After restricting itself to lending to only State Governments for years, NABARD has opened doors for private industry. To begin with, private firms can pitch for a Rs 2,000-crore fund that lends to agriculture produce warehousing and storage infrastructure projects. It covers all dry, wet and cold storage needs of agricultural produce and agricultural inputs.
The main lending window of National Bank for Agriculture and Rural Development, RIDF was only meant for State Government and its agencies. In order to meet the gaps and needs in the area of warehousing and storage of agricultural produce, this was opened for private parties, Mr P Mohanaiah, Chief General Manager (Andhra Pradesh) of NABARD, said at a press conference here on Thursday.
Available on first-come-first-served basis, this fund is also open to State Governments, public agencies, corporations, local bodies and special purpose vehicles set up for the purpose. Interest rate is put at 6.5 per cent for first seven years, with or without Government guarantee.
The private firms, however, would have to pay a small ‘risk premium’ for repayments after the 7-year period. Notified by the Finance Ministry early this week, the scheme would require borrowers to open escrow accounts in banks.
An escrow account is regulated by a third party to ensure flow funds from the borrower to lender (NABARD in this case) to meet payments agreed upon contractual obligations.
NIDA
In a separate move, it started Rs 2,000-crore National Infrastructure Development Assistance (NIDA) to give loans to public agencies directly as against the ‘Budgeted’ Rural Infrastructure Development Fund. This is aimed at limitations of RIDF such as restricted access to State agencies.
The interest rate, however, is pegged at 10 per cent. It, however, offers flexibility in repayment schedule.