Nabard to assist 10 lakh small farmers using self-help group model

The National Bank for Agriculture and Rural Development (Nabard), in a bid to step up its focus on the farm sector, plans to bring together about 10 lakh small and marginal farmers across the country in 2010-11 along the lines of the self-help group (SHG) model.

This will help farmers harness their collective bargaining power to access credit at competitive rates, improve productivity using quality inputs, and realise better price for their produce in the market, said Mr Umesh Chandra Sarangi, Chairman of Nabard.

The development bank, whose primary objective is to facilitate flow of credit for agriculture, rural infrastructure and rural development, and supervision of rural financial intermediaries, will organise joint liability groups (JLGs) comprising 7-10 farmers in the small and marginal category, he said.

"We have set a target of forming one lakh joint liability groups in the current financial year. About 10 lakh farmers will benefit by becoming members of the groups," said Mr Sarangi.

In the last couple of years, Nabard had organised around 30,000 JLGs across the country.

Pointing out that most of the farmers in India owned less than 2 acres of land, the Nabard chief said that by becoming a member of the JLG, small and marginal farmers who generally depend on informal sources of financing at usurious interest rates, can get credit from banks on competitive terms.

Ever since the SHG-Bank linkage programme was conceptualised and launched by Nabard in 1992, about 47 lakh self-help groups (as of March-end 2009), predominantly comprising poor women, have been able to access the formal banking sector in a sustainable and cost-effective manner.

By handling savings and internal lending, the SHGs have matured, acquired creditworthiness for themselves and earned the confidence of banks. As of March-end 2009, banks had an outstanding exposure of Rs 22680 crore to 42 lakh odd members of SHGs.

Nabard is not averse to setting up a bank provided this does not interfere with its primary mandate of facilitating flow of credit for agriculture, rural infrastructure and rural development, said Mr Sarangi.

In his reply to a question on whether Nabard would leverage its long-standing experience in rural lending to get a banking license from RBI, the Nabard chief said, "Without compromising our primary mandate, which is refinancing and supporting the needs of the agriculture sector in the country, we will not be averse to any new ideas."

Recently, Nabard appointed global management consultancy firm Boston Consulting Group (BCG) to prepare a report to restructure and diversify its operations to leverage its expertise in refinancing. The development bank is also seeking to implement a core banking solution.
Thanks: The Hindu Business Line


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