RBI asks banks to ensure supply of funds to rural cooperatives
The Reserve Bank of India asked banks on Tuesday to ensure adequate cash supply to cooperative banks and Regional Rural Banks (RRBs) so that farmers can have enough valid notes needed for purchase of seeds, fertiliser and other inputs during the ongoing rabi season.
The decision comes a day after finance minister Arun Jaitley had a meeting with RBI, Nabard and all bankers and impressed upon them to make available funds to the cooperative sector as it is an important financing mechanism for rural India.
According to RBI, it is imperative that farmers are adequately supported financially to ensure unhindered farming operations.
“It is estimated that about Rs 35,000 crore would be required by DCCBs (District Co-operative Banks) for sanction and disbursement of crop loans to farmers at the rate of Rs 10,000 crore per week,” an RBI notification said.
National Bank for Agriculture and Rural Development (Nabard) will be utilising its own cash credit limits up to about Rs 23,000 crore to enable the DCCBs to disburse the required crop loans to Primary Agricultural Credit Society (PACS) and farmers, it said.
“As many of these loans will be disbursed in cash to facilitate farming related expenses, we advise in this regard that banks with currency chests should ensure adequate cash supply to the DCCBs and RRBs,” it said.
Adequate cash supply should also be ensured for rural branches of all commercial banks, including RRBs, it said.
Further, it said, bank branches located in Agricultural Produce Market Committee (APMC) may also be given adequate cash to facilitate smooth procurement.
Jaitley today said its focus will now be on rural areas and more measures will be announced for farmers.
The minister said the credit flow from banks will also go up for various activities, including agriculture as huge amount of cash due to demonetisation was deposited in the banking system.
It is expected that the government may announce some more measures to ease pressure on the farm sector.
Enter your email to get our daily newsletter in your inbox
- In March 2020, EPFO had reduced the interest rate on provident fund deposits to a seven-year low of 8.5% for 2019-20. The interest rate was 8.65% in 2018-19 and 8.55% for 2017-18. The interest rate was 8.65% in 2016-17.
- The 30-share index swung nearly 633 points during the session, before ending at 50,296.89, showing a rise of 447.05 points or 0.90 per cent.