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Sanction of term loans to State Governments under Section 27 of the NABARD Act, 1981 for Contribution to share capital of cooperative credit institutions - Policy for the year 2020-21
Sanction of term loans to State Governments under Section 27 of the NABARD Act, 1981 for Contribution to share capital of cooperative credit institutions - Policy for the year 2020-21
 
NABARD provides long-term loans by way of reimbursement to State Governments under Section 27 of NABARD Act, 1981 for contributing to the share capital of cooperative credit institutions, viz. State Cooperative Banks (StCBs), District Central Cooperative Banks (DCCBs), Primary Agricultural Credit Societies (PACS)/Farmers Service Societies (FSS)/Large sized Adivasi Multipurpose Society (LAMPS), State Cooperative Agriculture and Rural Development Banks (SCARDBs) and Primary Cooperative Agriculture and Rural Development Banks (PCARDBs).
 
2. We advise that the policy for the year 2020-21 is on the lines of policy circular No. 93/DoR.33/2019 dated 01 April 2019 for the year 2019-20.  
 
3. The operative period of assistance would be from 01 April 2020 to 31 March 2021 and would cover disbursements made by the State Govt. towards share capital contributions during the year 2020-21.
 
4. The above credit facility from NABARD to the State Govt. would be available at 8.5% per annum or such other rate as may be prescribed by NABARD from time to time.
 
5. While providing the share capital contribution, the State governments may keep the          following in view:
 
(i) Need for promoting member driven cooperative credit institutions
 
The main objective of providing assistance to State Governments for contribution to the share capital of cooperative credit institutions is to enhance the Maximum Borrowing Power (MBP) of these institutions which is measured in terms of multiples of owned funds. This will drive these institutions into a position to undertake larger lending programmes for meeting the credit requirements of their constituents, particularly for agricultural loans. Further, to make the cooperative credit institutions a truly democratic, member-driven and self-reliant institution, it is desirable to strengthen the member base and also the equity base of these cooperative credit institutions, by increasing the mobilization of share capital contribution from members.
 
(ii) Realistic assessment of share capital contributions by State Governments
 
State Governments may provide the share capital to various institutions after realistically assessing the quantum of assistance required taking into account their lending programme and the norms prescribed by NABARD regarding eligibility, ceiling on share capital contribution by State Government etc.
 
6. The State Governments may submit their applications for reimbursement (in the prescribed proforma) complete in all respects well in time to the concerned Regional Office of NABARD in the state within the operative period (April 2020 - March 2021).
 
7. The salient features of the policy are furnished in the Annexure
8. Please acknowledge receipt of this circular letter to our Regional Office.