Chandigarh: Long-term finance to farmers through cooperative and regional rural banks (RRB) has turned costly with National Bank for Agriculture and Rural Development (NABARD) raising interest rate on refinance by 50 basis points, reports PTI.
With the revision in interest rate, the new interest rate on refinance for cooperative sector is pegged at 8.25% per annum and 8.75% per annum for commercial banks.
"The rate (interest rate) has been revised upward in the wake of monetary police review undertaken by Reserve Bank of India (RBI) this month," a senior official of NABARD said here.
RBI had hiked key short-term lending and borrowing rates by 25 basis points each as part of steps to rein in inflation.
The long-term finance, disbursed to farmers through cooperative structure and RRBs is given for dairy development, farm mechanisation, horticulture, poultry, micro finance and fisheries etc. "The long-term finance is primarily given for capital formation in farm sector," he said.
A major chunk of credit, given to farmers in Punjab, is routed through cooperative sector, RRBs and commercial banks.
NABARD is aiming to disburse money to the tune of Rs1,000 crore through refinance window in Punjab in 2010-11 against Rs704 crore disbursed in 2009-10.
Of Rs1,000 crore, state cooperative banks, RRBs and commercial banks will disburse Rs550 crore, Rs150 crore and Rs300 crore, respectively in the current fiscal, he said.
While people have been rushing to banks to swap their low-interest deposits for what they call...
LIC Housing Finance and banks are suspected to have given fake loans to individuals which landed in the accounts of a few builders. The deals were supposed to have been arranged by FII-funded Money Matters Financial Services
Following the raids by the Central Bureau of Investigation (CBI) on Money Matters Financial since last night, news that was broken by this website early today (Money Matters Financial raided by Central Bureau of Investigation), the CBI conducted raids on LIC Housing Finance (LICHF) and three banks during the day.
The CBI said it busted out a racket where a private financial services company, its chairman and managing director (CMD) and other associates were bribing senior officials of public sector banks and financial institutions for facilitating large scale corporate loans. They were also gathering confidential business information from financial institutions.
Officers of top management and middle management of various public sector banks and financial institutions, Bank of India (BoI), Central Bank of India (CBoI), Punjab National Bank (PNB), Life Insurance Corp of India (LIC) and LICHF were receiving illegal gratifications from the private financial services company who were acting as mediators and facilitators for corporate loans and other facilities from financial institutions, the CBI said in a release.
The investigation agency said it arrested R Ramchandran Nair, chief executive-LICHF, Naresh Chopra, investment secretary-LIC, RN Tayal, general manager-BoI, Maninder Singh Johar, director-CBoI, Venkoba Gujjal, deputy general manager-PNB as well as Rajesh Sharma, CMD-Money Matters and Sanjay Sharma and Suresh Dattani, both employees of Money Matters. All the eight arrester persons are remanded to custody till 29th November, CBI said.
Moneylife learns that officials of LICHF, BoI, CBoI and PNB had given out housing loans to a few hundred individuals, who were dummy borrowers. These borrowers existed only paper and were propped up by a few builders. The money was then transferred from the accounts of these individuals to these builders. It also appears that LICHF was charging a high rate of interest for these fake loans which was reflected in higher profits.
Driven by high profits over the last few quarters, the LIC Housing Finance stock has been a spectacular performer over the last 20 months. From a low of Rs178 at the end of March 2009, the stock had hit Rs1,496 on 29th September this year, a rally of over 1000%. Over the same period, market leader Housing Development Finance Corporation (HDFC) rose from a low of Rs223 to a high of Rs780, a gain of 350%.
As rumours of the LIC HF scam surfaced, the stock took a big battering. By the end of the day, it was down 18% and there were no buyers for the stock. Since the Moneylife report early morning, the Money Matters Financial stock too was sold heavily during the day and the stock was locked in the lower circuit. It appears that the cases of Money Matters and LIC HF and the banks are linked. CBI suspects that Money Matters was arranging these deals between the banks and the builders. According to our sources, bank officials and others were being gifted 2 kilograms of gold this Diwali.
It may be recalled that less than two months ago, Money Matters raised more than Rs400 crores foreign institutional investors, a deal arranged by India Infoline.