National Bank for Agriculture and Rural Development (NABARD) has newly introduced a refinance product for warehousing. The refinance scheme incentivises banks to accelerate the pace of creation of quality warehousing facilities for agricultural commodities, particularly for reducing post-harvest losses.
The scheme was conceptualised out of a dedicated Fund of Rs 2,000 crore allocated in the union budget. The scheme will help in creation of around 9 million tonne of additional storage capacity in the country.
National Bank for Agriculture and Rural Development Gujarat's CGM, H.R Dave said that Nabard will extend financial assistance, by way of refinance, to commercial banks, regional rural banks and cooperative banks against the loans extended by them for construction of warehousing infrastructure for agricultural commodities.
NABARD shall charge interest on refinance at 8% per annum, while interest on the loans to the borrowers would be decided by the banks as per their existing policies.
NABARD will extend an interest rebate of 1.5% to those borrowers, who repay their loans, alongwith interest, as per the repayment schedule prescribed by the financing bank. Interest rate rebate will be provided by NABARD once the bank certifies timely repayment by the borrower.
NABARD will assist the financing banks to undertake intensive on site and off site monitoring of the projects to ensure timely completion and availability of the additional warehousing facility to farmers.
Mr Dave said that the creation of warehouses would be the infrastructure required for the growth of agriculture sector. ""The budgetary allocation for funding through this mechanism is going to multiply in years to come to meet the storage requirements for food security as well as to include cold
storages and cold chain requirements,""he said while stressing the need for encouraging accredited warehouses as stipulated by Warehousing Development Regulatory Authority (WDRA) so as to make farmers eligible to benefit from interest subvention scheme of GoI for pledge loans.
As per the recently announced Govt of India scheme, KCC holder small and marginal farmers can get loans at 7% rate of interest for a period of maximum six months for storage of their produce.
One of the condition of availing the benefit of the subvented marketing loan is that the produce is to be stored in "accredited warehouses" and banks can finance these farmers against the negotiable warehouse
receipt issued by such accredited warehouses. While highlighting the expectation of policy makers, he said that this is a business proposition for bankers and sought their support to encourage hub and spoke model to benefit farmers to store their produce at village level besides getting better price realization.
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