The cabinet on Tuesday decided to infuse Rs 3,000 crore of capital into the

RELATED ARTICLES Nabard offices relocated in Naxal-hit areas

National Bank of Agriculture and Rural Development (Nabard) in two tranches.

The first tranche of capital infusion of Rs 1,000 crore will be done in the current financial year itself. The second tranche would be done in the next financial year. After the capital infusion, Nabard’s paid-up equity would rise to Rs 5,000 crore or the same as its authorised capital. Nabard is a specialised lending institution that provides refinance assistance to Agricultural cooperative banks, regional rural banks and farm lending of the publica and private sector banks in the country.

This year so far, Nabard had borrowed about Rs 6,500 crore from the financial markets. The borrowings were entirely through the private placement of bonds with public sector banks, mutual funds, insurance companies and other eligible financial institutions. Since the beginning of this year, Nabard had borrowed funds rates as high as 9.65 per cent for short-term funds. But it also raised long-term funds for ten-year at rates of 9.55 per cent through the private placements.

The bonds were then entirely picked up the Life Insurance Corporation of India and other life insurers that have an appetite for long-term bonds to match with their liabilities.

Nabard’s funding requirements are mostly on lending for rural development projects including rural infrastructure.