Nabard kicks off infrastructure lending on a commercial basis

The National Bank for Agriculture and Rural Development (Nabard) regulator for regional rural banks and cooperative banks since 1982, has begun lending directly to infrastructure projects at commercial rates as part of a transformation and pitting it against traditional lenders to the sector.  Nabard, which had a balance sheet of more than Rs.1.53 trillion as of December-end, will lend Rs. 42 crore to Karnataka State Warehousing Corporation (KSWC) to set up 1,06,000 tonnes storage capacity at nine different locations in the southern state. The loan is being given at an interest rate of around 10% and a maturity of 12 years, Nabard's Executive Director, Prakash Bakshi told Mint. This forms part of the total Rs. 173 crore loan that KSWC is seeking and which Nabard is considering. “We are considering other infrastructure projects as well,“ Bakshi said. “The idea is to support the development of rural infrastructure besides increasing the revenue of Nabard.“ Nabard is setting about changing its business model by funding infrastructure projects in the power and agricultural sectors on a commercial basis and expanding its role in financing state-government sponsored projects as Mint reported on 28 November. Its balance sheet comprises total funds received and loans disbursed. The entry of Nabard into direct infrastructure lending brings it in competition with commercial banks and specialized infrastructure lending companies, which have so far been dominating the space, analysts said.