Cabinet nod for raising NABARD captial to Rs 30,000 crore

NEW DELHI: The Union Cabinet today approved amendments to the NABARD Act to increase authorised capital to Rs 30,000 crore from Rs 5,000 crore, a move that will help the agency fulfil its commitments.

The Cabinet chaired by Prime Minister Narendra Modi approved amendments to the National Bank for Agriculture and Rural Development Act, 1981 as proposed in the draft Bill with such changes of drafting and of consequential nature, an official release said.

"The Amendments, include provisions that enable the central government to increase the authorised capital of NABARD from Rs 5,000 crore to Rs 30,000 crore and to increase it beyond Rs 30,000 crore in consultation with the RBI, as deemed necessary from time to time," it said.

The Cabinet also approved transfer of 0.4 per cent equity of the RBI in NABARD amounting to Rs 20 crore to the government.

"The proposed increase in the authorised capital would enable NABARD to respond to the commitments it has undertaken, particularly in respect of the Long Term Irrigation Fund and the recent Cabinet decision regarding on-lending to cooperative banks," the release said.

Further, it will enable NABARD to augment its business and enhance its activities which would facilitate promotion of integrated rural development and securing prosperity of rural areas including generation of more employment.

The transfer of entire shareholding in NABARD held by RBI to the Central Government will "remove the conflict" in RBI's role as banking regulator and shareholder in NABARD.

The proposed amendments in NABARD Act, include, certain other amendments including changes in long title and certain Sections to bring medium enterprises and handlooms in NABARD's mandate.