SHIVAMOGGA: KARNATAKA received reduced funding from the National Bank for Agriculture and Rural Development (NABARD) in recent years owing to improved performance by banks in meeting Priority Sector Lending (PSL) targets, the Union government has claimed.
Replying to an unstarred question from Udupi-Chikkamagaluru MP Kota Srinivasa Poojary in the Lok Sabha during the winter session of the Parliament, Minister of State for Finance Pankaj Chaudhary said that in order to ensure adequate flow of credit from the banking system to the sectors of the economy which are crucial for socio-economic development, PSL targets are allotted to banks by the RBI. In the event of any shortfall in achievement of PSL targets by the banks, funds are then allocated to financial institutions for financing critical sectors.
NABARD receives annual allocations from the PSL shortfall corpus from which it releases funds to states.
“In recent years, due to the improved performance of banks in meeting the target for priority sector lending, the PSL shortfall corpus has been decreasing,” the minister said.
The minister said allocations under various PSL-linked funds were rationalised based on demand, government priorities and utilisation in previous years. As a result, Karnataka saw a reduction in NABARD funding, particularly under Short Term Seasonal Agricultural Operations funds .
Data shared by the Centre showed that NABARD’s long-term refinance to Karnataka declined to Rs 7,128.37 crore in 2024-25 from Rs 11,479.6 crore in 2023-24. Short-term refinance remained largely stable at Rs 14,313.6 crore in 2024-25.
At the same time, funding under the Rural Infrastructure Development Fund rose steadily, reaching Rs 2,408.11 crore in 2024-25, compared with Rs 1,727.50 crore the previous year. Assistance under NABARD Infrastructure Development Assistance stood at Rs 1,020.30 crore in 2024-25 while it was Rs 1362.27 crore in 2023-24.
Micro irrigation fund decreased to Rs 49.63 crore in 2024-25 from Rs 110.23 crore in 2023-24. No loans were sanctioned under Warehouse Infrastructure Fund in 2023-24 and 2024-25 while Rs 46.07 crore was sanctioned in 2022-23.
The Centre said NABARD continues to support agricultural and rural development through refinance schemes, infrastructure funding and targeted initiatives such as the Tribal Development Fund and Food Processing Fund, with eligibility determined under scheme guidelines.