The National Bank for Agriculture and Rural Development (Nabard) will review the funding needs of regional rural banks (RRBs) and district co-operative banks on Monday as they get ready for operations under partial lockdown conditions.
Nabard is equipped with a balance sheet size of Rs 5.25 trillion. The repayments to RRBs and cooperatives are getting impacted by the moratorium. “We are assessing how much was due to them. The picture will become clear by the end of month,” Nabard Chairman Harsh K Bhanwala said.
Nabard will tap the refinance facility being activated by the RBI to ensure liquidity for financial institutions for on-lending. It can draw up to Rs 25,000 crore under refinance window at policy repo rate.
Bhanwala said the cash withdrawals had also been higher. People have withdrawn money from deposits for requirements. Plus, pre-monsoon sowing season is around in some parts that would need resources. Also, with expectations of normal monsoon, preparations will start from early May in some states, he said.
Considering these factors, there was possibility that institutions may face resource constraint at grass routes level. “We will not just augment the resources but also front-load the availability (disbursements). In normal circumstances, these entities lend first and then claim (for refinance),” he said.
The procurement activity (for agriculture) will start from Monday, under partial easing of lockdown. For this many corporations and state government entities will need liquidity. Refinance institution will try to make resources available as early as possible so payments can happen to farmers.
During March when lockdown was implemented, Nabard said refinance of Rs 32,455 crore was disbursed. Of which, short-term finance of Rs 13, 588 crore was given to co-operative banks and RRBs.
The long-term refinance disbursed in March 2020 was Rs 18,867 crore. Those who availed of this facility were commercial banks (Rs 11,225 crore), co-operative banks (Rs 1,670 crore), RRBs (Rs 2,375 crore), small finance banks (Rs 3,046 crore). The long-term refinance for NBFCs working as micro finance institutions is about Rs 551 crore.
The total short-term refinance outstanding in the balance sheet was Rs 68,476 crore at the end of March, while the long-term finance outstanding was Rs 166,400 crore in the same period.