A 1000-cr fund to be launched to address climate issues in rural financial system, say Nabard chairman Shaji K. V. | Mint

New Delhi: After NabVentures Fund 1, the National Bank for Agriculture and Rural Development (NABARD) now plans to launch a second round with a focus on ventures that address hurdles created by climate change in the rural financial ecosystem, said India’s apex development bank chairman Shaji K.V.

Nabventures, a subsidiary of NABARD, last July launched a fund called ‘Agri-Sure’ with an initial corpus of ₹750 crore, with ₹250 crore each from NABARD and the Ministry of Agriculture, and ₹250 crore from other institutions to promote investment in innovative, technology-driven, high-risk, and high-impact activities in agriculture and allied areas.

NABARD feels that the next round of improved productivity should come through innovations. “So, innovations need to be supported. For that, venture capital is needed, and we have already set up NabVentures Fund 1. We will follow up with NavVenture Fund 2 in the next financial year; It will be a ₹1000-crore fund,” he told reporters on Sunday on the sidelines of the Gramin Bharat Mahotsav, adding, “NabVentures Fund 1 was more focused on agriculture and some rural activities we are doing, but we will add the climate part to NavVentures Fund 2.”

Area-based pilots

“What we are intending to do is area-based pilots. As a development-financial institution, we need to now create some use cases and show to the other people that if you take up these types of activities, your activity will be defeating most of the climate issues, and we can overcome those things.”

“So, we are coming up with that part of an area-based programme. We are also in talks with many of the multilateral institutions, including ADB (Asian Development Bank) and FAO (UN Food and Agriculture Organization), to bring the expertise from outside. But then, India needs to have its own solution. We can’t just transpose the solutions available elsewhere to this place. We need to have our own home-grown solutions. If you go to rural areas, a lot of home-grown solutions are there, which need to be identified, be piloted and showcased,” he added.

On computerization and strengthening of Primary Agricultural Cooperative Societies (PACS), NABARD head informed that 67,000 cooperative societies will be computarized by the end of the current financial year. So far, 50,000 have been digitized.

Digital tech push

“Along with it, cooperative banks, which are scheduled banks and are forming higher tiers in the cooperative structure, are also being increasingly pushed to adopt digital technologies. So, NABARD, in conjunction with the government, will be setting up a shared services entity for such cooperative banks. By this, we intend to make accessible banking in a more affordable manner to the marginalized sections as well, leveraging the Pradhan Mantri Jan Dan Yojana, which is (benefiting) around now 530 million (people) and counting. We need to now make such accounts more active. For that, more digital facilities need to be given to the rural financial institutions.”

“With whatever development activities we are doing a credit layer will also be added so that with whatever margins or the capital which rural folks are investing, we’ll augment that with affordable credit, intending to improve production and productivity,” Shaji said.

The rural development financial institution also plans to push dairy and fishery farmers more for interest subvention credit facility to help them borrow from banks to improve their per capita income.

“Under KCC, our aim is to saturate not only landowning farmers but also lease land farmers. We will try to saturate PM Kisan beneficiaries with KCC and then tenant farmers Plus, animal husbandry, fisheries and allied activities also need to get interest subvention credits so that their per capita income can be improved. For that, we are doing a campaign in association with the Department of Financial Services, involving all the banks and rural financial institutions to saturate animal husbandry and fisheries sectors,” K.V. said.

Nudging fish farmers

“We are also nudging state governments to get registered fisheries farmers. Fisheries farmers is one area where the registration has to be improved. Once registration and linking farmers with the activity is done, we can push banks to lend,” he added.

As of 7 August 2024, 426,666 KCCs had been sanctioned to fishers and fish farmers, and as of last January, banks issued 75 million KCCs with a limit of ₹9.4 trillion to farmers across all sectors, according to an official statement.

With a view to ensuring availability of agriculture credit, including loans taken against Kisan Credit Card (KCC) at a reasonable cost or at a reduced rate of 7% per annum to farmers, the government through public sector banks, private sector banks, regional rural banks and cooperatives is implementing an interest subvention scheme of 2% for short term crop loans of up to ₹3 lakh. Currently, besides a 2% interest subvention, farmers, on prompt repayment of crop loans on or before the due date, are also provided 3% additional interest subvention.

When asked about the timeline, NABARD chairman said, “It is an ongoing process because tenancy is one thing which is dynamic. As and when tenant farmers are coming in, we need to target them for predicting.”

There are two limits for KCCs. One is ₹3 lakh for interest subvention. The other is a Rs200,000 collateral free limit. “So, that is also helping more forward because if land record is not proper, collateral banks will not insist based on some declarations,” K.V. added.