Nabard's performance in 2001-02 is commendable given the fact that commercial banks were flush with funds. The bank plans to sharpen its focus on irrigation and agri-business in the current financial year

Chairman, YC Nanda and Managing Director, M V Chalapathi Rao

For the National Bank for Agriculture and Rural Development (Nabard), the year 2001-02 has been a good one. The aggregate financial support provided to commercial and cooperative banks, regional rural banks and the state governments crossed the Rs 20,000 crore mark and the aggregate disbursement under investment credit grew at 8.5 per cent. At a press conference to announce the bank’s performance, Chairman Y C Nanda said, “ Despite the high liquidity with commercial banks, the reason many borrowed was that they see Nabard as a long term source of finance.”

Resource Mobilisation

The markets have been Nabard’s main source for raising fresh funds. Of the total Rs 2548 crore that was mobilised during the year, Rs 1775.5 crore came from Capital Gains Bonds and Rs 773 crore were raised through Priority Sector Bonds. The funds raised through Capital Gains Bonds were at a competitive rate of 7 per cent.

Borrowings from the market were in the range of Rs 2700 crore to Rs 3000 crore. Rs 4500 crore-Rs 5000 crore came from the banking sector and Rs 6500 from the RBI. Being a refinance institution, Nabard has no Non-Performing Assets (NPAs).

Discussing the possibilities for new resources, Chairman Nanda said, “We are having a discussion with the government to tap new sources. We have to have special instruments. Being primarily a refinance institution with no retail outlets, we should be able to mobilise finance at a rate lower than the banking sector.” He added, “ We are better suited to reign in long term resources.” Nabard’s good performance during 2001-02 was possible even though it now has a tax liability. The bank had to cough up Rs 395 crore as tax. This year too the tax liability is expected to be in the same range.

Diversification plans

PERFORMANCE HIGHLIGHTS
Operation	2000-2001 (Rs Cr)	2001-2002 (Rs Cr)
Support to clients	19518	21146
Investment credit	6158	6682.8
RIDF (drawals)	3176.9	3790.3
Rural Non-farm sector	1020.2	1128
Resource mobilisation	1472	2548

The bank’s diversification plans are yet to pick up pace. Insurance is one new area that the bank is considering. The rationale according to Nanda is,” Rural areas are not being adequately covered and we feel there is need for insurance there.”

Nabard does not consider direct credit an attractive proposition as it brings with it the problems of NPAs. However, Nanda said,” We may get into direct finance of special projects like godowns and agri export zones.” It would be worthwhile but we have to be cautious,” he added.