Earmark more agri credit for investments: Nabard chief

Most of the agricultural credit is used for boosting production, and more of these funds should be earmarked for investments in infrastructure creation, Shaji K V, chairman, National Bank for Agriculture and Rural Development (Nabard) said on Monday.

“Almost 80% of our balance sheet is for the production credit, we need to reorient that to more investment credit,” Shaji told FE at the sidelines of ‘Startup Mahakumbh’ is being organised here. “We are not sure whether they (farmers) are actually using it for production as we are not tagging it with output sensor,” he said.

Investment credits in agricultural sectors are those loans which are repaid over the 10-15 years. Saji said investment in technology, farm-machines and post harvest infrastructure should be focused on credit flow to agriculture and allied sectors.

Sources said that out of the current fiscal’s target of Rs 20 trillion of the agriculture credit flow, the commercial banks, cooperative banks and Regional Rural Banks have disbursed Rs 20.39 trillion during April-January of 2023-24.

In FY23, the growth in agriculture credit was ‘robust’ with a disbursement of Rs. 21.55 trillion, 16% more than the target of Rs 18.5 trillion. Last fiscal, Rs 1.19 trillion (12%) of agriculture credit was towards allied sectors such as animal husbandry, dairy, poultry, and fisheries out of total disbursal of Rs 18.5 trillion.

Last fiscal, commercial banks had a share of 72% of the total credit disbursed which was followed by cooperatives banks (13%) and Regional Rural Banks (15%).

According to officials, within the total credit outgo to agriculture, the share of small and marginal farmers in the total number of accounts increased from 48.6 million (57%) to 116.6 million (76%) during FY15 – FY22.

Meanwhile, Shaji of Nabard said that for pre-revenue stage startups, a new fund of Rs 750 crore is being worked out to fund ‘new ideas’ for boosting agricultural sectors.

Meanwhile, the government will soon launch a Rs 750 crore dedicated fund of Rs 750 crore to support and scale up operations of technology-driven agri-startups and rural enterprises.

The agriculture ministry will roll out “blended capital support” involving the private sector to finance startups for agriculture and rural enterprises relevant for farm produce value chains, which will be managed by Nabventures, a wholly owned subsidiary of Nabard.

To address regional disparity in agri-credit flow, Nabard is working with banks towards improving credit culture especially in eastern India by providing collateral in terms of social guarantee or a specialised fund and insurance products.

In FY23, the agricultural credit flow to five southern states – Andhra Pradesh, Telangana, Karnataka, Tamil Nadu and Kerala was 48% of the total disbursement of Rs 21 trillion while the southern region had only 17% of the gross cropped area of the country.

However, the eastern region – Bihar, Jharkhand, Odisha and West Bengal received only 8% of the total agricultural credit flow at Rs 1.73 trillion in 2022-23 against the cropped area of 12%.