NABARD mulls loan recovery as deadline nears; no extension sought
Thiruvananthapuram: The National Bank for Agriculture and Rural Development (NABARD) has decided to recover the loan granted to overcome the COVID crisis in agriculture and small scale industries. It is observed that NABARD’s action amid the second wave of the pandemic will trouble the farmers as well as the small scale entrepreneurs.
According to reports, NABARD generated Rs 2500 cr to the farmers and small scale industries in Kerala. This amount will be recovered from the borrowers.
NABARD granted the loan under ‘Special Liquidity Facility’ scheme to give financial support to the rural sector and farmers as per the directive of Reserve Bank of India. The loan was distributed via cooperative and rural banks. Rs 1500 cr was granted to Kerala Bank and Rs 1000 cr was distributed to Gramin banks.
The Kerala Bank approved the loans through primary cooperative banks. Small scale vendors, merchants and farmers received an amount upto Rs 2 lakh as a working capital loan with an interest rate of 6.8 percent. Kerala Bank also directed the borrowers to repay the loan with interest by May 4. As per the direction, the loan will not be renewed or the deadline for repayment will not be extended.
If the borrowers are not repaying the loan, the primary cooperative banks and rural banks should clear the payment with Kerala Bank. Hence, the cooperative banks and gramin banks will face a crisis.
If the borrowers are not repaying the loans, the cooperative banks have been directed to clear the loss by converting NABARD loan as personal loans with high interest. This directive will affect the farmers and entrepreneurs.
Out of Rs 1500 cr from NABARD, 85 percent was given to agriculture and related sectors. 15 percent was sanctioned to small scale and medium industries. Loan was sanctioned for agriculture activities under ‘Subhiksha Keralam’ project through this fund.
Meanwhile, sources close to NABARD revealed that neither Kerala Bank nor the government appealed to extend the deadline to repay the loans.
NABARD sanctioned the financial aid to the states as a package to overcome the COVID crisis. When the second wave of the pandemic is turning more critical in Kerala, neither the government nor the Kerala Bank appealed for extending the deadline to repay the loans. Hence, NABARD is not considering any relaxation for Kerala, revealed sources close to NABARD.
Meanwhile, Kerala Bank Chief General Manager KC Sahadevan stated that Kerala Bank has to repay Rs 1500 cr to NABARD within May.
“NABARD granted Rs 1500 cr to Kerala Bank as special aid amid COVID crisis. This loan should be repaid within May. There will be no relaxation to clear the payment. Hence, directions were given to recover the distributed loan before the deadline of repayment,” said the official.