No Plan to Change Management of Rural Credit Funds: Arun Jaitley

Government has no plan to make any change in management of National Rural Credit (NRC) funds provided by the NABARD for undertaking agricultural activities and to rural non-farm sector.

Finance Minister Arun Jaitley said NABARD provides refinance to approved financial institutions out of the NRC (Long Term Operation) fund and NRC (Stabilisation) fund for undertaking agricultural activities.

He said government has no proposal under consideration to make any change in the management of these funds.

Mr Jaitley said the NRC fund (LTO) is utilised by NABARD only to provide financial assistance by way of loans and advances to commercial banks, regional rural banks and cooperative banks by way of refinance of their long term loans issued for agriculture, allied activities and rural non-farm sector.

"The amount of NRC (stabilisation) fund is utilised by the NABARD only to provide medium term loans to approved financial institutions by converting short term crop loans into medium term loans to enable farmers to obtain fresh loans in case of natural calamities such a drought, floods etc," he said.

The Finance Minister said a new fund namely 'Long Term Rural Credit Fund' in NABARD with initial corpus of Rs 5,000 crore has been recently announced in the Union Budget for providing refinance support to cooperative banks, regional rural banks so as to boost capital formation in agriculture and rural economy.

"This fund will be met out of the shortfall in priority sector, agriculture sector, weaker section lending scheduled commercial banks," he said.