National Bank for Agriculture and Rural Development (Nabard) is planning to raise up to Rs 30,000 crore through bonds in the current financial year (FY25) to support lending operations, according to rating agency Crisil.

The money raised through the market covering bonds and money market instruments had about 51.5 per cent share in total borrowings by Nabard at the end of March 2024.

The government-owned development finance institution’s (DFI) total borrowings stood at Rs 7,89,191 crore as of March 2024, according to Crisil’s analysis. Crisil has assigned a “AAA” rating to the proposed bond offering, which factors in support from the government of India. Nabard declined to respond to queries from Business Standard.

The government of India’s fiscal management policies and financial reforms in the past few years have led to an increase in the institution’s reliance on market borrowings, resulting in higher cost of borrowings, Crisil said.

Another source of funds for the DFI is the deposits from commercial banks. The amount banks have to keep as deposits with NABARD is linked to the extent of the shortfall in meeting priority sector lending (PSL) targets. Rural Infrastructure Development Fund (RIDF) deposits had close to 23.7 per cent share in total borrowings at the end of March 2024, Crisil said.

As for its lending operations, its loan book is broadly divided into two segments: direct finance and refinance book. Direct finance, which includes loans to state government agencies as well as voluntary organisations, stood at Rs 4,47,324 crore or 56.3 per cent of the loan book as on March 31, 2024.

Crisil said the refinance loan portfolio of NABARD stood at Rs 3,47,780 crore or 43.7 per cent of loans as on March 31, 2024. This support includes loans to state government, commercial banks, and regional rural banks (RRBs) as refinance against the loans disbursed by them to the final borrowers.

First Published: Jun 10 2024 | 7:14 PM IST