THIRUVANANTHAPURAM: The newly-formed Kerala Bank will help farmers in the state to avail themselves of loans from primary agricultural credit cooperat ive societies(PACS) at a lower interest rate. The present 7 per cent will come down by at least one per cent. “Most of the agriculture loans are sanctioned from National Bank for Agricultural and Rural Development (NABARD) funds. Until now, the state cooperative bank used to channel the funds to PACS through the district cooperative banks (DCB). The intermediary DCBs were getting one per cent interest.
With their elimination, this could be passed on to the farmers,” said a senior cooperation department official. NABARD provides refinance loans at 4.5 per cent interest. The proposal to adopt a two-tier system for agriculture loans, to reduce the net interest spread, was first made by a working group on cooperation during the fifth Five-Year Plan. An RBI panel had also recommended the two-tier system in 1972. The new bank will also ask NABARD to raise the refinance fund.
Officers said Kerala Bank will approach the RBI for permission to receive NRI deposits. “A sizeable portion of the 1.68 lakh NRI deposits in the state could be attracted by the new bank. Special investment schemes will be devised for non-resident Keralites(NRK),” he said. Presently, NRI deposits constitute only a small portion of the total 65,000 crore deposits in the state’s cooperative banks.
The Kerala Bank will become the second largest bank in the state after the SBI. According to the State Level Bankers’ Committee (SLBC), as of June 2019, SBI has 1,216 branches in the state with a total deposit of `1.53 lakh crore and NRI deposits account for around half of that.
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