Direct Refinance Assistance to Co-operative Banks

1. Need for Direct Refinance Assistance to Co-operative Banks

Implementation of the Government of India Revival Package of Short Term Co-operative Credit Structure (STCCS) as per Vaidyanathan Committee recommendations has enabled District Central Co-operative Banks to borrow funds directly from any financial institution regulated/approved by RBI.
NABARD has developed a product ‘Short Term Multipurpose Credit Product’ (STMPCP) to provide financial assistance to Co-operative Banks (StCBs/DCCBs) primarily to expand their lendable resources and also enable them diversify business operations to improve their profitability.

2. Purposes covered under STMPCP

2.1 Short Term Multipurpose Credit Product

  • Working capital requirements.
  • Repair and maintenance of farm equipment and other productive assets.
  • Storage/grading/packaging of produce.
  • Marketing activities.
  • Crop loan (if the requirement is more than Rs.3.0 lakh).
  • Redemption of old debts and other socio-economic needs.
  • In addition to the above, all purposes which are covered under Section 21(1)(i) to (v) of NABARD Act, 1981 are also eligible for refinance under this product.

2.2 Assistance to Co-operative Banks for on-lending to sugar factories

The refinance assistance would be provided to Co-operative Banks for on-lending to sugar factories (co-operative & private) for prompt payment to farmers towards procurement of sugarcane and also to meet out the internal expenditure. Terms and conditions of sanction, eligibility of the banks, interest rate and security will be same as that of Short Term Multipurpose credit Product

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