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LATEST NEWS UPDATES | Nabard starts infra lending to diversify by Atmadip Ray

Nabard starts infra lending to diversify by Atmadip Ray

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published Published on Jan 24, 2012   modified Modified on Jan 24, 2012

The National Bank for Agriculture & Rural Development, or Nabard, has started lending directly to infrastructure projects out of its own resources for the first time in 30 years, in an attempt to diversify its activities and make itself relevant at a time when the dynamics of the rural market are changing. 

Essentially a refinance bank till recently, Nabard has created a Rs 1,000-crore special window for lending to build core projects, two officials familiar with the development said. To start with, it has sanctioned four power projects amounting to Rs 292 crore in Andhra Pradesh, Gujarat, Karnataka and West Bengal. 

The bank has been a nodal agency for lending to rural infrastructure projects under the Centre's Rural Infrastructure Development Fund, or RIDF, but this is the first time it is lending using its own funds. It becomes the latest entrant in the country's infrastructure lending space, which needs investments of $1 trillion during the 12th Five-Year Plan (2012-17 ). 

According to Nabard officials, state government undertakings are very keen to avail of loans using the Nabard Infrastructure Development Assistance (NIDA) window as they can get the loan at a very competitive interest rates ranging between 10% and 10.75% a year ."It's a very attractive proposition for state undertakings as there is no processing fee or hidden cost," said NSP Rao, Nabard chief general manager in Kolkata. 

It offers one to threeyear moratorium, which is a norm for infrastructure lending. It is learnt that Nabard is considering 30-odd project proposals across states. "The bank will enhance the size of the corpus from Rs 1,000 crore after seeing the initial response," Rao said. It has centralised the loan-sanctioning power for NIDA. The development bank has sanctioned Rs 140 crore to Transmission Corporation of Andhra Pradesh, Rs 93 crore to West Bengal State Electricity Transmission Corp, Rs 42 crore to Karnataka State Warehousing Corp and Rs 17 crore to Gujarat State Electricity Corp.


The Economic Times, 24 January, 2012, http://economictimes.indiatimes.com/news/economy/finance/nabard-starts-infra-lending-to-diversify/articleshow/11611328.cms


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