Dolar Kotecha, Chairman of the National Cooperative Agriculture & Rural Development Banks’ Federation Ltd. (NAFCARD), along with the Managing Director of NAFCARD, met K.V. Shaji, Chairman of NABARD, in Mumbai on Thursday to discuss a comprehensive roadmap for strengthening Kheti Banks and State Cooperative Agriculture and Rural Development Banks (SCARDBs) across the country.
The meeting focused on providing greater assurance, liquidity support and policy reforms to make Kheti Banks more profitable, sustainable and operationally effective. The deliberations were aligned with the cooperative development vision of Prime Minister Narendra Modi and Union Home and Cooperative Minister Amit Shah, aimed at reinforcing rural and cooperative banking institutions as pillars of inclusive growth.
NAFCARD presented a detailed list of issues concerning NABARD’s refinance to SCARDBs, drawing attention to the declining share of SCARDBs in NABARD’s overall refinance portfolio. It was highlighted that SCARDBs are not receiving a fair share of concessional refinance under the Long Term Rural Credit Fund (LTRCF). NAFCARD urged NABARD to consider a separate, year-long allocation under LTRCF exclusively for SCARDBs to help moderate interest rates at the farmer level.
Among key reform suggestions were waiver of mandatory State Government guarantees for financially strong SCARDBs, use of external credit ratings, acceptance of non-loan assets such as prime land as security, and revival of refinance support to Gujarat and Tamil Nadu based on balance sheet strength.
NAFCARD also sought extension of the Agricultural Infrastructure Fund to ARDBs, setting up NABARD-supported Business Planning and Recovery Cells in SCARDBs, and permission to invest surplus funds in debt and money market mutual funds for better returns.
The Federation pointed out a significant liquidity mismatch, noting that during 2023–24 and 2024–25, refinance support of Rs 2,300 crore and Rs 2,878 crore respectively fell short of SCARDBs’ total advances of Rs 5,781 crore and Rs 6,849 crore.
NAFCARD recommended a liberal refinance approach, allocation at least equivalent to annual repayment to NABARD, restoration of interim finance, reschedulement of refinance in natural calamity years, and a two-year moratorium to ease recovery pressures.
Other proposals included longer repayment periods for rural housing, reduced refinance costs to lower farmers’ interest burden, flexibility in lending programmes, and inclusion of new eligible purposes such as revolving credit limits, education loans, and credit for essential rural household needs.
The interaction concluded with a shared commitment by NAFCARD and NABARD to work jointly for the growth, stability and revival of Kheti Banks and SCARDBs, reinforcing their role in strengthening India’s rural credit ecosystem.
