The Coronavirus pandemic has severely hit many states in India, including the southern region. At the same time, the pandemic has also affected the economy of states in many ways. In a letter to NABARD’s Chairman Harsh Kumar Bhanwala, the Chief Minister of Kerala, Pinarayi Vijayan specified that the pandemic is going to have negative effects economy on states.
Just after announcing Rs 20,000-crore package to combat the effects of Covid-19, Kerala has persuaded the National Bank for Agriculture and Rural Development (NABARD) and has asked special revival package, including Rs 2K-crore loan under Rural Infrastructure Development Fund. The pandemic has affected the financial stability of the state and that’s why seeking the state is also demanding a reduction in the interest rate of refinancing of various loans to enable banks to reduce interest rates.
He requested a special credit of Rs 2,000 crore under the Rural Infrastructure Development Fund at 2 pc per year, instead of the prevailing 3.9 pc per annum. The state suggested that NABARD’s refinance facility should also accommodate for additional cost adjustment.
The state also suggested that the special extended coverage of 100 pc refinance should be extended to pandemic-affected states, which is now being provided to the north-eastern states. The state urged that the interest rate of refinancing of loans for short-term agricultural operations to state cooperative banks, regional rural banks, and commercial banks to cover crop credit should be lessened to 2 pc from the existing rate, i.e., 4.5 pc.
All of this together will enable banks to reduce interest rates. The interest rate of other short- term loans by Nabard, covering small enterprises, handloom and artisans should also be reduced to 5 pc. The refinanced Long Term Rural Credit Fund should be made available at 3 pc to the Kerala State Cooperative Bank in line with promoting medium and long-term investment credit in Kerala.
