Naveen Objects to Increased Rate on NABARD Loan

BHUBANESWAR: Opposing increase in interest rate on Rural Infrastructure Development Fund (RIDF) loans by the National Bank for Agriculture and Rural Development (NABARD), Chief Minister Naveen Patnaik on Tuesday requested the Centre not to implement the new rates on loans sanctioned prior to April 2012. In a letter to Union Finance Minister Pranab Mukherjee, the Chief Minister said that the rate of interest chargeable by NABARD to all RIDF loans disbursed on or after April 2012 have been enhanced to 8 per cent in accordance with the decision of the Reserve Bank of India (RBI).  Expressing serious concern over the rate of interest arbitrarily enhanced by the RBI from 6.5 to 8 per cent, the Chief Minister emphasised that creation of the RIDF window under NABARD has been a major intervention for augmenting the basic infrastructure and for boosting agricultural productivity in rural areas. Naveen said NABARD had sanctioned ` 12,634.12 lakh for four irrigation projects in Odisha under RIDF-XVII on July 26, 2011. The tenure of this loan is seven years, including the grace period of two years. As regard the rate of interest, it has been clearly and unambiguously mentioned in the sanction letter that the loan will carry interest rate of 6.5 per cent, Naveen said and added that it is a loan carrying a fixed rate of interest. He said that there was no mention anywhere in the sanction letter that NABARD could raise the interest rate anytime during the period of its validity. “I would urge you to persuade the RBI and NABARD to review the issue urgently and to ensure that the revised rate of interest of 8 per cent is not made applicable to RIDF loans sanctioned prior to April 2012,” he added.