduled commercial banks to the extent that they fall short of their obligation to lend the priority sector. While presenting the Budget proposals in the Lok Sabha today, the Finance Minister observed that Financial Inclusion can be taken forward by expanding the reach of these three banks. To achieve this, he proposed to create the following funds :

(i) A fund of Rs. 5,000 crore in NABARD to enhance its refinance operations to short term cooperative credit institutions.

(ii) Two funds of Rs. 2,000 crore each in SIDBI – one for risk capital financing and other for enhancing refinance capability to the MSME Sector and;

(iii) A fund of Rs. 1200 crores in NHB to enhance its refinance operations in the rural housing sector.

The Finance Minister said that each of these funds will be governed by general guidelines that are now applicable to Rural Infrastructure Development Fund (RIDF) with some modifications. He also emphasized the need for enhancing eligibility criteria for loans under the Differential Rate of Interest Scheme to the weaker sections, which still stand at levels fixed in 1986. Accordingly, he proposed to fix the borrowers’ eligibility criteria as annual family income of Rs. 18,000/- in rural areas and Rs. 24,000/- in urban areas.

Source : Press Information Bureau

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