With a view to increase the flow of credit for Agricultural Operations to farmers, Short Term Refinance Assistance is provided to Scheduled Commercial Banks by NABARD for financing the PACS/ceded societies for the purpose of Seasonal Agricultural Operations in such areas where the Central Cooperative Banks are weak or not in a position to lend to PACS adequately. The Short Term Credit limit is sanctioned by NABARD to the Scheduled Commercial Bank under Section 21(1) and Section 21(4) of NABARD Act 1981 against promissory notes, subject to the Banks furnishing a declaration in writing setting out the purposes for which they have made loans and advances and such other reasons, as may be required by NABARD. Scheduled Commercial Banks in turn to sanction credit limits to PACS for on-lending to its members for seasonal agricultural operations.
Quantum of refinance will be subject to maximum limit of 40% of Realistic Lending Programme (RLP) of the Scheduled Commercial Bank to the PACS. RLP of the Scheduled Commercial Bank may be arrived at on the basis of assessment of crop loans likely to be disbursed by the PACS identified for extending the ST (SAO) credit support.
The refinance will be available to Scheduled Commercial Banks at an interest rate of 4.5% p.a., subject to revision in future. Rate of interest charged to ultimate borrower, for crop loans up-to Rs.3 lakh should not exceed 7% p.a. The policy guidelines, terms and conditions including eligibility norms, etc governing extension of credit limit for ST SAO to Scheduled Commercial Banks for financing PACS are given at Annexure I and II.
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