The National Bank for Agriculture and Rural Development (Nabard) is planning to raise more than Rs 10,000 crore from the market this financial year to fund cooperative and commercial banks.
The bank plans to raise Rs 3,000-4,000 crore through retail bonds and mop-up another Rs 2,000 by issuing certificate of deposits, short-term money market instruments.The balance will be raised through mix of sources like corporate bonds. The extent of dependence on market borrowings will be less this year for Nabard as compared with FY08 (Rs 13,000 crore) due to availability of Rs 5,000 crore from the National Rural Credit-short-term (NRC-ST) facility announced in the 2008-09 budget.
The interest rate for funds sourced from this corpus (NRC-ST) is expected to be 6 per cent, much less than the market borrowings which are made at an average 8 per cent interest rate. It plans to bring down the cost of funds below 9 per cent from 9.15 per cent in FY08. The cost was 8.75 per cent in 2006-07.
Read more in The Business Standard article.
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